# Thoughts on Precious Metals in 2014/2015



## Westerncanada (Nov 11, 2013)

Hello Everyone.. 

I know there's a specific forum for Invest's but I was hoping to get a more overall approach so I am posting this here... 

The S&P is Flying a long quite well, with the market overall doing better and better I am very much leaning towards cutting off my TD - E Series regular purchases and moving more towards silver certificates/gold certificates. 

I have done some research (not as much as I could but have read information on it consistently the last 3 months) and I feel like long term in 2014/2015 I am better off moving money into Metals and keeping some heavy cash reserves as well for when the market correction comes out... 

Just a quick snapshot of my investment Currently in respect to the spread of funds: 

Today: 
RRSP: Max Contribution Via Work match policy 3% Plus Match
Share Purchase Program at work: 5% plus Match 
Pension Program: Maxed

Extra Income Split: 
50% - TD - E Series S&P
25% - TD - E Series Nasdaq
25% - Cash Reserve 


I feel this gives me a double safety net approach via work Plan's with a relative Medium Risk Program personally.

*Work Plan stay's the same

Future Plan: 
50% Silver Certificates
15% Select Silver Mining Companies (SLW, AUN etc) 
45% Cash Reserves 

Although this is relatively high risk with Metal's I am less and less inclined to continue dumping finances into the Stock Market as it's reaching record highs.. 


My question is, does it make sense for me to continue with the Stock Market Heavy Portfolio or is this something I am better off moving into Metal's or potentially lower interest Cash Alternatives? 

I am 31, solid career and comfortable where I am now but want to ensure I am setup for the next 35 years. 



What are you guy's doing? I know the Couch Potato Portfolio's continue to purchase Stock regardless of market trend's but I just cannot imagine this market not having a major correction in the next 2-5 years..

Thoughts?


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## MoreMiles (Apr 20, 2011)

The way I look at it... if there is a stock crash, the government will bail out to ensure the retirees don't end up in streets. It will be a huge burden to build homeless shelters to accommodate everyone. So there may be QE 100. If there is a silver or gold price crash... they would not care. 

I will stick with the herd. Yes, I may not be the 1% but at least I will not be left out of the safety net.


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## Westerncanada (Nov 11, 2013)

I agree to a point.. Silver is currently very low compared to where it's been the past 20 years when you factor in inflation...

My biggest reason for moving into silver is that historically it's always done very well when the market crashs.. and also had a great spike every ten years.. due to my financial situation I am comfortable buying it and waiting until it hits another peak before unloading.. 

I know no one should try to time the market.. but if I can cash out a large sum when the market crash's from metals rising, i'd prefer to buy a swack of Stock when the market crash's from my metal's proceeds.. 

just my two cents.


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## swoop_ds (Mar 2, 2010)

I think precious metals will go down a bit in the short term (great buying opportunity) and then trend up for the year. (Just my opinion) I wouldn't accumulate more than 5-20% of your overall assets in precious metals though. So once you're at that level, either start getting back into equities or more cash.

Just a note that your percentages in your post equal 110% for your 'future plan'. 

I personally think it's prudent to have extra cash. I don't think that the whole market is going to implode anytime soon, but I think a correction will be coming. The one at the start of the year was just a little taste. (once again, just my opinion)


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## richard (Jun 20, 2013)

Westerncanada said:


> What are you guy's doing? I know the Couch Potato Portfolio's continue to purchase Stock regardless of market trend's but I just cannot imagine this market not having a major correction in the next 2-5 years..


I think someone once said "Imagining is hard, especially when it's about the future."

When the S&P 500 record high was $100 what did people imagine?


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## Westerncanada (Nov 11, 2013)

swoop_ds said:


> I think precious metals will go down a bit in the short term (great buying opportunity) and then trend up for the year. (Just my opinion) I wouldn't accumulate more than 5-20% of your overall assets in precious metals though. So once you're at that level, either start getting back into equities or more cash.
> 
> Just a note that your percentages in your post equal 110% for your 'future plan'.
> 
> I personally think it's prudent to have extra cash. I don't think that the whole market is going to implode anytime soon, but I think a correction will be coming. The one at the start of the year was just a little taste. (once again, just my opinion)


110% was just positive thinking  My mistake on the math.. 

