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Make or Break Time for Silver
Those who took my advice to load up on silver a month ago (click here for “Why the Really Big Play is in Silver” at http://www.madhedgefundtrader.com/august-13-2010-2.html ), are laughing all the way to the bank. The white metal outperformed gold better than 1.6:1 ratio that I predicted. Silver is now trading at a 30 year high, is overbought, and bumping up against key technical resistance.
Unsurprisingly, I have been flooded by emails from readers asking what to do next. Short term traders, those in the futures markets, and anyone using a degree of leverage should take the money and run. As I have pointed out with my hugely successful agricultural trades this summer (corn, wheat, sugar, coffee, soybeans), we now live in a zero return world, and the 13% gain silver has posted since August 23 puts you way ahead of the pack. Mean reversion can be such a bitch that it makes your ex wives appear like a convent full of nuns.
For those who hold physical bars and coins, it is a different story. Just keep it locked up and throw away the key. My multiyear target for silver is the old 1979 high of $50. Some hyper bulls, like Europacific’s Peter Schiff, thinks it may go to $100 (click here for my interview with Peter at http://www.madhedgefundtrader.com/february-20-2010-peter-schiff-of-euro-pacific-capital.html ).
In any case, the round trip dealing costs for physical bars and coins are too high, sometimes reaching 20%. There are also the tax implications, for those who bother with such things. Remember, coin dealers are now required to file 1099’s with the IRS on all precious metals sales by individuals. And if things don’t work out with this financial markets thing, and we enter the Armageddon daily predicted on the Internet, you can always use your silver to bribe the border guards.
To show you how mainstream silver is becoming, you can pick up silver coins on Amazon here for only a couple bucks over the spot price by clicking here at http://www.amazon.com/Buffalo-Indian-Nickel-999-BULLION/dp/B001OFTWE0/ref=sr_1_1?ie=UTF8&s=miscellaneous&qid=1284479236&sr=8-1
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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Short signals detected yesterday have now increased.
http://stockmarket618.wordpress.com
I buy all my PM's at Scotia Mocatta. They are the PM arm of Scotia Bank up here is Canada. They deliver right to your door and couple days later in a nondescript courier envelope.
You buy it from them - keep the receipt and they'll buy it back from you at a premium close to the dealers. .
We have dealt with them for a couple generations now.
You might pay 50 cents more a silver maple or eagle.
Who cares you aren't mugged as you walk of the dealers place.
That is a risk premium I'll pay for.
In dollar terms , Gold & Silver must move up. The problem is in guessing the prices in other currencies, how much each is debased and how much they are being manipulated by their countries.
The problem is also that most countries are having huge dollar reserves and are caught in a trap.
It's time the dollar stopped being the international reserve country. The damage it is doing to world trade is enormous.
Wow, I bought it between $9-12 (wish I saw the light earlier)and added more on pullbacks, YEARS ago. So enjoy the 1 month rally, I and many, many others here made real money by simply understanding the usage of the metal, current supply and demand. Just an FYI there is only a 19 year easy (all estimated of course) supply of the metal and usage is exponentially growing, but when the estimate was done demand was still way down so chop 5-6 years off of the 19 year estimate. Silver @ $100? Sure, probably when supply is almost all gone in a few years. Could it go higher? Yup, but it doesn't matter because the dollar will be worthless.
30 year high yes, but I would discount the Hunt Bros. fluke silver high on the long term price of silver. Is the USD at a 30 year high, and going higher?
Gold would need to get to $2200 to equal the inflation adjusted high of 1980, and the silver ratio is lagging. Could argue things look worse now for long term USD outlook. Short term, CFTC also known to be looking into PM price manipulation charges.
Looks like the chicken littles are just clucking on silver. I haven't looked, what's SLW doing?
It's amazing, buying silver on amazon. I think people are starting to feel something bad is coming our way and but they don't know what and when.
I spoke with a tax attorney at the Baltimore Coin Show in June and she said that the $600 reporting requirement has been law for a long time now but rarely enforced. Many self-employed businesses are paying their workers cash now, and again, rarely enforced unless an ex-wife rats on the ex-hubby for more $$$. It's cheaper to keep her... IRS workers are union employees and will complain to the union steward if they are given really nasty work to do. I don't think revenue officers will want to be tasked with a lot more paperwork with all the trouble that goes with it. There are ROs at the www.quatloos.com site. Ask them.
The 1099 thing does not take effect until 2012.
Or you can pick up allocated silver at bullionvault.com for pennies over spot and never have to worry about 1099s
@Barmaher
What makes you think those transactions are exempt from reporting? The Treasury/IRS has info-sharing agreements with 40 countries under the guise of anti-terrorism, and you can be damn sure those "vault" companies are playing ball if they know what's good for them. In a few more years you won't be able to move $5 without the entry showing up in a database in DC.
