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Grave Warnings to Precious Metal Investors

I am a palladium bug, not a silver bug or gold bug. Although I do like silver and gold, and I like all precious metal investments, my favorite remains palladium. But regardless of what precious metal you like best, I urge all precious metal investors to own only physical metals and stocks of their favorite precious metal mining companies.

I strongly discourage owning any Exchange Traded Funds (ETFs) that invest only in futures contracts or other paper instruments. I cited The United States Natural Gas ETF (UNG) and The United States Oil ETF (USO) as perfect bad examples. At one point of time UNG was the second largest long position in my portfolio, right after Stillwater Mining (SWC). I still cannot help but pat myself on my back for promptly realizing the fundamental problem with a paper-based "commodity" ETF such as UNG, and sold without hesitation. Had I held UNG till this day I would have been much poorer. Unfortunately such ETF funds continue to make many unsuspecting investors poorer by the day. So I urge every investor to carefully read why paper-based ETFs do not work.

I do expect that 99% of people will attack my viewpoint that paper ETFs do not work. I don't mind as I know 99% of people simply won't grasp the concept until they have lost all their money. I will be very happy if 1% of people feel that I have helped them to avoid costly mistakes and to make smart investment decisions.

Like advocators Jim Sinclair and Ted Butler, I always encourage people to directly own physical precious metals. I do not trust the physical gold ETF, GLD, and the physical silver ETF, SLV. Like some other folks I expressed skepticism whether these funds actually hold the physical precious metals as they claimed. These ETF funds were hosted by entities known to be hostile to precious metal investors and known to have large short positions in silver, so why should people trust them? At one point I went as far as scrutinizing the almost 10,000-page-long silver bars list posted by iShares Silver Trust (SLV), and discovered plenty of red flags.

http://seekingalpha.com/article/236304-grave-warnings-to-pre...



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Gold standard now supported by Alan Greenspan the person who hel

Gold standard now supported by Alan Greenspan the person who help destroy USD

http://www.youtube.com/watch?v=yRJs5yL62BA&feature=player_em...

History does not long entrust the care of freedom to the weak or the timid.
Dwight D. Eisenhower

First, I say I generally agree with you, but allow me to make

some small clarifications:

#1 One cannot "invest" in metal. One can speculate on price direction, but that is all. Value does not change. The only thing that changes is relative worth to paper currencies.

#2 One CAN invest in mining companies. In this case, you are not speculating. (though that is possible too.) Here, you are providing capital for someone to do SOMETHING that will produce value.

#3 Paper is not metal. No matter how much some would believe otherwise, they will continue to loose their shirts until they learn this. If you hold an ETF or other form of "paper" metal, you don't have metal. You have paper. And that is ALL you have.

Carry on...

Yes, I was going to post this.

Metals are NOT, repeat NOT, an investment. They are a store of wealth.

_____________________________
"Make the lie big, make it simple, keep saying it, and eventually they will believe it." -- Joseph Goebbels

Are you soliciting 1% members? Sign me up.

Thank you for your warning. I will be a member anyway.

But, from the start I know it to be a lost cause. Please reconsider your club name:

  • 100% Club... Salesmen making full quota.
  • 49ers Club... NFL team, taking old California miner name. The miner usually worked hard in the dust. Those counting their winnings took them.
  • "1898 - Anti Imperialism League"... Never made good on our quest to stop imperialism, even I was Vice President. Should've named the club, "Pro Imperialism," done nothing and been proud of it.
  • Should've wrecked "Imperialism" by leading the charge. I am well qualified to make a mess of things on the world stage.
  • 1% Club... Member: Mark Twain.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

out of all the posts I've

out of all the posts I've read from you this one is not a part of the 15% I've understood.

are these all well thought out, albeit obscure references to some cultural significance that I'm unaware of, or just a sort of rambling on the Internet?

“One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors.” Plato

Thank you for understanding 15% of my comments.

Well nuff.

I am generally inline this JforFreedom forum message.