Richard you definitely could be right.. It's hard to imagine no crash happening in the next 20 year's though..


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## Nemo2 (Mar 1, 2012)

richard said:


> I think someone once said "Imagining is hard, especially when it's about the future."


This guy:


> “It's tough to make predictions, especially about the future.”
> 
> ― Yogi Berra


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## Rusty O'Toole (Feb 1, 2012)

Gold is down 40% from the high and just coming off the base. I don't know whether it is going up or down, but buying anything at a 40% discount is pretty safe.

I'm not as sold on gold as I used to be, but it has its place in a conservative investment plan. Silver likewise, and silver tends to fluctuate more than gold.


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## Westerncanada (Nov 11, 2013)

Rusty O'Toole said:


> Gold is down 40% from the high and just coming off the base. I don't know whether it is going up or down, but buying anything at a 40% discount is pretty safe.
> 
> I'm not as sold on gold as I used to be, but it has its place in a conservative investment plan. Silver likewise, and silver tends to fluctuate more than gold.


I agree... I would definitely have a stronger position with Gold if it wasn't for the higher cost/ROI Potential vs Silver.. I feel a 10K bet on Silver has a much higher impact potential then the low cost of silver currently.. but we'll see..


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## bgc_fan (Apr 5, 2009)

Rusty O'Toole said:


> Gold is down 40% from the high and just coming off the base. I don't know whether it is going up or down, but buying anything at a 40% discount is pretty safe.


That discount assumes that gold was correctly priced. There's a story about banks manipulating the price for the past decade. 
http://www.bloomberg.com/news/2014-...ows-signs-of-decade-of-bank-manipulation.html


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## alingva (Aug 17, 2013)

*Infographics*

Here are some infographics about precious metals and why you should invest or at least consider them
THE 2014 GOLD SERIES

Gold versus cash – what is best?

Investing in Gold is a Wise Choice

Gold and Silver Fever

There are a lot more out there, worth reviewing.

Here is my thinking. Paper money is a promise to pay, it is not money. Gold/silver are. Gold/silver will not disappear but any paper money asset can and will eventually. So small portion of the portfolio in precious metals will not hurt, even if precious metals go down they still represent some value.


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## hboy43 (May 10, 2009)

alingva said:


> Here is my thinking. Paper money is a promise to pay, it is not money. Gold/silver are. Gold/silver will not disappear but any paper money asset can and will eventually. So small portion of the portfolio in precious metals will not hurt, even if precious metals go down they still represent some value.


Well Merriam disagrees with you:

Money: something generally accepted as a medium of exchange, a measure of value, or a means of payment ...

Given the above fiat currency meets all 3 parameters, gold and silver maybe not.

I think you are imprecisely stating that fiat currency as a measure of value might be less stable, ie subject to inflation, than gold and silver. This is something to consider I suppose.

My bigger issue is the false dichotomy often set up in discussions of gold: One's wealth can either be in fiat currency, or it can be in precious metals. Given this definition my net worth is about -$320K as I owe fiat currency and own no more precious metals that a dozen or two silver coins.

I don't trust fiat currencies any more than you do, but this belief doesn't lead me down the golden path. It seems to me that gold has value because a subset of the population agrees among themselves that it does. I clearly don't count myself in that subset. Now I agree that I could make this statement about anything, but I think most reasonable people will put food, energy, tools and equipment, buildings etc. into a different category, a category of things in some sense with real utility. This category is where I store my wealth, neither fiat currency nor precious metals.

This is not to say that people who hold precious metals won't make a killing. They might well. It is for me not a sufficiently deterministic outcome compared to alternative asset classes.

Anyhow, you won't likely consider any of the above as sensible, such is the nature of gold believers vs non believers. It is more for consideration of those who have not yet chosen their religion.

Cheers

hboy43


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## dogcom (May 23, 2009)

bgc_fan said:


> That discount assumes that gold was correctly priced. There's a story about banks manipulating the price for the past decade.
> http://www.bloomberg.com/news/2014-...ows-signs-of-decade-of-bank-manipulation.html


This has been going on for quite some time as I and a few others have mentioned it in the past and have been ridiculed. Now that the bought and paid for mainstream media is bringing it out it must be because they can no longer hide the fact of central bank manipulations. Paper to gold claims are running close to 100:1 and central banks have run out of physical gold to keep the price down in any meaningful way. In the face of huge physical demand in the east it would be suicide if they tried to knock gold lower then the 2013 low without finding a significant supply of gold somewhere. 