"Mean reversion can be such a bitch that it makes your ex wives appear like a convent full of nuns." classic
My ex wife is a nun now, I just thought she was a lesbian
In 2004 I read "the Creature from Jekyl Island" and bought silver at that time.
No doubt. I am about half way through it. I wish I had read it 10 years ago.
Tough crowd. I say it is just getting started.
Those who took my advice are laughing all the way to the bank.
Unsurprisingly, I have been flooded by emails from readers asking what to do next.
You can also listen to me on Hedge Fund Radio.
Silver is now trading at a 30 year high.
Anyone who bought silver in 1980 knows it traded to $54.
ZH degrades itself giving deluded megalomaniac narcissistic fraud a platform.
How is that TBT trade working out for MHFT and his CIA?
http://www.buyandhold.com/bh/en/education/history/2000/hunt_bros.html
http://www.zerohedge.com/article/my-lunch-cia
http://www.zerohedge.com/article/my-equity-scenario-rest-2010
Real good thing about Silver is there is no real massive physical concentrations in central banks if any at all. Most of it is spread out all over the world. Bullion dealers and some industrials may have a decent reserve but their not going to dump on the market to take a chance of bringing down the price. Leave that to JP Morgan with paper Silver. Gold on the other hand has the IMF, several large bullion banks and many governments all holding large reserves.
Yup. Silver go boom.
this is the worst submission since those annoying smart phone posts.
"The 1099's (as you are likely aware), apply to EVERYTHING.ALL transactions, at any level.
"This is what makes it so onerous.The paperwork costs, alone will kill small business, and make the cost of operating cost prohibitive."
I doubt that this reporting requirements will go through without modification. They should up the minimum to $2000 or more. The $10K, 8300 (FinCen) requirement should be raised to $25K or so. There have been a number of people nailed in the last year for "structuring", without any apparent criminal tie-ins.
Here is one example from "the Constitution State", but there are a lot of others if you search for "structuring", for all we know he was withdrawing cash to buy hard assets: http://www.justice.gov/usao/ct/Press2010/20100301.html
Still, I want the IRS to require proper reporting of suspicious transactions, and would like them to do due-dilligence audits with the scam "cash for gold" operators. Bullion traders realize they are in an exceptional situation with the IRS auditors in a tough position in knowing their net profit basis. Audits may be painful, but necessary when people are trying to avoid taxes left and right.
I can buy a "monster box" of 500 oz. silver eagles from Apmex for $22.93 each. A local coin shop is paying $1.25 over spot. That is a fairly tight spread.
"The physical" - safe or costly?
Just sayin'.
BTW, Gold to $1700, Silver to $32.
Thanks MHFT.... You are preaching to the choir somewhat, but its always good to hear the analysis again from a respected trader.
Ummm, 1099's are not required yet and the law is still a proposal.
IF it happens, it does not take effect until January.
The 1099's (as you are likely aware), apply to EVERYTHING.ALL transactions, at any level.
This is what makes it so onerous.The paperwork costs, alone will kill small business, and make the cost of operating cost prohibitive.
This is what happens when Democrats get elected,(GOP has other issues), but at least they do not consider business the enemy of the state.
Just a comment on the 1099 reporting: The IRS is considering excluding reporting of transactions that are made with debit or credit cards. I presume that is because the public will think that the transactions are being "tracked" by somebody who cares. That is wrong, of course, but a relief from the reporting burden.
You -- or anyone who is interested -- can contact the IRS for commenting on the whole shebang this way:
email the IRS with "Notice 2010-51" in the subject line to
Notice.Comments@irscounsel.treas.gov
Or, you can write to
Internal Revenue Service, CC:PA:LPD:PR (Notice 2010-51)
Room 5203
P. O. Box 7604
Ben Franklin Station, Washington DC 20044
Speak your piece. They don't read blogs...
I had a relatively large short position in silver to hedge my long gold trade. Since then I've sold off all my gold, and reduced some of the short positions in silver, but I'll keep some on to speculate. Silver has largely traded sideways for the past 10 months.
Agreed,
But in light of the Physical deliveries taking place, the last 10 mos can really be thrown out the window.
Silver is the most manipulated PM of all.
Silver is one of the only 2 forms of real money...
act accordingly...
As for Silver. Rumor has it the Comex is broken right now or damn close to it. They are scrambling to fill orders with physical or pay off those who are long with paper money. There is evidence that this might be the case but we will know pretty soon as options expiration is the 27th and right now the longs are in the money. JPM lost money on the last options expiration.
I would NOT purchase from Apmex. They have great customer service until something goes wrong and then they evaporate. Right now I am suing them for non delivery of gold coins after they gave me the run around for a couple of months.
It's all good unless they go bankrupt as they will end up paying me three times what I ordered from them.
I've ordered from them dozens of times, quite a bit and everything is always perfect.
