Buying Gold / Silver / Precious Metals

[TLC]

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anyways, its been the same for uranium and gold. nobody i can find is predicting a crash, yet some people are predicting a continued surge.

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When sentiment gets so one-sided, it's usually a good sign to start looking for the exit door. I'm not saying to go through it yet; but, definitely locate it, position yourself closer to it than others, and maybe even crack it open and put your toe out a little.

[john kane]

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When sentiment gets so one-sided, it's usually a good sign to start looking for the exit door.

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i completely disagree. as i said above, maybe its becuase 90% of articles you will find about any investment will say 'invest' and 10% 'don't invest' but for every 1 uranium article in 2006 you can find saying it is a bad investment, im pretty sure i could find you 20 saying to invest.

but your logic above, you'd of missed out on a price rise from price over trebling since 1st jan 2006.

here is an article from moneyweek on the early february 2007. spot price of uranium $75. They, like almost every article under the sun, said to expect $100+ this year.

http://www.moneyweek.com/file/25277/...this-year.html

from memory currently is around $113. when you have a vast number of 'experts' saying to buy something for the next 6 month+ period. I am sure im some cases the cliche is true, but you have countless cliches for everything. maybe 'you got to be in it to win it' 'you can't lose what you don't put on the table, but you can't win much either' 'he who dares wins' etc etc.

cliches or one liners mean nothing imo.

sorry, i think ive gone far too extreme in my reply. just when trying to learn about investing, you hear so many different viewpoints. no jokes, i don't think ive ever come across learning something without so many people thinking they are right in what to do, each with valid arguments. that is what makes it so hard i guess.

all im trying to do is find a few investments which i think will do very well given the trends. my first one was gaming shares, then uranium, now gold. each have done very well, and i hope uranium will be the same.

sorry if this has come across as a tirade, just pretty tired from doing too much work recently and realising I have $2K less than I actually do (spending a lot recently, bad debts)

[john kane]

also one other thing, i do agree that when the general public are all buying then it's a good time to start looking for the exit door, but right now i dont think the general public are, and so by buying now i hope to ride the price rises of both dollar weakening and the public realisation that gold should be bought.

if thats what you meant, which i think it is, then i agree far more than what my first reply indicates.

apologies.

[gonebroke2]

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I would not be trading food/technology/weapons for a yellow brick after society collapses. Gold, it seems to me, lacks the inherent values of other storable goods.

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That is a silly statement to make. How do you think people traded goods before the creation of paper money? Bartering is inefficient because of the problem with double coincidence of wants.

[kimchi]

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also one other thing, i do agree that when the general public are all buying then it's a good time to start looking for the exit door, but right now i dont think the general public are, and so by buying now i hope to ride the price rises of both dollar weakening and the public realisation that gold should be bought.

if thats what you meant, which i think it is, then i agree far more than what my first reply indicates.

apologies.

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John, I never know whether you are investing or trading. It sounds like you're trend following.

What are your exit strategies for these commodities you're heavily into?

[kimchi]

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I would not be trading food/technology/weapons for a yellow brick after society collapses. Gold, it seems to me, lacks the inherent values of other storable goods.

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Gold has always been a backing for paper money or credit notes somewhere on earth since 2500B.C. Many societies have collapsed since then.

The US government dumped gold as a backing for The $ in 1971. They might have to return to this time-tested method in the future.

[john kane]

i started off trading, then went to investing, now investing in the short term [img]/images/graemlins/smile.gif[/img]

trend following is good with me so long as i get in when it still has time to run and get out before it goes bellied up.

with uranium, i already sold around 20% of my holdings as it's become stagnant recently. either way i jumped in around $80 and its now at $113.

anyways, as for gold, im thinking of going for a CFD.

plan was long (obv) for $60 per full dollar with a $600 stop loss.

sound good?

my figuring for $60 was i initially wanted about $40K in gold, so that works out at around 58 oz ~ 60.

so if i put in $60 per $1 that should give me the same risk.

but means I don't have as much tied in yet can get the same returns. the most I can lose is about $5,400 if it drops to $600.

As for exit strategy, I will hold till I no longer feel it will continue to rise based on what I read.

I feel I have tried to implement exit strategies with some of my holdings, I held sportingbet till an announcement then sold a couple of days later, I kept party till nly a few days ago as I felt it had reached its target price, I've started selling Uranium (although may well hop back on board) due to market stagnation.