Looking around we have government debts out of control, US unemployment in the high teens and not the number you see published because after a year of unemployment benefits you are simply dropped from the stats. We are also seeing money printing around the world, high level dead bankers everywhere and bond and stock market manipulation. 

Gold and silver but especially gold is more of a wealth preservation then an investment and really don't go up in value but doesn't change in value meaning it holds its purchasing power over very long periods of time. However in an environment of being mis-priced it does hold some investment value as well.


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## fatcat (Nov 11, 2009)

Westerncanada said:


> Hello Everyone..
> 
> I know there's a specific forum for Invest's but I was hoping to get a more overall approach so I am posting this here...
> 
> ...


i think you out yer freaking mind ...

first and foremost, you may be wrong

second, you can't time the market

third, precious metals are always volatile and a a really specialized investment and can in no way be compared to the sp 500

fourth, over your time horizon (40 years) , there is no way silver or gold will outperform the sp500 ...no way, the sp500 actually provide useful goods and services, gold and silver actually combined offer relatively few _actual_ uses as products other than to stoke the imagination of conspiracy theorists

if i were 31 and had an uncontrollable urge to buy commodities i would avoid gold and silver which will lead you into an alice and wonderland of bearish conspiracy theories about the fed and the globalists and endless crap that will eat away at your investment ability and skills

if i was 31 and had an untrollable urge to do something like what you seem to want to do at least consider buying commodities that have real demonstrated uses and are down at the moment like lithium, uranium, potash, and even palladium

gold and silver are wrongly classified as investments and rightly classified as exactly what they are ... fantasies ... they feed whatever loony notion in your head that says you are smarter than everyone else

why not buy some beautiful silver and gold coins from time to time to look at and hold and pop those in your sdb ?

no way in hell gold and silver are going to outperform the sp500 over 40 years ...no way


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## Nemo2 (Mar 1, 2012)

fatcat said:


> i think you have lost your freaking mind ...


I was distracted by the profusion of inappropriate apostrophes in the screed....but I do tend to agree with your analysis.


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## alingva (Aug 17, 2013)

hboy43 said:


> Well Merriam disagrees with you:
> 
> Money: something generally accepted as a medium of exchange, a measure of value, or a means of payment ...
> 
> ...


I partially agree with you however you can say that sugar or olive oil have no value because you cannot trade them easily. What would you rather have in Ukraine, Cyprus, Argentine and other collapsing countries? I am pretty sure that people of these countries would be happy to own gold, silver, olive oil or sugar instead of their currency. I do not think that Canada will go the same way however Canadian dollar have been losing its value against gold and silver and it will continue to lose it, it is not a secret. So putting some money in precious metals makes sense.


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## Westerncanada (Nov 11, 2013)

fatcat said:


> i think you out yer freaking mind ...
> 
> first and foremost, you may be wrong
> 
> ...


Few Comments here... first, I was not suggesting that Gold or Silver would out perform the S&P over 40 years.. but merely suggesting I feel there will be a major correction in the next 2-5 years and does it make sense continually putting my original blend of investments in these E-Series account... 

Secondly, Silver has a ton of actually everyday use's and has for quite some time: 
http://chemistry.about.com/od/elementfacts/a/silver.htm

I agree that Silver/Gold investing is increased by people thinking the worlds financial system will collapse etc, and not my personal motivation to invest in this currently. 


I can appreciate your point of view against this and thank you for sharing it.


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## Rusty O'Toole (Feb 1, 2012)

bgc_fan said:


> That discount assumes that gold was correctly priced. There's a story about banks manipulating the price for the past decade.
> http://www.bloomberg.com/news/2014-...ows-signs-of-decade-of-bank-manipulation.html


Manipulation stories are not news to anyone who follows the gold markets and can read a chart. Even so, precious metals are selling at a discount manipulated or not.

The London Gold Fix scandal is kid's stuff compared to some of the beat downs gold has suffered in the last 2 years.