They send all packages certified mail signature required you fucking douche. It takes 10 days from Oklahoma because its a secure shipment and travels by ground only.
They send everything signature required, but not "certified."
Again, my only "problem" with APMEX, was when UPS delived my gold maple leafs to the wrong address by mistake.
But I've had nothing but good experiences with APMEX.
Who is this comment directed at?
First I have heard bad, also was the loss thru shipping, or NEVER shipped?.
Got an issue w/ them, and are not uber wealthy, go with Lear Capital.
Takes forever to get if you pay w/ Cashiers Cks, Bank Wires faster.
But good folks.
Loss thru shipping that they failed to make good on as they couldn't ascertain whether it was insured or not.
Now that you mention it, one day I was waiting for the delivery to arrive, by UPS, and the UPS web site indicated the delivery had been made. Puzzled, I called APMEX, who contacted UPS, and determined the delivery had been made to the wrong address in town by mistake. UPS sent the driver back to pick up the package within a hour, and I had it.
That was weird. APMEX has shipped to me via USPS and UPS. I always prefer USPS.
Although signature is required, I don't recall ever it being sent registered mail.
Insurance, although not prohibitively expensive, does kind of add up. And my impression is that APMEX does not buy much insurance when they ship. I know this because when I shipped a hundred silver eagles to them the insurance was about $20, bringing the shipping cost from the post office to about $40 for signature Priority Mail.
But when APMEX ships they only charge $24.
This guy isn't up to much.
He's trawling for web hits to his illustrious website. Which started of interesting but when he interviews the mainstream Fed Lovers he made me realise that what Madhedgetrader and you and I are looking for actually diverge and diverge and diverge.
I only got halfway through this troll report and gave up. These guys will never get it.
You're so right -- border guards have no use for silver. Fastest way through customs/security in any turd world country: scatter Johnny Walker miniatures throughout your luggage. I've done this many times -- it's never failed.
Better stick to hedge funds. PMs are things that you never sell.Sell the car, your house, your kids, but PMs NEVER. I have owned my 8lbs or so of AU since 1990 when it was stuck at about $280 for almost a decade. In the end it has served me extremely well as a way of preserving my buying power. If I would have held it in fiatscos my money would be constantly diluted through inflation. This is the real function of PMs and why they alway will get red hot in times of expected inflation. Fliping back and forth on your monthly timeline back into fiat is really quite pointless.
Patience young grasshopper. Don't believe what Soros speaks out the side of his mouth, believe what he is actually doing. Ill bet he has not sold a solitary ounce. We have not even entered into the inflation phase yet. Its only when the economy finds its footing and things start to improve that PMs will start to relate to all the money that is printed and diluted in the down cycle. When UI numbers finally start to move south of about 7% and the interest rate is racheted up to try to slow an overheating in the economy. Then and only then do you consider selling a few bars. AND THEN ONLY IF YOU NEED THE MONEY. Unless of course, if you own some 3X levered gold ETF worthless paper, in which case sell immediately.
P.S> if you need help go backto 1980-1982 gold price vs interest rates if you need a guide to time any sales. JMHO
Dear MadHFT : technical analysis - even if it is (cough) "technically correct" - does not apply to rigged markets where the riggers are now self destricting...
...hope this helps....the info is all there if you are open to receive it.
Reishi-self
not satanicly controlled and not a machine
His 20% premium claims are wrong. APMEX lists its buyback prices. They pay a buck over spot for Eagles and Maples to buy them back from you. You cannot just look at your buying premium without looking at your selling price too.
Yep, and do not forget to add your freight into the DC Averaging.
I agree! APMEX is one of the best dealers out there. Won't rip you off. I regularly buy from them. That said, I also regularly buy from http://suissegoldcorp.com/. Their prices generally beat APMEX. However, shipping is slower (USPS vs UPS I guess).
You are nuts if you don't shop around. There are other sites that people "swear by" which offer good deals (usually in bulk).
That's the point, most folks are not going to buy a 100 Mapes......that's chunk, and it also crews up DCA on your purchases.
That is the only issue I have with APMEX.Lear is not like that.
It's all about the timing.
Silver is IMHO going nowhere but up, it is still tracking Gld.( as long as Gld is up, Slvr will follow.
It will continue to do so until, and IF COMEX fails to meet physical deliveries.....then watch out.
the only thing better than a never ending surge is a massive break lower followed by a corner. Bernanke will not confront the speculators so, sure, the bid/ask is getting wider as the prices keeps going higher...but that's why these are professionals. perhaps they moonlight as assassins.
Garbage.
The Amazon link is especially absurd - apmex beats those prices like a drum, all day, every day. With research like this, what is the credibility of the remainder of the post?
BC Boots,
Agreed, eGay, and amazon, are not where a regular Joe buys PM's.
Some of the more savvy here, The Racoon, say's he does a/ok.
Don't ask me how.As everytime I have looked, their prices are for FOOLS.