Posted 14 March 2012 - 07:45 PM
Why AGQ over SLV? Just wondering
Because I'm looking to trade the volatility in silver. I only buy and hold gold.
The idea with silver is to use the volatility of silver to increase my holding of US dollars. This also acts as a hedge against an equally heavy holding in gold.
I don't consider it a complete hedge though and see gold and dollars as complementary forms of liquidity. Gold should still outperform dollars, but by trading those dollars against silver the dollar position may well outperform the B&H in gold... as gold is only rising 20 odd % yearly against the dollar.
This heavy and leveraged trade also provides an exit plan. There's a good chance that buying double silver at 26 and again around 30 will give over a 1000% return if silver spikes through 100 in the next 2 or 3 years. Best to sell on this spike when it comes because every chance that silver will then correct to 50.
I don't think silver leverages gold, all it leverages is the volatility to both sides. In the aggregate it should appreciate at a similiar rate to gold... 20 odd % a year.
Modern money "shorts" the currency, and is backed by debt. The debt is real. A debt deflation will lead to a prolonged period of deleveraging, where the short-covering of currencies will strengthen currencies relative to asset prices. At the global level, in the FX market, central currencies will benefit from deleveraging at the expense of peripheral currencies. Due to instability and uncertainty, gold will benefit against all currencies as it continues to be re-monetized.
Hold on to your hats for hyper-deflation, where cash is king, and gold the King of cash.
[Silver? A Volatile Queen].