Anways, do you think a CFD is a good idea? Note I will be going for the account which limits your losses to what you deposit.

[kimchi]

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As for exit strategy, I will hold till I no longer feel it will continue to rise based on what I read.

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You used the words 'feel' a few times when describing your exits. It all sounds a bit emotional to me.

Anyway, which CFD provider do you use? Bear in mind that many UK CFD providers make their own market and they are in effect a "fake" market - like spreadbetting.

CFDs do follow the market more closely than spreadbets, although they still trade at a slight premium, which tends to be somewhere between the nearest future delivery price and the spot price.

And remember, spreadbetting is free of income tax...

How long do you plan to hold your CFD? After a month or 2, financing costs (on long positions) erode the cost savings of eliminating stamp duty on shares (and I think GETF are subject to stamp duty, whereas index ETF aren't).

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plan was long (obv) for $60 per full dollar with a $600 stop loss.

sound good?

my figuring for $60 was i initially wanted about $40K in gold, so that works out at around 58 oz ~ 60.

so if i put in $60 per $1 that should give me the same risk.

but means I don't have as much tied in yet can get the same returns. the most I can lose is about $5,400 if it drops to $600.


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I assume this is your position sizing, but I don't quite understand what you mean. A gold CFD, I assume is a contract representing the spot price? What's the leverage you can get, and what's your account size? What percentage of your account does $5400 represent?

[john kane]

sorry kimchi i didnt reply earlier, i had logged out of my account and then back in a day later and didnt realise you had replied (hence my extra thread today).

i use tdwaterhouse and yesterday set up their CFD account. I have spent quite a while trying to understand all this (isnt easy when your learning all this new info). the NTR spread is 5% (what does this mean?).

I can get for a full dollar $10 to $500 which I assume means for every $1 change in the price of gold I can make/lose $10 to $500.

My account size is much like my poker bankroll in the sense I can make it what I want (within reason). I'm a 22 year old who has been lucky and got $100K when he should have $0, through online poker. So I feel if I do lose, heck, it's not the end of the world, I like to think I have a pretty good sense of what is important (yeah I can get pissed off when the stocks dont go the right way, but still I understand 'the bigger picture' so to speak).

It is still hard to predict obviously, I just spent the last hour+ on kitcomm.com a metals forum and it's hard to decide. The general consensus was a pullback from $670 to $640-$650 and hopefully up to $700+.

I calculated the overnight financing (see other thread if interested) and it worked out at $14/day at $100 stake. So I need gold to go up $1 per week to break even.

Spreadbetting seems very inviting as its free of capital gains tax, however I need to work out what the difference is.

Anyways, I'm not sure, it is hard, however, I like the look of going down the CFD/spreadbetting route simply for the leveraging aspect. I know a people reading this will be 'omg he'll just lose his money way faster' but still I'm trying hard to learn.

I'd say I wouldnt be suicidal if I lost $40K of the $100K, anymore would suck. I mean I only had $20K in December, so this is all pretty nice.

Part of me earlier wanted to go for $400 per $1 on the spot price and put the $40K in with if it hit $570 I'd be busto of the $40K, but part of me thinks I should not be so money management stupid. I think putting in the $5.5K is a safe(ish) amount to risk.

[kimchi]

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the NTR spread is 5% (what does this mean?).



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NTR is the Notional Trading Requirement. It has nothing to do with the spead. An NTR of 5% means that you have to deposit 5% of your position total.

5% NTR is effectively 20x leverage. The NTR of a market tends to increase/decrease as the market's volatility increases/decreases.

If you bought a single contract of gold (100oz) that would be about $65000 - $70000 market exposure. You only need to deposit 5% of that into your TDWH account. Not sure what the contract sizes for CFDs and spreadbets are. I assume spreadbets are £1 per cent (or $?) and CFDs are each probably worth an ounce of gold.

Remember that financing can become expensive if you hold a (long) position for more than a month or 2, and it is charged against your market exposure, not your margin deposit.

As for risk. You have $100k account. If I were you I'd place a stop-loss at a sensible position below the market. If that stop-less were to hit, I would only lose $1000. You can then work backwards and decide how many CFDs you can afford when only risking 1% of your account.

It doesn't matter if you have 100 or 1000 x leverage if you manage your risk properly.