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Steve Netwriter

The Beginners Guide to Gold/Silver

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Triangular Arbitrage & the Gold/Silver Terminology Campaign

 

Isn't gold priced in US$ ?

 

This is quite a common question, and one I identify with, because when I started looking at gold & silver I also was told that they were priced in US$.

It took me a while to get my head around what I think is the best way to think about this.

 

Because it's a common question, I've created these.

 

The first one is a basic 'law' of forex trading. Basically you can't sit there making money just by swapping US$ for GBP for Yen for US$ round and round in a circle. It would be nice, but alas :D

 

Triangular_Arbitrage.gif

 

 

This applies the same law to gold:

 

Triangular_Arbitrage_gold.gif

 

 

I would like to encourage everyone to use this terminology, as I think the 'normal' one is based on mis-information created by those who would like everyone to think gold & silver are just commodities.

 

GoldandSilver_Terminology.gif

 

 

I hope that helps you to appreciate that gold & silver are currencies in their own right. So if you live in the UK and think in GBP, then look at the movements of GBP against Gold.

If the US$ goes down, to maintain the arbitrage triangle, the GBP and Gold must move appropriately.

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I'm not sure people realised that the last "campaign" poster was slightly tongue in cheek.

But not completely :D

It does make a point ;):D

 

Apologies to gwizzie, I've not thanked you for your contribution, which is excellent :D

 

 

When to Buy - Looking at Charts

 

Here is an example looking back over the past decade. The problem is you can never know what is going to happen.

But learning from the past can at least help to give you perspective.

 

GoldUS_buy_times_081001.gif

 

 

One way to view the gold market is by what % you expect it to change versus other currencies.

During low inflation & high deposit rates, you can generally expect gold to perform badly.

During high inflation & low deposit rates, you can expect gold to perform well.

 

MonetrayReflation_RealRates.gif

 

 

By looking at the yearly percentages, you can get an idea of whether the gold 'price' is on the high or low side of what you might expect.

 

GoldUS_Sep07toSep08_081001.gif

 

 

This is my interpretation of the way gold moves short-term during a bull market.

But it never quite repeats the same way, just to keep you on your toes.

 

GoldUS_phases_081001.gif

 

 

And this from Jim Sinclair's website:

 

TheGoldCycleFromDanNorcini.gif

 

 

Look at the volume. A price movement on a high volume means more money is involved, rather than a large price move based on one trade !

 

GoldUS_080408_volume.gif

 

 

Follow the COT (Commitment Of Traders) reports on Jim's site: http://www.jsmineset.com/

Example:

 

Example_COT_Report.gif

 

 

Follow the "Hourly Action In Gold From Trader Dan" on Jim's site: http://www.jsmineset.com/

 

 

Don't just watch the gold 'price'. You need to watch it against a number of other important currencies, like US$, GBP, Euro, JPY.

Here is an excellent option for people without trading platforms:

 

NetDania_Chartstation.gif

 

http://www.netdania.com/Products/ChartStat...artStation.aspx

 

 

Also like this, which is an excellent way to compare the performance of various currencies:

 

Gold_Silver_GBP_JPY_Sep_2007_to_Jul.gif

 

http://stockcharts.com/charts/performance/...;NZD,$gold

 

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This thread has been awesome, thanks so much Steve!

 

I have a question that hasn't been asked. For those that are self employed what kind of measures can be taken for insurance in the event of a bank collapse?

 

My understanding is that if your bank was to collapse you still owe the taxman his money (this worries me) So I'm just wondering if it would be a good idea to buy more than your recommended 10% in PMs to cover tax liabilities

 

 

 

 

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I'm really glad you find it useful :D :D

The trouble is, if I'm not careful I start reading it myself. I find it somewhat hypnotic :blink:

 

I think I've kinda covered that somewhere when I talk about what % to buy. Ah, here:

 

http://www.greenenergyinvestors.com/index.php?showtopic=3757

 

Again, just my views. I'm no expert.

 

The normal amount of PMs to hold is supposed to be 5% to 10%. I read it again somewhere yesterday. Something like "in case of war, earthquake or other sudden massive unpredictable shocks"

 

I've been saying "10% minimum, you're uninsured if you don't have that right now", simply because any loss on 10% is small compared with the benefit of having insurance.

