When to use the dry powder?

[Market Harmony]

Gold and Silver are chopping around price points that are maddening to long term bulls. And newer entrants to the PM market that have bought silver at $32, then $30, and $29, and $28, then $27 are currently underwater and probably regretting that they used their cash to do this. Silver's move down has evaporated 17% of the USD price since 2013's high's around $32. Gold's move down has been less dramatic... 9% gone from $1700.

Obviously, you do not buy something to lose money on it. We all buy in the anticipation of maintaining wealth, or even growing it. Some found the higher prices a good deal and used funds to purchase PM's. Others are sitting on unused funds, "dry powder" so to speak, and are awaiting a signal to the bottoming of prices for PMs before they begin to purchase. How will they know?

In other markets, things are not looking as bleak... bigger markets such as FOREX (USD) and the US Stock Market are making new highs for 2013- and in the case of stocks, new all time highs in the DOW and S&P. There is a lot of money being "made" there. Bets are continuing, speculations are growing, wealth is being created and other funds are moving to this market. But these markets are not going to maintain their trajectory forever. They will come down. The price action will turn over. The profits generated and funds removed from these markets will need a new home. Gold and Silver will be one of the new homes.

Mark my words:
As the stock market peaks and turns, when the talking heads all expound the virtues of buying the dips in stocks, when the cheer-leading of Wall Street is front page news, when you hear about the stock market at the water cooler at work, when people begin to talk about international travel because of the value of the dollar, then the worm has just turned.
Break out that dry powder and blow it all on Gold and Silver. It will be the best financial move you'll ever make.

The rush out of the stock market and USD will be a stampede:
- People are still scared for their 401 K's and IRAs
- The systems in place at firms on Wall Street are tighter in order to prevent the same big losses of 2007 and 2008
- Countries have been weaning themselves of the USD over the last few years and their ability to do business in their own currency is dramatically increasing

Get ahead of this stampede. The rush for the exits will be enormous. It will cause disruptions in all markets. Once it has began, it will be next to impossible to maneuver your funds effectively. You do not want to be the last locust to the plague.

[beauanderos]

+1

last locust to the plague... I love that one!

[68Camaro]

Fully agree Mike. The signs are there in the background if you can tune out the noise. ASE sales are at record highs and the three North American mints are churning out government issued bullion coin at rates greater than those countries can mine the metal, so the difference is ALL essentially being imported from elsewhere.

There is supply source from scrap, recycle and recovery of old worn circulating coin, but then there is also the private mints churning out rounds and bars.

Industrial use is still on the increase.

Now is the time. I would like to be hopeful for an abilty to convert my 401K in 3 years to PM at reasonable prices, but I will not be surprised to see $100 silver by this time next year.

[beauanderos]

Fully agree Mike. The signs are there in the background if you can tune out the noise. ASE sales are at record highs and the three North American mints are churning out government issued bullion coin at rates greater than those countries can mine the metal, so the difference is ALL essentially being imported from elsewhere.

There is supply source from scrap, recycle and recovery of old worn circulating coin, but then there is also the private mints churning out rounds and bars.

Industrial use is still on the increase.

Now is the time. I would like to be hopeful for an abilty to convert my 401K in 3 years to PM at reasonable prices, but I will not be surprised to see $100 silver by this time next year.

Rich, you can't borrow against the 401K to buy at these artificial lows, and pay interest back to yourself? Cheaper than paying an early withdrawal fee. The threat of nationalization or similar cypress effect on our pensions and 401k's is credible.

[68Camaro]

Already done that and am on my second go-round of it, in fact. There is a 50K loan limit and a 4-1/2 year payoff time.

It helps but it's not the full deal. 3/4 of the 401K (including that loan, so more like 80% of it) is already in Sprott PM funds, but that it is a paper account in a brokerage, which I don't have in hand, is the fundamental issue. If the paper market goes down I could lose it all, no matter what.

[beauanderos]

Already done that and am on my second go-round of it, in fact. There is a 50K loan limit and a 4-1/2 year payoff time.