ETF funds should be researched before investing. Make certain the fund does what you wish to encourage.

ETF funds do simplify investing in a sector you wish to encourage. Clearly a good thing. Simply, buying into a name or label without due diligence, may be opposite your intention.

My reply was far off the point. I sought to mention how wrong I was a century ago selecting an "Anti..." name. Well intended, but not popular. Though our intent & actions were altruistic, our results were but a footnote in history. I encourage folks to read that footnote.

Going with just one historical example (the footnote), in 1898, I joined the "Anti Imperialism League" as Vice President.... We did not succeed in our quest to stop imperialism. We should've named the club, "Pro Imperialism," done nothing and been proud of it. Meaning if we could've got Imperialist to do nothing, we would have all been better off.

"Should've wrecked "Imperialism" by leading the charge." This statement was whimsically reminiscing that perhaps I could have been more effective stopping nonsense by being in favor of it. I am well qualified to make a mess of things on the world stage.

I am just mentioning a footnote in history.

Your comments stand.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

I say piffle!

The author's comparison to ETF's that hold futures contracts in oil and natural gas belies a profound misunderstanding on his part as to how the markets work. Oil and gas futures usually trade at a rather large premium ("contango") to the spot price, for the simple reason that oil and gas are expensive to store. Except in times of unusual supply disruption, contango is a big drain on those futures funds. One reason that gold and silver make for good stores of value is that they are cheap to keep.

The only reason to prefer CEF over SLV or GLD that I can see is if you believe the former is less likely to be fraudulent. I know that is a popular belief in some quarters, but I am not convinced. However, I have not yet studied the rest of the seekingalpha article that's linked above.

The holders of class A shares in the Central Fund may only redeem the shares for 80% of their net asset value on demand. (I don't think that has ever happened.) On the other hand, the market-makers for GLD and SLV trade directly with the funds on an on-going basis. They trade baskets of shares and physical metal back and forth freely at full value. That is why the prices of those funds track the spot price so closely (less accrued administrative fees). CEF usually trades at a premium to net asset value. As of yesterday, it was trading at a 5% premium.

Me? I prefer to have most of my precious metals in physical form, if for no other reason than because I am not tempted to trade physical metal frequently. But I do have some "playing-around" holdings in GLD and SLV. (I should have sold my playing-around shares when silver was flirting with $29. Sigh. I would be buying them back, with some bonus shares, along about now.)

Ĵīɣȩ Ɖåđşŏń

"Fully half the quotations found on the internet are either mis-attributed, or outright fabrications." - Abraham Lincoln

You called it precious metals "investing."

But I call it precious metals "gambling."

Just like ALL stock market trading because the markets are manipulated and another crash is coming that will make the last one look like a trip to Disneyland.

When you HOLD the physical metals, THAT is investing or at least PRESERVING your wealth.

My argument that the markets are manipulated relates to this:

Unless you are buying INDEXES, you will lose owning individual stocks because the indexes (DOW, S$P 500 etc) are constantly scrutinized and poor performers are thrown out while they add new names.

So over time the indexs always rise.

BUT CONSIDER...If you had owned all the original individual stocks of the DOW and had kept them, you would be dead broke (except for GE which is still around-barely).

THAT is the lie that says markets always rise over time.

Eventually, MOST companies go bankrupt or out of business over time.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

When you HOLD the physical


When you HOLD the physical metals, THAT is investing or at least PRESERVING your wealth.

So if you bought all your metal at $28.00 how did you preserve your wealth?

I call a lot of bullshit in this thread. People are banking on silver to be an actually accepted form of trade in everyday life that in itself is speculating.

Nope, it's historical fact. And not that long ago either.

Either in this country, or in others.

And you don't have to go even that far back to prove it.

Zimbabwe is an excellent CURRENT example of what happens when paper reverts to its true value.

People pan for gold just to eat.

The only thing "speculative" about silver or gold once again being used in commerce is if you try to peg the timing of it to the calendar.