 

Here's a later post:

 

http://www.greenenergyinvestors.com/index....ost&p=53432

 

Now I realise I seem to have omitted this :blink:

 

Krassimir Petrov - Investment Analysis (part 3) - 32 min - Apr 9, 2008

http://video.google.com/videoplay?docid=976700141486118374 (75MB)

5% to 10% gold - to create a diversified portfolio.

10% to 15% - a more balanced portfolio in the current inflationary environment.

20% to 40% - a more aggressive portfolio.

50 to 80% - if you are expecting a crisis. (Krassimir Petrov holds about 50% bullion. Nothing else. No counter-party risk.)

 

I don't feel confident in answering the tax question. But I strongly suspect the answer will be the one that's worst for you !

Have you considered paying tax in advance ? I know it's not "the done thing", but I don't think there is anything to stop you.

If it is a serious threat, then why not ?

 

I try very hard not to suggest more than 10%. As I've said many times, I think when it's more than that it should be a self-researched decision.

That doesn't mean I am suggesting only 10%. I want to make that clear.

 

But, lets put it this way, I agree with Krassimir on this point:

 

50 to 80% - if you are expecting a crisis.

 

And if this is not a crisis, what is ?! :blink:

 

I personally feel a LOT happier about my PM investments than my fiat money ones (which I consider high risk, and do worry me).

 

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Thanks for the lengthy reply Steve!

 

To be honest a few weeks ago I thought 20% would be a lot in PMs but now 50% looks like a better idea (Perhaps along with a big stock pile of food and any other essentials/bartering goods like cigarettes etc

 

That may be a good idea about paying tax early, I'll look into that one for sure!

 

I think like always, it boils down to DYOR and come to your own conclusions. Always nice to hear from those who are better informed than a newbie like myself on these issues so thanks.

 

 

 

 

 

 

 

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Lithium battery grant by US president Obama - 2.4% billion for research and development...can ou say this is where the direction of automotives is going!!É!

 

Invest in lithium - Im long International Lithium (TNR:TSX) and up 120% since last Oct. For folks who invested in Jan theyd be up 500%+

 

http://mining101.blogspot.com/2009/08/obam...initiative.html

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http://www.financialpost.com/news-sectors/...html?id=1889996

 

http://www.cnbc.com/id/15840232?video=1214209086&play=1

 

Byron Analyst quoted in National Post & CNBC..

 

___ and guess who bought msot of the financing today...no wonder its up on 4 million shares traded last 2 days!!!

16 projects, 3 brines, Nevada & Argentina...doesn't get better than this!

 

 

 

 

August 14th, 2009

 

 

 

TNR GOLD CLOSES $500,000 FLOWTHROUGH PRIVATE PLACEMENT

 

 

 

Vancouver B.C.:TNR Gold Corp. (“TNR” or the “Company”) is pleased to announce the closingof a brokered private placement previously announced on August 4th,2009and led by Byron Securities Limited.(the “Agent”), which has resulted ingross proceeds to the Company of $500,000 (the “Offering”).

 

 

 

The offering consistedof the issuance of 2,000,000 flow-through shares of the Company at a price of$0.25 per flow-through share for gross proceeds of $500,000. As considerationfor acting as agent, the Agent received a cash commission of 7% of the grossproceeds raised. In addition, the Agent was issued 200,000 agent’s warrants(the “Agent’s Warrants). Each Agent’sWarrant entitles the holder to acquire one non-flow through common share of theCompany at an exercise price of $0.25 per common share until February 14, 2011.

 

 

 

All of the securitiesissued pursuant to the Offering are subject to a four month hold periodexpiring on December 15, 2009.

 

 

 

Proceeds of Offering will be used to fundTNR's exploration projects in Canada.

 

ABOUT TNR

 

TNR is a diversified metals exploration companyfocused on identifying and exploring existing properties in Argentina and Alaska and new prospective projectsglobally. Upon approval of pending licences in Ireland, TNR will have a totalportfolio of 32 projects, of which 16 will be included in the proposed spin-off of International LithiumCorp.

