Need some advice

[balz]

I need some advice about what to do with the recent silver drop.

The main problem is that I live in Canada and pay with canadian cash.

Some weeks ago, silver was at 43$ and I bought from Kitco for 45.50$ CDN/ounce.

Today, silver is at 36$ and I can buy for 41.50$ / oz.

A drop of 7$ in silver price and a drop of only 4$ in what they charge, mostly because canadian dollar lost a lot of its value in comparison to USD (was over parity, now clearly under).

What would you do in my situation?

Basically, I'm not sure how to play the CDN vs. USD game in the silver game.


Thanks

[Nickelmeister]

As a Canadian bullion dealer, I see this type of confusion in my clients all the time.

You have to understand that the "official" price of gold and silver are quoted in USD terms, but when paying Canadian dollars the exchange rate always has to be factored in. Typically when the price of gold and silver go down (or up) significantly in USD the effects are somewhat off-set by the currency fluctuation. As a Canadian we are playing the "CAD vs. silver game" as you put it. Whatever happens to the USD - or the price of bullion in USD - is actually irrelevent to us.

[Nickelmeister]

Of course you can also trade currencies in your dealings, but the spreads (if you are actually changing physical currency at the bank, or via Paypal or something) are atrocious.

[balz]

So what would you recommend?

I plan buying silver on my margin (9% interest annualy) but I don't see how it can be profitable if the CA gains back its value.

I am not sure what you mean about the CAD vs. silver game Nickelmeister; since the spot is in USD, it should make a difference, no?

What would you do in my situation?

Thanks

[frugalcanuck]

My plan was buying USD above parity and waiting for this market down turn that would cause the CAD to slump with the price of PMs. All was going to plan untill I was offered 72oz of silver for a good price. I still have USD reserves waiting for the right price.

[Nickelmeister]

So what would you recommend?

I plan buying silver on my margin (9% interest annualy) but I don't see how it can be profitable if the CA gains back its value.

I am not sure what you mean about the CAD vs. silver game Nickelmeister; since the spot is in USD, it should make a difference, no?

What would you do in my situation?

Thanks

What I am saying is that if you are a Canadian with your assets denominated in CAD, then you will not profit directly from silver spot appreciating against the USD. Silver must increase in value against the CAD for you to come ahead (if you are measuring your net worth in CAD). These gains - or losses - will be muted or amplified by the prevailing currency exchange rates. I am not recommending any specific course of action.

[balz]

All the tools I know calculate silver in USD... This is kind of complicated to calculate easily spot in CDN... How do you do it yourself?

[Nickelmeister]

Here are live silver quotes in 14 currencies, including CAD:

http://www.kitcosilver.com/

[fansubs_ca]

A handy reference I assembled:

http://www.moonie.ca/cdn_charts.html

You'll have to right click on the link, then "save link as..." to your hard drive then
double click on the HTML file from a folder on your own hard drive and it will
open up in your default browser. Stockcharts.com blocks it from working on my
site but will let you use it from your local hard drive.

I coded it together for my own use when I wanted to do a quick look at the metals
and oil in CDN$ but since it's already made I might as well share it. My 1997 style
HTML skills are still slightly usefull. ^_- Eventually professional web developers
will find a way to make it obsolete through incompatibility with whatever the
new way is though.

I can't really give you specific advise because although I have a current hunch I
could be severly wrong. ^_- If things get to where I think it's more glaringly
obvious I'll post what actions I'm taking at that time, I just don't think things
are that obvious yet. Hopefully having charts that show meaningfull ratios
from your point of view will help in forming your own decisions.

As for margin, I'm generally leary about using "Other People's Money", that's
usually how you get run out of a position at the exact wrong time amoungst
other drawbacks.

[balz]

A handy reference I assembled:

http://www.moonie.ca/cdn_charts.html

You'll have to right click on the link, then "save link as..." to your hard drive then
double click on the HTML file from a folder on your own hard drive and it will
open up in your default browser. Stockcharts.com blocks it from working on my
site but will let you use it from your local hard drive.

I coded it together for my own use when I wanted to do a quick look at the metals
and oil in CDN$ but since it's already made I might as well share it. My 1997 style
HTML skills are still slightly usefull. ^_- Eventually professional web developers
will find a way to make it obsolete through incompatibility with whatever the
new way is though.

I can't really give you specific advise because although I have a current hunch I
could be severly wrong. ^_- If things get to where I think it's more glaringly
obvious I'll post what actions I'm taking at that time, I just don't think things
are that obvious yet. Hopefully having charts that show meaningfull ratios
from your point of view will help in forming your own decisions.

As for margin, I'm generally leary about using "Other People's Money", that's
usually how you get run out of a position at the exact wrong time amoungst
other drawbacks.

It does not work as stockcharts asks to visit its web site to see the images...

Thanks for the link Nickelmeister.

Bought some silver this morning at 36,50$ CDN... Right now at 30$ US I am not sure I made a good deal!

[fansubs_ca]

It does not work as stockcharts asks to visit its web site to see the images...

It will do that if you just click on the link.

As I said you'll have to "right click" on the link, then "save link as..." to your hard
drive then you will have my HTML file on your computer.

Once you have the HTML file on your computer you can double click on the HTML file
from a folder on your own hard drive, then it will bring up the images in your default
browser.

I tested this method and it works with:
Firefox 1.0.1
Google Chrome 13.0.782.220 m
Internet Explorer 6.0

You have to follow my instructions for it to work. ^_-

[BOHICA]

Works in IE 7 also.

[Robarons]

So 1 oz of silver is $31.95 CAD and you bought at $36.50 CAN.

So thats a $4.50 premium- if thats the lowest premium you can find in your area and with your budget than yes.

I assume when you go to sell you get silver spot in CAD, not USD right?

Some of the larger bullion dealers are at $1 over in quantity, unsure if they send to Canada though.

[balz]

It does not work as stockcharts asks to visit its web site to see the images...

It will do that if you just click on the link.

As I said you'll have to "right click" on the link, then "save link as..." to your hard
drive then you will have my HTML file on your computer.

Once you have the HTML file on your computer you can double click on the HTML file
from a folder on your own hard drive, then it will bring up the images in your default
browser.

I tested this method and it works with:
Firefox 1.0.1
Google Chrome 13.0.782.220 m
Internet Explorer 6.0

You have to follow my instructions for it to work. ^_-

Thanks it works now!

[balz]

So 1 oz of silver is $31.95 CAD and you bought at $36.50 CAN.

So thats a $4.50 premium- if thats the lowest premium you can find in your area and with your budget than yes.

I assume when you go to sell you get silver spot in CAD, not USD right?

Some of the larger bullion dealers are at $1 over in quantity, unsure if they send to Canada though.

I think this is the main problem. Kitco has close to a monopoly in Canada. Not much competition. If I don't like the premiums, well... I'm in trouble! I guess the premiums are lower in the US because there are many players in the game.

And they don't have great choice either. I'm only glad they got the Maples back... Last time I had to buy Philarmonics which are not as great in my opinion...