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Van

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Posts posted by Van

  1. Does Friday's action mark a short term top?

     

    First we got weak GDP numbers on Wednesday, and then well below expectation for payrolls on Friday, and Gold could not manage to push any higher.

    DXY looks ready to begin clawing back some more of is recent losses.

     

    While my long term outlook has not changed, it wouldn't not surprise me to see a pullback over the next few weeks.

  2. Yes, my findings surprised me. They showed that gold has been the metal to buy & hold most of the time, and that a mixed gold/silver strategy did not outperform a gold-only portfolio, even if you did some swapping along the way based off a fixed GSR price. This is because gold has outperformed silver long term by 3%pa, so even if silver was a better short term buy, over the long term gold reasserts itself.

     

    However when I threw out the fixed buy/swap price levels and replaced them based off moving averages silver I managed to get a significant bump in return by swapping gold|silver at very extreme price levels. You don't want to be doing this too often just because transaction costs will be significant, and actually the model showed me that once every few years was the best performing strategy anyway.

     

    I am not suggesting that gold will continue to outperform silver by 3%pa over the next 48 years as it has in the last 48, but there is nothing to suggest that it the trend will reverse. Gold is money and the ultimate store of wealth, while silver is, at least for now, primarily an industrial commodity with some monetary qualities. That's why I believe that unless silver is remonetized, we will eventually see GSR at 100+ and trending higher in the future (even if we revisit 40-50 area first). I don't ever envisage the GSR returning to 15:1 the way the metals are being used at the moment.

  3.  

    Silver is at a bargain price. If one looks at the 10 year chart, although there will be opportunities to swap silver for gold, the strategy is risky, while the gold/silver ratio

    is still high. How would someone know when to swap ?

     

     

     

    My model uses a 71 month moving average, and then will trigger a swap signal if price moves above 2.3 standard deviations away from this level.. ie you can expect

     

    I have found using these parameters (71 months SMA, 2.3SDs) would have generated the best returns over the last 48 years... far better than just using a fixed number that many analysts seem to think represents "fair price".

     

    Of course, there is no guarantee that using the same parameters that proved optimal in the past will continue to be the best going forward. In fact, I am certain that they won't.. but they are a good starting point, at least.

     

     

    https://docs.google.com/spreadsheets/d/12xiAkvM25aY0yNs6Z2gXBVDH8CFdI7lGf5sh8eZSXKg/

     

    gsr.png

  4. GSR is now down to 74.

     

    Looking more and more likely that we have seen the peak @83.

     

    Below 72 GSR and I will start to diversify into acquiring gold. I didn't anticipate to be doing this so soon at this stage of my precious metal stacking, but my model says to buy primarily gold at that level to build long term wealth, as gold is the better long term hold, while silver was the better short-term hold.

     

    If GSR does spike up again to > 86 then it will be a good chance to sell any gold and buy more silver. These swap signals are only generated once every 4-5 years, so we are due one soon.

  5. I expected this break out since gold exceeded the 1180$ October high some time ago, while silver was still lagging behind its own 16.40 high.

     

    This 4 year decline has been brutal for investors.

     

    Yes, it has absolutely destroyed "buy & hold" investors, which is probably why I will never advocate "hold forever" as an investment strategy, for any asset, except possibly your own home.

     

    Been incredible to watch it play out and to witness first hand how sentiments turns from red-hot at the top to utter revulsion at the nadir. Still a good time to get back in imo. I think everyone is underestimating how high silver could climb this year - $20+ is not an outlandish target.. and not even than far away now.

  6. The fundamental analysts calling for $10 oil have again be proven spectacularly wrong, as oil is now 4 times that.

     

    I am not particularly an expert on the oil industry so I can't vouch for the some of the numbers being thrown around, but the are generally accepted as being in the correct ballpark. Truth is probably that nobody really knows, and there are lots of ways of doing the sums that will give you different but equally "correct" figures. I work in the portfolio analytic industry and I can tell you that you can report a portfolio as having returned 6% or 10% depending on methodology you use and both are accepted as "correct".

     

    The cure for low prices is always... low prices. Companies become unprofitable, projects are abandoned which affects future supply and hence creates the next bull market. Basic economics 101.

  7. Silver looking very good today, especially in GBP.

     

    The miners already moved to new highs last week. We are witnessing the birth of a commodities bull market that will rip the stupid grin off Yellen's face over the next 5 years as the next stage of the global paper money experiment unfolds.

  8. eh?

    Different oil producers have different cost to bring their oil to the market. We know the Saudis are probably the cheapest, where it can be extracted as cheaply as $10/pb (I personally doubt it is anywhere near this low), while most US producers are losing money at current sub-$40 level. Brent North Sea is quite expensive, somewhere around mid-$40s.

     

    But I don't think anyone has a cost anywhere near as high as 100pb. Sorry, no.

     

    But be careful because to extract oil requires oil, so if the price falls, input costs fall anyway.

     

    102811CostExtraction.png

     

     

    The death of oil has been greatly exaggerated. I'm sure that we'll be revisiting this thread in 2 years' time and wonder how we failed to buy MORE oil when it was such a bargain.

  9. Have rising house prices pushed monthly repayments above the cost of renting?

    Do YOU fear you can't ever get on the property ladder?

     

    Fear Not!

     

    We have the solution.

     

    Throw away the 25 year mortgage.

    Now introducing the 40 year mortgage.

     

    Keeping home affordable for 40 years or more.

     

    Because you KNOW prices only ever go up.

     

    Buy now before it's too late!

     

    http://www.theguardian.com/money/2015/oct/09/first-time-buyers-stretching-house-prices-mortgage-repayments-property-ladder

     

     

    /and Jesus wept.

  10. Gold definitely in a correction now.

    That it wasn't able to make a new high when yesterday's Brussels attack happened was clear sign of an intermediate top was behind us.

     

    I would now look for support around ~1190 high of last Oct, which is also where the 50dma is currently.

  11. Listening to Polney or any of these rampers will absolutely be harmful to your wealth. They have large investments in their position and like anyone a strong emotional attachment to their theories. While I like the fundamental case for Precious metals I treat them as just an investment vehicle that I hope I can use to grow my wealth slowly in the years ahead. DYOR as always, ask why you buy, whether it is stocks, PMs, real estate and ask yourself where is the best place to put your money at the moment.

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