 

It is anticipated that TNR shareholders of record will receive one share andone full tradable warrant of International Lithium Corp. for every 4 shares ofTNR held as of the yet determined record date. This will result in TNRshareholders owning shares in both TNR and International Lithium. For furtherdetails of the spin-off please refer to TNR's April 27, 2009 news release orvisit http://www.internationallithium.com

 

 

The recent acquisition of lithium projects in Argentina,Canada, USA and Ireland confirms the Company'scommitment to project generation, market diversity and building shareholdervalue.

 

 

 

On behalf of the board,

 

 

 

Gary Schellenberg

 

President

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Awesome thread. Many thanks.

 

Hi d2thdr, glad you liked it :D

 

You got me reading it again :lol:

Quite amazing how much stuff I've forgotten that I've written on this thread :blink:

Interesting to see if it stands the test of time.

 

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Did not see any information on the auspicious days for buying gold in India;

 

=============================================================

 

Apr 22 Thurs Gurupushyamrit - Day for new ventures

 

May 16 Sun Akshaya Tritiya -Gold invokes prosperity

 

May 19 Wed Pushya Nakshatra - Day for new ventures

 

Jun 15 Tues Pushya Nakshatra - Day for new ventures

 

Jul 13 Tues Pushya Nakshatra - Day for new ventures

 

Aug 9 Mon Pushya Nakshatra - Day for new ventures

 

Sept5 Sun Pushya Nakshatra - Day for new ventures

 

Oct 3 Sun Pushya Nakshatra - Day for new ventures

 

Oct 17 Mon Dussera Festival - You give gold away to your family and friends on this day

 

Nov 3 Wed Dhanteras - Gold invokes prosperity-----maximum purchase of gold

 

Nov 5 Fri Deepavali/Laxmi Pujan Festival of lights -------substantial purchase of gold

 

Nov 26 Fri Pushya Nakshatra Day for new ventures

 

Dec 23 Thurs Gurupushyamrit Day for new ventures

 

All these days are based on Hindu Calendar. So the dates are only for 2010. The dates will change every year according to Roman Calendar.

 

Subscribe to Indian Holidays calendar on iCAL on mac or via google and you will know when the days are for the future.

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How do you keep Coins/Bars in mint condition?

 

Remember several debates about taking coins out of the bags they arrive in, seem to recall Ziknik mentioned some silver lost it's shine and advocating airtight bags from Staples for instance.

 

There are plenty of airtite capsule suppliers around(see ebay), if not already encapsulated received from the mints.

 

But what about bars. Making an assumption some form of airtight container may also be wise as with coins? So wondered if people had any specific suggestions, trying to check i'm doing it right or am I concerned about nothing?

 

N.B Link to a post by ID5 as he's such a helpful chap :P

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How do you keep Coins/Bars in mint condition?

 

Remember several debates about taking coins out of the bags they arrive in, seem to recall Ziknik mentioned some silver lost it's shine and advocating airtight bags from Staples for instance.

 

There are plenty of airtite capsule suppliers around(see ebay), if not already encapsulated received from the mints.

 

But what about bars. Making an assumption some form of airtight container may also be wise as with coins? So wondered if people had any specific suggestions, trying to check i'm doing it right or am I concerned about nothing?

 

N.B Link to a post by ID5 as he's such a helpful chap :P

Always ready with an arm to help the old ladies into the path of oncoming vehicles :rolleyes:

 

For coins see the advice in the coins thread here but for bar a very light smear of any oil will do then wipe with a dry cloth. The visual condition of bar is really immaterial to its price as it has no numismatic value, it’s just bullion.

 

There are though collectors of 1oz bar style tokens and those should be kept in the same manner as silver coin as there is some premium over bullion value for condition. There are also a few buyers of old hand poured bullion bars that are interested in the pattern and style of the stamping on the bars but these collectors are very few and far between and more often than not their collection is sold or broken up rather than going to a new collector. Again they would advocate a light oiling and darkness as the best way to store the bars as the completeness of the stamps and patterns is of greater importance than the perfection of surface quality.

 

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I know a little bit about coins so I have given it a go http://www.greenenergyinvestors.com/index....ost&p=49117

 

I READ THIS (part of the post) BUT DO NOT KNOW WHAT THE MEANING IS?