It helps but it's not the full deal. 3/4 of the 401K (including that loan, so more like 80% of it) is already in Sprott PM funds, but that it is a paper account in a brokerage, which I don't have in hand, is the fundamental issue. If the paper market goes down I could lose it all, no matter what.

I have 100% of my paper in USLV, and it is scrotum tightening to watch what happens to its value on these sustained drops. But I have adopted the attitude that it's not mine anyway (since BHO is likely going to calculate some means of obtaining it) so I am swinging for the fences with its diminishing assets. It's taken an 80% haircut since 2011, but I figure its all or nothing. Either the market reverses and I make a bundle off of it, or it dwindles down to squat and vanishes. I still have my physical and a good job, so I'm not dependent upon the paper play money.

[barrytrot]

My actual answer is about 8 weeks ago

I guess I was too soon but I still like my positions a lot

[SilverDragon72]

Fully agree Mike. The signs are there in the background if you can tune out the noise. ASE sales are at record highs and the three North American mints are churning out government issued bullion coin at rates greater than those countries can mine the metal, so the difference is ALL essentially being imported from elsewhere.

There is supply source from scrap, recycle and recovery of old worn circulating coin, but then there is also the private mints churning out rounds and bars.

Industrial use is still on the increase.

Now is the time. I would like to be hopeful for an abilty to convert my 401K in 3 years to PM at reasonable prices, but I will not be surprised to see $100 silver by this time next year.

Rich, you can't borrow against the 401K to buy at these artificial lows, and pay interest back to yourself? Cheaper than paying an early withdrawal fee. The threat of nationalization or similar cypress effect on our pensions and 401k's is credible.

I should look into borrowing from my plan, if I can. If so....then I could see purchasing some major PMs with it!

[SilverDragon72]

Fully agree Mike. The signs are there in the background if you can tune out the noise. ASE sales are at record highs and the three North American mints are churning out government issued bullion coin at rates greater than those countries can mine the metal, so the difference is ALL essentially being imported from elsewhere.

There is supply source from scrap, recycle and recovery of old worn circulating coin, but then there is also the private mints churning out rounds and bars.

Industrial use is still on the increase.

Now is the time. I would like to be hopeful for an abilty to convert my 401K in 3 years to PM at reasonable prices, but I will not be surprised to see $100 silver by this time next year.

Rich, you can't borrow against the 401K to buy at these artificial lows, and pay interest back to yourself? Cheaper than paying an early withdrawal fee. The threat of nationalization or similar cypress effect on our pensions and 401k's is credible.

I should look into borrowing from my plan, if I can. If so....then I could see purchasing some major PMs with it!

Nope. I cannot borrow or take anything out unless I sever employment or have a financial hardship that I would have to prove....

Ah well, I had to look into it!

[agmoose]

If it hits $20 again, I'm selling a motorcycle and putting it all in physical. Until then I will continue my weekly buys and my weekend rides.

[dannan14]

Rich, you can't borrow against the 401K to buy at these artificial lows, and pay interest back to yourself? Cheaper than paying an early withdrawal fee. The threat of nationalization or similar cypress effect on our pensions and 401k's is credible.

It depends on the provisions of the plan document. A very large percentage of employer sponsored retirement plans have a loan provision. The limit could be as high as 50% of the account(with an absolute maximum of $50k). It all depends on how your employer set up the plan. Furthermore, all interest you pay on such a loan you are paying back to yourself! Interest and principle payments both go back into your 401k account. There is usually a large one-time or smaller annual fees charged by the plan's TPA so find out what the fees will be before taking the loan. IRAs do not work like this and to the best of my knowledge there is no way to use an IRA as collateral for a loan from a financial institution.

EDIT: Just saw the reply, but this is still good info for other folks who have money in employer sponsored retirement plans.

[shinnosuke]

If it hits $20 again, I'm selling a motorcycle and putting it all in physical. Until then I will continue my weekly buys and my weekend rides.

If you knew the price would be $100 eventually, what's the difference in selling now and waiting for the possibly non-occuring $20? Just wondering how you're making the decision...not trying to give you any grief.