I wouldn't invest all my money in gold and silver but I consider it prudent to put away 5% or 10% as disaster insurance. And, if you are going to buy, right now prices are low.


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## Synergy (Mar 18, 2013)

The battle continues ;o)

Can we agree that both gold and silver have "some" practical use? - as mentioned in past threads. If yes, would it not be okay to have a very small portion of your portfolio allocated to precious metals? Seems like a decent way to diversity one's portfoilio.

The Role of Precious Metals in an Investment Portfolio
http://www.safehaven.com/article/5446/the-role-of-precious-metals-in-an-investment-portfolio


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## MoreMiles (Apr 20, 2011)

Russia is almost at war with Nato / USA....and still no pop in gold price tonight?!


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## fatcat (Nov 11, 2009)

i am obviously being a little provocative here
yes gold and silver do have some industrial uses, absolutely

ad the old adage about 5% in gold is ok by me (though i think you should go all they way and just have the physical, if you want security, be as secure as you can get)



> but merely suggesting I feel there will be a major correction in the next 2-5 years and does it make sense continually putting my original blend of investments in these E-Series account...


  well, most people are constantly tweaking their blend even the potato people 

there may well be a major correction coming in 2-5 years (a pretty easy call to make) but who knows whether gold and silver are the place to be if a correction happens .. ? 

i would say that perhaps you should put divvys and spare change into cash and wait for a buying opportunity and then buy _more_ sp500

at your age, more sp500 will pay off over the next 40 years ... gold and silver are highly volatile investments ... the sp500 make some of the best and most useful products and services in the world

they aren't even in the same category

i speak from experience as a recovering zero hedger who lost a lot of opportunity money believing that fiat currency was going to hell and _you better have gold and silver to withstand the coming hyperinflation_ *crap* ... which is just plain wrong


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## GoldStone (Mar 6, 2011)

I'm in full agreement with fatcat. Great post #14.

Stock markets may crash for X number of reasons. Not all of them benefit PMs. Deflation is one example. It's terrible for stocks, but it's equally bad for PMs.


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## Westerncanada (Nov 11, 2013)

GoldStone said:


> I'm in full agreement with fatcat. Great post #14.
> 
> Stock markets may crash for X number of reasons. Not all of them benefit PMs. Deflation is one example. It's terrible for stocks, but it's equally bad for PMs.


Please correct me if im wrong.. but have metals not always faired well during crash's?


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## Synergy (Mar 18, 2013)

I'm not sure about the actual price of gold / silver historically but mining stocks will take a beating during a "crash". Check out XGD 2008-2009. Granted they recovered quicker than the S&P 500.


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## richard (Jun 20, 2013)

Well fatcat's got one or two of the best posts on the forum here...

Correlation can be measured in a lot of different ways. On a day with a lot of bad news you might find gold prices going up, but looking back at the last few years I think they rose through the crash and the recovery... and then fell back down while the recovery continued. I think gold's peak price was in 1980 after adjusting for inflation.

Sure stock indexes have a bit more risk these days. Going into commodities is a great way to multiply that risk. A lot of people have felt there will be a major correction over the last 5 years. After sitting on cash all that time they can only buy half as many shares now.

If you're really interested, a few years studying the commodity markets might be enough to get a good grasp of what it would take to at least protect yourself, maybe even do well. If it's not worth doing that it's speculation.


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## fatcat (Nov 11, 2009)

Westerncanada said:


> Please correct me if im wrong.. but have metals not always faired well during crash's?


as has been pointed out gold tanked in 2008 and it only recovered because people could see that the fed was going to print lots of money and that would lead to fears / rumours / hope that not just inflation but hyperinflation would come crashing on the financial shore like a tsunami and so far all we see are little ripples lapping in a pond

deflation is so far still the biggest threat 

gold and pm's are only the place to be in a crash if there is a correlating massive infusion of fed dollars

if the fed sits if out and say "we can't print any more" it would seem to me that gold would be the last place you would want to be ... it earns nothing and people will try to find assets that make them something just as they have the last few years

so we would be groundhog daying it .... how are the pm people feeling that bought gold at 1900 and silver at 50 and are making not a dime not a nickel in earnings off their hard earned money

if you are really convinced that a crash is coming I would highly suggest to load up on plain old cash and then you can buy whatever looks good at bargain prices


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## james4beach (Nov 15, 2012)

Firstly I don't believe that gold is manipulated, or not any more than commodities in general. If you look at the broad commodity charts you'll see that gold more or less performs like the rest of commodities. So you would have to expand the conspiracy theory and say they are manipulating _all_ commodities, which is possible, but it doesn't hold water to say they're just suppressing gold alone.