"Jonkirk" - you don't get it..."BigT" - you DO.

I didn't say TRADE metals.

The idea is that over time (Not 2 or 3 days) the metal you buy will hold its value while the paper money loses its value.

Obviously you are one of those people who investing in precious metals is not for.

That's fine.

Go put your money in a bank at 1% interest.
Or under your bed.

Either way it's going to be worth less in the future than it is today.

In 5 years, compare the price of 1 ounce of silver to the 28 dollar amount you quoted.

I'll take my chances with the silver.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Ok, let's look at it.

Take a simple example.
In 1932, you had a 1 to 1 exchange. A $20 bill could be exchanged for a $20 gold piece. They were "equal".

Let's say you took them both, and put them in your drawer, and took them out today.
Your $20 gold piece is worth over $1300.
The $20 bill is still worth $20.
Which held value?

The idea that a dollar tomorrow is still worth what a dollar is worth today is not valid. The dollar lose value every single day. It's losing alot with this QE2 coming up. Discussions are that dollar holdings will lose about 20% of its remaining purchasing power by the middle of next year. So, the dollar is dropping. What are you going to do about it?

Some people buy silver.
Whether you realize it or not, you didn't buy "at the top". You bought "at the bottom". Once the manipulation can't be maintained, and people realize that their savings is losing purchasing power by the double-digits, they are going to look for a safe haven.
At that point, there is no telling how high silver and gold are going to go. This is only a short time away.
They can't hold it down with this kind of buying the debt with borrowed money.

You got in cheap.
Your dollar investments are going to be worthless. The only thing that is going to hold you above water is your silver and your hard assets.

BigT, please stop confounding dollars with FRNs

the distinction is at the heart of the matter.

The dollar has not lost any value since 1913. In fact, it has gained considerably in what it can buy.

What has lost value is a piece of paper that the general public accepts as if it were a dollar. That confidence has eroded over time. So what it can be exchanged for has decreased.

The dollar is not an abstract accounting unit. It is a physical measure of a weight of pure silver.

Has that measure of silver decreased in purchasing power since 1913? Has a coin containing that much silver, and called a dollar, decreased in purchasing power?

And I don't mean in terms of some piece of paper, I mean in terms of actual usable goods it can be exchanged for.

Confounding dollars with FRNs and saying dollars when what we mean is FRNs only serves to keep people confused and not seeing the plain obvious solution to the mess.

Using proper terminology makes everything really clear.

Once it is clear that what is losing value is not the dollar but a piece of paper with the word dollar written on it, and people understand what a dollar actually is, then the solution becomes obvious. People will even suggest it on their own without prompting.

Money is not a difficult or complicated subject, as long as you keep your terms straight.

Please, help me educate others and let them find the answers on their own by making an effort to differentiate between dollars and FRNs. No need to explain it unless someone asks. Just simply refer to each in their appropriate contexts. It doesn't take long for people to figure it out.

This is tough to do at first, but a little effort in the beginning and it becomes second nature.

OK

Point made.

OK samadamscw...How much silver is in a dollar?

If I accept your argument that 1 dollar actually buys MORE today than in 1913 then I need hard numbers.

Are you saying you would pay the same (or less by your statement) for an average house today as you did in 1913.

Maybe so IF your dollar IS silver itself.

Just tell us how much silver is in the dollar as you are defining it.

I know the founders spoke of a dollar representing so many grains of silver but I don't know how much actual silver that is.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

.765 grams

before 1934

Another important point, one does not "invest" in metals

You can invest in mining and fabrication companies, but not in the metals themselves.

That is speculation - gambling.

As long as people understand the difference, and what those differences mean, then they should understand your advice to be common sense.

Only people who think it is possible to "invest" in silver, gold, palladium etcetera have a problem not understanding why "paper" metals are no good.