[TwoPenniesEarned]

I bought in to a bunch of royalty streamers and miners today because I felt myself saying "well I may as well wait for it to breach $26.50". If I'm convinced it will go lower, then I think there is a very decent chance it may have just hit bottom and be on the way back up, at least temporarily. Maybe makes it back to $32 and then gets smashed. I'm selling my AGQ at $31 and waiting for the next smash for sure. Then buy it back at $29, sell it at $35, etc.

Certainly if you are interested in the miners, I think now is as good a time as any to come in. P/E ratios under 10 for solid companies that have dividend yields better than treasuries and which are increasing those dividends by 15%-25% per year! You may as well get paid to wait on them.

[agmoose]

If it hits $20 again, I'm selling a motorcycle and putting it all in physical. Until then I will continue my weekly buys and my weekend rides.

If you knew the price would be $100 eventually, what's the difference in selling now and waiting for the possibly non-occuring $20? Just wondering how you're making the decision...not trying to give you any grief.

Fair question. I buy a certain amount every week anyway, but can't access my retirement account like some, and also wouldn't take on any debt to buy more. No one KNOWS for sure if silver will hit 100, or even 50. Do we think so, sure. Physical AU and AG are just part of my plan, and there are other things we save for and enjoy doing. I've sold silver to cover some of those recently, example, a deal on several guns from a deceased police officers collection came available but required cash within 3 days to get. I was able to flip some of them at a profit and then rebought the silver. For me, $20 is just the number I set in my head that I would sacrifice the Harley at (temporarily) and make a large buy. I'd hate to part with the bike though......lol.

[beauanderos]

Since I feel like (hope this doesn't jinx matters) that we're pretty close to a bottom, though I could be 100% wrong... I've taken on some strategic debt recently. Meaning... prices on some items on ebay were tempting enough that I opened up some new extensions of credit card debt on two cards. I have deals where I can get zero percent interest for a year, with only a three percent transaction fee in one case, four percent in the other. I wind up with a bunch of stuff I feel I got for a fair price, the downside being I now need to exercise discipline to pay down the balances each month so that they are cleared within the year and don't convert to higher rates. Will I kick myself a bit if prices drop even further? Not really. You have to determine your convictions then have the guts to make a stand upon them. So... short term? I might have given up the chance to buy a few items at even a lower purchasing price... but long term? Who here among us doesn't think that silver prices... or at least the premiums required to obtain physical... won't be significantly higher a YEAR from now? Zero percent to buy into this low? Yeah, baby... bring it on!

[shinnosuke]

Since I feel like (hope this doesn't jinx matters) that we're pretty close to a bottom, though I could be 100% wrong... I've taken on some strategic debt recently. Meaning... prices on some items on ebay were tempting enough that I opened up some new extensions of credit card debt on two cards. I have deals where I can get zero percent interest for a year, with only a three percent transaction fee in one case, four percent in the other. I wind up with a bunch of stuff I feel I got for a fair price, the downside being I now need to exercise discipline to pay down the balances each month so that they are cleared within the year and don't convert to higher rates. Will I kick myself a bit if prices drop even further? Not really. You have to determine your convictions then have the guts to make a stand upon them. So... short term? I might have given up the chance to buy a few items at even a lower purchasing price... but long term? Who here among us doesn't think that silver prices... or at least the premiums required to obtain physical... won't be significantly higher a YEAR from now? Zero percent to buy into this low? Yeah, baby... bring it on!

Ray, I agree with you. There's just one flaw in your logic though. We all (just generalizing here) thought the same thing a YEAR ago. How can this madness continue!?!?!...was our line of reasoning. Well, it has. It is reported that John Maynard Keynes once said, "Markets can remain irrational a lot longer than you and I can remain solvent." (Of course, he was probably close friends with the very people who were making the markets irrational...)

[68Camaro]

To the OP, I think the answer was "yesterday".