My thoughts are that it's generally good to buy an asset when it's fallen and especially when out of favour, but only if it's something that can't possibly go to zero. The stock index, and gold are two such things.

For example if you found yourself looking at the stock market when it was out of favour, analysts were unanimously negative on it, and it had recently fallen 30% then it would certainly be a good time to accumulate a solid holding such as XIU or ZCN for the long term.

Similarly, that's what I saw in gold, so I bought some.

It's not so much that I expect great performance in the coming year, it's just that I want to accumulate this asset and think it's a good idea to add to the position during such a weak phase. I would do the same for the stock index.


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## Rusty O'Toole (Feb 1, 2012)

MoreMiles said:


> Russia is almost at war with Nato / USA....and still no pop in gold price tonight?!


Closed today at 1350.30, up 28.30 for the day. Highest it has been since last October. I'm surprised it is not up more, but would rather see it inch up steadily than pop up one day and down the next.


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## alingva (Aug 17, 2013)

james4beach said:


> Firstly I don't believe that gold is manipulated, or not any more than commodities in general. If you look at the broad commodity charts you'll see that gold more or less performs like the rest of commodities. So you would have to expand the conspiracy theory and say they are manipulating _all_ commodities, which is possible, but it doesn't hold water to say they're just suppressing gold alone.
> 
> My thoughts are that it's generally good to buy an asset when it's fallen and especially when out of favour, but only if it's something that can't possibly go to zero. The stock index, and gold are two such things.
> 
> ...


Listen to this interview with Eric Sprott
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2014/2/8_Eric_Sprott.html


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## dogcom (May 23, 2009)

James4beach even Bloomberg now reports that gold is manipulating in the London fix and fix is a good word in itself. I think however we could see a good correction or decline here as commercials are now very short in both gold and silver.


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## fatcat (Nov 11, 2009)

even if it is manipulated to a degree, is the manipulation strong enough to override market forces ? ... i doubt it
if the world wanted to pay 2000 for gold it would be doing so ...

it's a non-productive, extremely hard to value asset ... 

gold is a fantasy


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## dogcom (May 23, 2009)

As long as there is gold to be found for delivery to the east then there is not going to be any hurry to want gold to go to $2000 when it can be bought for less. This would also apply to other commodities as well if someone for whatever reason wants to game them down to make fiat currencies seem worth more then again who wouldn't want to keep bargain prices for as long as possible. This is frustrating for speculators or shorter term investors who want to see prices rise but because of their short term buying and selling they can be played with.

Fatcat history is not on your side as far as gold being the fantasy. It has always held value but every fiat currency has failed in history so the real fantasy is paper money. However having said that as Humble-pie once mentioned gold can languish for a very long period of time which can make it worth much less for someone who doesn't have the time to wait those periods out. The stock market as well can languish for long periods of time and have the same effect on investors without the time on their hands.


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## fatcat (Nov 11, 2009)

dogcom said:


> as Humble-pie once mentioned gold can languish for a very long period of time which can make it worth much less for someone who doesn't have the time to wait those periods out.


yes, absolutely, it does languish for long periods of time ....

why the heck would you even want to risk "waiting those periods out" when you can buy productive assets that actually pay you something ?

this to me is crazy (buggy ?) thinking ... gold is too hard to really value

and there is so many _easier_, better, more productive assets to own, i don't see why people even bother with gold


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## dogcom (May 23, 2009)

I don't think we are in one of those secular bear markets but in a cyclical bear market as far as gold is concerned. The reason I believe this is all the evidence of money printing which is something I have never seen in my lifetime. Russia at this time is talking about not paying US dollar debts and dumping and not using US dollars if the US goes ahead with economic sanctions. They say they have excellent trade agreements to see to that. China is already unloading US dollars so we will see how all this plays out.


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