The gold bull market of this year, has brought a lot of attention to the sector. If you are new to this sector, you may be wondering which metal to buy, silver or gold? It is good to own both in my opinion, but I believe it makes more sense to have more silver than gold by a lot. Perhaps every 8 dollars you have in silver, you should have 2 in gold or around that range. The reason why I believe this is because the silver price moves a higher percentage than gold. If you like safety more, and don't need the extra reward, than gold is a better play. There is risk with owning more silver than gold. When silver goes up, it out performs gold in percentage but also when it drops, it also drops a bigger percentage so it all depends on if you believe this gold and silver bull market is here to stay or if its just a bear market rally. Both are possible, and both you can profit from. I myself like high risk, especially in this sector where its been beaten up so bad. Silver has gone up around 44% YTD while gold is up around 27% YTD roughly. There is one example of how silver out performs gold. If you want to take a look at the risk of a down fall, from the 2011 top to 2015 bottom, silver dropped about 70% while gold dropped closer to 45%, doing the numbers in my head so they may not be exact but close to. That is the extra risk involved in silver. It is possible the metals could drop lower, but assuming this happens, I would have to bet real estate would drop by 50-80% and so would the stock market. If this happens, the only safe play is physical cash since banks would be going under. This would offer tremendous opportunity though as well so be prepared if that does happen but my belief is the federal reserve and all the other central banks will print trillions to stop this. The government would go bankrupt if this were to happen since they would receive less tax dollars, they would default on the debt. They have to inflate rather than deflate in order to keep our current system going, which should change sometime in the coming years. When, I do not know but it is coming one day. You now know the leverage you can use through silver, there is even greater leverage using the mining shares, which of course come with an even greater risk since an individual company can go bankrupt at any time for a number of reasons which we can't predict. While silver is up 44% YTD, mining companies are up in between 100% and 500%! Thats incredible leverage, but of course that's not for everyone. The current pull back in the mining shares sector almost scared me enough to get me out of my positions watching my portfolio go down 37% roughly from its peak. It offers incredible leverage but its hard to be at peace every second the market is opened. You have to have a strong stomach for this leverage. They also dropped about 90% or more from there 2011 peaks. A lot of companies went bankrupt.
I would not recommend buying or selling, as the future is still unpredictable, but get educated so you can take advantage on upcoming opportunities. Thank you for reading, and wish you the best investing.
Thursday 22 September 2016
Wednesday 21 September 2016
Is it time to buy gold?
Gold has shown great returns leaving everyone with a great question. Is it time to buy or time to sell. Daily, I have been getting worried and ready to press the sell button watching gold go near its support level down around 1305. I probably would of hit sell if it had gone to 1304! Luckily I didn't and japans central bank was a positive for gold, as well as the fed. No interest rate hike! That is only a short term move for the market I believe though. In order for me to be bullish on gold, we are going to have to get higher in the 1350s level and then break through that high around 1380. This could still be a bear market, and we could be experiencing a bear market rally. Thats what Harry Dent believes, who is a smart guy. He could prove to be incorrect with his deflation theory assuming that the fed printing trillions will not stop this when it comes. He could be right or someone like Jim Rickards could be right with their 10,000 dollar gold which seems more likely but only time will tell. I am still very skeptical of this bull market in gold, but I am heavily positioned to profit from it while being prepared to leave the market the second I believe it is going to reverse its trend to its bear market. I do believe much higher gold prices are going to come possibly up to 2500-3000 range, or higher. Yes higher, it is very likely considering we already know the reaction that central banks will do if they see any signs of deflation, which could be close considering America looks like its already in recession. They will print again and possibly go negative interest rates. I cant imagine gold going down in a negative interest rate environment. The way I view the gold sector is if your in the right stocks, you can only lose 100% of your investment, but there is potential to make 50x your money. Those odds, I like alot. I do believe gold has more room to go but we have a lot of walls to break before its in the clear bullish view so be careful and ready to sell if the market changes.
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