Friday, June 13, 2014

Structuring A Silver Plan

Since my recent post on 11th June regarding the potential conclusion of Silver, with bias to the upside, Silver has since rallied 1.5% and is very nicely above it's final 2, line-in-sand resistances of $19.2 and $18.7. My personal take (and mildly invested position) is that silver will take off from here.

However, if silver does take off, what is my plan? I actually don't really have a proper plan regarding my silver strategy, which is why I decided to write a short post to outline my actions in the event of certain outcomes in the market.

Although I invest in SGD, for the sake of simplicity and the KISS protocol, I shall just reference the USD prices.

Spot Reference: $19.50

So, what I'm doing here is that the further the prices in silver declines, the more massively I will build up my position.

From my understanding, cost to mine an ounce of silver is realistically between $15-20 per ounce, so I will really be accumulating at the frontlines. This also limits further downside purely due to simple supply/demand economics. After you take into account yearly inflation, this seems like a hole-in-one!

As of now, silver prices have hit a smaller resistance at $19.60. I expect a pullback, hopefully back down to the $19.20 levels, at which point I will fully load up on silver and increase my physical allocation to 5%. If it breaks lower, my plan above will be systematically executed.

Of course, I will be accumulating through BullionStar. It may take months or even years more for Silver to spike up and reach its potential, so I don't want to be leveraged and sitting in unrealized losses and paying on-going management and expense fees for that. I rather have physical allocation to me. I see this as an opportunity to cheaply increase my networth now by buying a totally undervalued asset that will be a major component of asset valuation in the future.

I have my plan for protecting my future purchasing power, irrespective of whatever foreign central banks are doing, irrespective of my faith of my country's currency. This is a matter of personal "kiasu" mentality. The only person you can count on to look out for yourself, is yourself.

Good luck out there guys, the next few months look set to be crazy!

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