Monday, July 14, 2014

Precious Metals Smashed Down 2.5%: MY VERSION OF THE GREAT SINGAPORE SALE!



AMAZING! In the past 15 hours or so since the market opened from the weekend, both Gold and Silver has been steadily declining until about just a few hours ago where they have gotten monkey hammered so bad!

Both Gold and Silver and down about 2.5%, which is a massive down move for 1 day. This has been the biggest 1 day drop in the metals since Dec 2013.

Ironically, while I was watching the price plunge lower and lower, I was listening to a podcast by Barry Ritholtz and Jeff Gundlach and there was talking about gold and gold miners, about how their sentiment has been so bad in the recent few years. I have MASSIVE respect for Mr. Gundlach.

Earlier in the afternoon, I was a bit happy to see prices drop - things I like are getting even cheaper! So I went to take a small little position. I have been restraining myself from buying all the mini-dips on the hourly charts because I smelt a bigger move in the daily cycle coming along to knock gold down. I must admit, I did not think that it would be so massive and deep. A $30 USD drop in gold in a single day is rather significant!

From what I hear, it is because of massive futures dumping. The notational amounts was $1,370,000,000 USD. Yup. $1.37 Billion USD worth of gold contracts dumped. Now, in ounces, thats about maybe a million ounces! Oh well, if people are selling, then I guess I am the poor sucker buying.

I took a significant position and managed to get in and buy gold at $1303.60 USD, which is pretty much as close as it was to the low-of-the-day as of currently. Can gold go lower? Sure, of course it can. What would I do? I guess I would probably double down my holdings!

Probably many people are confused with my conviction to gold and silver. I'm not a "prepper" or some crazy person, but I do have my reasons behind my thought process of accumulating these assets. It is a mix of sentiment, fundamentals, history and also prudence. I think the main things that have made me even more appreciative of gold is a presentation by Santiago Capital and a report by Incrementum Liechtenstein which I have so painstakingly added here below.





Since 1971 when all currencies became fiat, a whole generation of investors have been brought up overlooking the function and importance of both Gold and Silver as investments. Many people don't even have the faintest clue about what are the drivers of pricing in these markets, and I don't blame them. I have devoured so much information, yet I think I have barely skimmed the surface and I surely don't have the entire picture nailed down. But from the bits I do know, I am quite convinced.

As Brent Johnson mentioned in his presentation, I am owning precious metals mainly for wealth insurance. Sure, my portfolio suffers a minor performance drag by not being fully invested in "productive" assets, but I honestly really sleep a lot better at night. My physical gold and silver holdings are with BullionStar, and I urge anyone interested in a low-cost way of investing in the physical precious metals to check them out and their Vault Gram product. Maybe a 1 oz Gold coin is too expensive for you to invest in, but surely you can spend less than a dollar to get a gram of Silver?

I'm not saying that the sky is falling down (though it just so happens that my mix of assets would strongly appreciate in those circumstances). I am also not saying to convert your whole portfolio to precious metals and wear a tin foil hat and hope for the world to come crashing down. I am merely saying that there are certain (tail-end) risks in the market, and perhaps you should consider some of these risks and how your portfolio would hold up in such scenarios, that's all.

I have done it, and like I said, I sleep very well at night.


Full disclosure: If you enter BullionStar through my site, and you buy anything, I get a small commission.

This is my main source of blog revenue. I prefer this to asking for "donations" because I rather you get something that you want as well, instead of a tip.

Whether you buy at BullionStar directly or enter from my site, the price you pay does not change.

My personal precious metals investments are stored with BullionStar and I pay the same fees as any other regular customer.

2 comments:

  1. Interesting update you have shared here about precious metals.

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