To Shin... For a couple of years we've been living with an unstable system that is being artificially stimulated and corrected. Because of that I believe we've all known (because it's been said here many times) that a) those keeping the system going have few earthly limits on what they can do with paper and policy, and they are very creative as well as highly motivated to use those tools, and b) a) makes the possibilty that the system will crash far more certain, but makes predicting the precise timing of it nearly impossible - we can only bound it between near and far, and c) because of a) and b) we have to prepare both for the possibilty that the crash may literally be imminent as well as the possiblity that the current state may linger for a period of years. After the last near-disaster was averted in 2011 (and there was a week that late summer where the world was within a week of collapse had TPTB not stepped in behind the scenes and kicked the can down the road again, successfully). There will come a time when TPTB will lose control, and the events that finally stimulate that collapse will only be certain in hindsight.

[slickeast]

Yesterday

[SilverDragon72]

I need more dry powder!

There is a coin show coming to my area this weekend.....and I have some surplus powder to spend!

Stack it!

[frugalcanuck]

I think keep your powder dry.. possibly even short silver after rebounds if you are into paper. The big money right now is shorting gold and silver not stacking.

[68Camaro]

The big money is shorting paper silver and gold. The smart money is buying physical.

If you look at a plot of price v time (not that I'm a technical zealot) we have bounced off 26-ish many times since the 2011 high. That defines a bottom with high resistance. It's a bottom the paper shorts haven't been able to break through. It's a bottom that is holding despite many attempts to sabotage it by catering to the shorts and playing with statistics and negative stories in the media. It's a bottom that has real roots in finite amounts of physical silver, increased difficulty with finding new significant sources of silver, extraordinary pressure in ability to mine still in the future due to energy issues not yet manifested, physical silver being bought for wealth preservation in record amounts, and huge industrial opportunities for silver which are still in relative infancy. It's a bottom that less than 1% of people with means are taking advantage of, and if that was to simply double to 2% the curtain will be pulled back from the wizard and true price discovery in a free market will cause silver to find its correct price, which I believe is well north of $100/oz and more like $300/oz in today's dollar, not considering or accounting for the strong inflation that is on the horizon.

[Treetop]

the big money has been shorting silver since well before I had any. silver is up a large amount over this time period.

[uthminsta]

Yesterday

Yep, it's about that simple.

[beauanderos]

The big money is shorting paper silver and gold. The smart money is buying physical.

If you look at a plot of price v time (not that I'm a technical zealot) we have bounced off 26-ish many times since the 2011 high. That defines a bottom with high resistance. It's a bottom the paper shorts haven't been able to break through. It's a bottom that is holding despite many attempts to sabotage it by catering to the shorts and playing with statistics and negative stories in the media. It's a bottom that has real roots in finite amounts of physical silver, increased difficulty with finding new significant sources of silver, extraordinary pressure in ability to mine still in the future due to energy issues not yet manifested, physical silver being bought for wealth preservation in record amounts, and huge industrial opportunities for silver which are still in relative infancy. It's a bottom that less than 1% of people with means are taking advantage of, and if that was to simply double to 2% the curtain will be pulled back from the wizard and true price discovery in a free market will cause silver to find its correct price, which I believe is well north of $100/oz and more like $300/oz in today's dollar, not considering or accounting for the strong inflation that is on the horizon.

+100... this should be a sticky

[SteelCityCopper]

The big money is shorting paper silver and gold. The smart money is buying physical.

If you look at a plot of price v time (not that I'm a technical zealot) we have bounced off 26-ish many times since the 2011 high. That defines a bottom with high resistance. It's a bottom the paper shorts haven't been able to break through. It's a bottom that is holding despite many attempts to sabotage it by catering to the shorts and playing with statistics and negative stories in the media. It's a bottom that has real roots in finite amounts of physical silver, increased difficulty with finding new significant sources of silver, extraordinary pressure in ability to mine still in the future due to energy issues not yet manifested, physical silver being bought for wealth preservation in record amounts, and huge industrial opportunities for silver which are still in relative infancy. It's a bottom that less than 1% of people with means are taking advantage of, and if that was to simply double to 2% the curtain will be pulled back from the wizard and true price discovery in a free market will cause silver to find its correct price, which I believe is well north of $100/oz and more like $300/oz in today's dollar, not considering or accounting for the strong inflation that is on the horizon.

Preach on Brother 68!