Post was from: Jul 21 2008, 09:05 PM Millennium man Member No.: 1,809 Joined: 8-May 08

 

Also you would be amazed at how many people want to buy or sell PM’s without having to notify someone. Relatively compact, easy to sell, price may spike up and down intermittently but over a longer term is quite stable. Buy a coin a month, save them and give them to your children, grandchildren or lover before you pop your clogs or even leave them a letter in your will with a pirates map. Take a few abroad and flog them to pay for you holiday spending money. Physical is so hard to tax, that’s one reason why governments hate PM's

id5

 

What are PM's?

 

I am about to purchase gold coins for investment as my return from building societies in interest is so poor. I am hoping to keep my savings safer and hopefully only sell it when absolutely necessary.

Being in my 70's I am also thinking of my children's inheritance. I founf the info on this site helpfull.

 

 

 

 

 

 

 

 

 

 

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I wrote all this a while ago, but I thought I'd post it here in the hope that it will help anyone just starting to think about buying gold/silver.

 

 

If you want to buy some but have the company you buy it from look after it for you, then the options are:

 

http://www.goldmoney.com/

Gold Money (James Turk):

Gold = 3.39% over £6k, Silver = 5.25% for <£6k, 4.99% for more.

There is no storage fee for gold in the London vault; only a monthly account fee. A storage fee of 0.24% per annum (2 basis points per month) is charged for gold stored in the Zurich vault, with a minimum fee of 0.1 grams of gold per month.

If you own silver, a storage fee is deducted monthly from the amount of silver in your account. The fee is 0.99% per annum (0.0825% per month), with a minimum fee of 0.2 ounces of silver per month.

 

http://www.bullionvault.com/

Bullion Vault is cheaper, but don't do silver. Has a more complicated system, but is more flexible.

Charges: http://www.bullionvault.com/help/QuickStart.html (from 2.06% over 2 years)

 

Another option is The Perth Mint Australia.

http://www.perthmint.com.au/ig_metals.aspx

They do various options. And will store for you and do delivery later if you wish.

Depending on which country you are in, you may need to go through one of the listed brokers in your country.

 

http://www.newzealandmint.com/

 

 

 

If you want to purchase gold and have it delivered:

 

In the UK

 

http://www.atsbullion.com/

In the UK, give these guys a call - I have used them and they are VERY professional and very competitive on pricing for 1 oz bullion coins - you can order over the phone with a debit card and they mail them to you discreetly and insured!!!!

 

Baird and Co

Prices of coins: http://www.goldline.co.uk/bullionCoinsPage.page

 

Coin Invest Direct

http://www.coininvestdirect.com/main.php

Prices in GBP: http://www.coininvestdirect.com/main.php?a...rate=pound_rate

 

Tax Free Gold

http://www.taxfreegold.co.uk/

 

In NZ

 

If you are in NZ, I think the best option is:

http://www.newzealandmint.com/

The best option is 24ct gold kiwi coins. No GST, and they charge from 6.5% downwards depending on quantity. But the good thing is they buy them back at the spot price.

So coins work out cheaper than bars, and if you have to use them, more saleable than bars.

http://www.newzealandmint.com

Tel. 0800 696 468 (0800 NZ MINT)

 

 

Pensions

Yes you can put pension money into gold.

Here is one example for the UK:

 

Gold SIPP - Gold Pension

http://www.goldmoney.com/en/gold-sipp.html

 

 

 

IMO if you want to do more trading in gold, then consider ETFs

But, IMO these are not the safe haven that having allocated physical gold is.

You will need to check the prospectus carefully to see what you are actually buying.

Here are some examples:

http://www.etfsecurities.com/en/updates/do..._Fact_sheet.pdf

 

 

Reading

IMO you should only invest in what you understand. So inform yourself before doing anything.

 

For daily information from an experienced gold expert.

http://www.jsmineset.com/

 

FUNDAMENTAL REASONS TO OWN GOLD

BY: JOHN EMBRY, CHIEF INVESTMENT STRATEGIST OF SPROTT ASSET MANAGEMENT INC. &

SPROTT GOLD AND PRECIOUS MINERALS FUND.

http://www.sprott.com/pdf/reasons_to_own_gold.pdf

 

This is a very long but very informative read about gold.

http://www.gata.org/files/RedburnPartnersG..._11-12-2007.pdf

 

Gold Is Money - Deal with It! - Remarks by Robert K. Landis to the Association of Mining Analysts, London, England, October 2, 2003

http://www.goldensextant.com/LandisAMA.html

 

For daily news and great articles:

http://www.marketoracle.co.uk/Topic3.html

 

http://www.dollarcollapse.com/

 

For a good background read, and good info on BV (unfortunately BV Watch has closed. You may be able to find cached versions)

Bullion Vault Watch - discusses the different ways to sown gold, including whether Bullion Vault is safe, including charts of how much gold they have.

http://bullionvaultwatch.blogspot.com/

This article: http://bullionvaultwatch.blogspot.com/2008...vault-safe.html

Found from this iTulip thread: http://www.itulip.com/forums/showthread.php?t=3143

 

You can get the latest prices from:

 

http://www.bullionvault.com/gold-price-chart.do

 

t24_au_en_bpoz_2.gift24_au_en_yeoz_2.gift24_au_en_usoz_2.gif

From: http://www.kitco.com/market/bp_charts.html

 

Neat multi-currency chart

http://www.kitco.com/gold_currency/charts.htm?gbp

 

gold.gif

From http://www.kitco.com/images/live/gold.gif

 

And Silver in US$:

silver.gif

From: http://www.kitco.com/images/live/silver.gif

 

 

At the moment 1x 1oz coin costs around £460 or NZ$1200.

So it's possible to invest say 10 or 20% of your liquid portfolio in gold, how ever much money you have.

 

IMO think about buying gold like buying another currency. There is an exchange rate between all the paper currencies and gold. That's why the price of gold fluctuates relative to the paper currencies.

Gold is a currency that cannot be printed, and pays no interest.

 

Also, please remember the price goes up and down. Even during a gold bull market, there will be large fluctuations in the price. IMO buy and hold, and ignore the dips in between.

 

 

Please can you give me any idea how heavy it would be in imperial weight- to carry 30 oz of gold coins?

I think troy oz. are different to imperial oz.?

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What are PM's?

 

I am about to purchase gold coins for investment as my return from building societies in interest is so poor. I am hoping to keep my savings safer and hopefully only sell it when absolutely necessary.

Being in my 70's I am also thinking of my children's inheritance. I founf the info on this site helpfull.

 

I'll be helpful in case id5 is busy. P.M's = Precious Metals

 

As for the rest let me say welcome, the good people around here will not tell you what to do, but mainly what to think about. On that note take a look at the recent falls (Palladium ouch) and remember P.M's are not akin to building society investments, you don't get interest and their value can drop.

 

But the true meaning of such volatility all depends whether you buy them to trade or as some form of insurance. As for inheritance, what P.M's ;)

 

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Interesting to re-read this thread. You get a graphic sense of how the price of gold has dramatically increased - people moaning in 2008 about paying £540 for a gold oz coin! Chance would be a fine thing now!

 

It leaves me uncertain as to whether this means gold is in the early stages of a bubble (good) or toppy already (bad).

 

I'd like to emphasise that for British people wanting gold for the SHTF scenario, the sovereigns seem the only way to go: cheapest way of buying gold and in a small and easy to carry format. 1oz coins will be too big in the SHTF scenario and sovereigns will be much more useful. Most importantly, before old MadMax comes along, both sovereigns and Britannias are CGT free.

 

Anyone buying a Krugerand in 2008 at £540 would be selling now c.£880 and, in theory, paying £76 CGT. Anyone buying four sovereigns would buy and sell at similar prices and pay absolutely no CGT.

 

Don't do tax fraud - they'll catch you one day and use it as an excuse to take all your coins!

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This is where that chart comes from:

 

There's Just Not Enough Gold; Modeling A Dollar Flight To Gold

http://www.kitco.com/ind/Dillon/jan172008.html

And that means the price has been held artificially low so that the inflation of money isn't so noticeable. The big and interesting question is "can they keep the price low, or will they run out of gold or the ability to hold it down?"

There are some signs that they are starting to fail. Like the price rising and the withdrawal of sale of gold coins from the US Mint.

 

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