Quite simply, if you own paper, you don't own metal, because paper is not metal. It really is that simple. Possession is 9/10's of the law is not just a euphemism. In this case, if you can't ACTUALLY HOLD IT in your hand, then you do not own it and you can quickly lose all claim to it, or the claim is effectively non-existent.

What are the

fundamentals of palladium? Do Chinese cars use catalytic converters? What else is palladium used for? What is the supply vs. demand fundamentals?

I'm thinking about buying some myself, thanks

Brad

Central Fund of Canada

may be the exception and it isn't really an ETF. They have been around for ages & trade both in Canada and here. They purchase only physical gold and silver in prescribed ratios and the metal is stored in a completely segregated vault (used to be Canadian Imperial Bank of Commerce in Toronto) and is audited regularly. Very small company and you can talk to the principles when you telephone.

Phil. 4:13

So when the bottom falls out how do you get your gold?

Drive to Canada?
ETFs are bad because you don't hold the metal. No matter how trustworthy the holder is, it ain't you.

True, too true

Central Fund doesn't invest in paper or derivatives, but the investor is still purchasing shares in the company (paper) and the company owns the shiny white and yellow in the vaults deep under the pavements of Toronto. So it is a sensible stock in which to invest and that is all!

Phil. 4:13

So when the bottom falls out,

So when the bottom falls out, what do you do with your silver you bought at the top like the rest of us + at a premium ?

Buy stuff

.

You use it in commerce.

The point isn't to convert it back to the now worthless currency of choice, but rather use it directly.

Silver was used directly in everyday commerce up until 1965. (for sure, it continued a short time beyond that, but not by much)

And it was MUCH more prevalent before 1913. (when the Fed was created)

So you are also banking on

Commerce... so now the argument is that since I traded an ETF backed by physical holdings that someone who owns physical holdings is more precious/valuable because I can't trade in dollars because I made the same ratio or winnings or losses as you did?

Thanks for the info

:)

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sometimes LL can suck & sometimes LL rocks!
http://www.dailypaul.com/203008/south-carolina-battle-of-cow...
Love won! Deliverance from Tyranny is on the way! Col. 2:13-15

I Agree With You, Or Whoever Wrote This Article !

I'm sure most people who have money to invest have heard the expression,"Don't Put All Of Your Eggs In One Basket".

The example I saw of this old saying was found in a little kids pre-school reading book many, many years ago. A young farm boy was sent to town to sell his families eggs in a large basket,,,,he tripped on the way to town and all the eggs broke,,,,can you imagine what his parents said when he got home?

I invested in stocks in the 1970's with some success after spending lots of time reading investment letters and doing hours and hours of research. I even took a class in stock investing at that time

In the 1990's I began to put physical Golden eggs in my investment portfolio and although I still have only one Gold mining company stock in my portfolio, the physical Gold/Silver Has//Is out performed the paper stock by a "VERY" wide amount,,,,and there are several different ways to invest in physical precious metals, ETF's are not ownership of metal for the average investor !

beesting

Logic


I strongly discourage owning any Exchange Traded Funds (ETFs) that invest only in futures contracts or other paper instruments. I cited The United States Natural Gas ETF (UNG) and The United States Oil ETF (USO) as perfect bad examples. At one point of time UNG was the second largest long position in my portfolio, right after Stillwater Mining (SWC). I still cannot help but pat myself on my back for promptly realizing the fundamental problem with a paper-based "commodity" ETF such as UNG, and sold without hesitation. Had I held UNG till this day I would have been much poorer. Unfortunately such ETF funds continue to make many unsuspecting investors poorer by the day. So I urge every investor to carefully read why paper-based ETFs do not work.

If I apply logic to this you state the reason for not owning an ETF is based on an experience you had with another ETF that trades in future contracts? SLV (ETF) is the next best thing for people who can't pull out an entire 401 and buy silver. It's an ETF that invests in 100% physical silver bullion. The ETF you stated (UNG) is all future contracts for natural gas, crude oil, heating oil, etc. How does this apply to an ETF that reflects the prices of its physical stock pile and trades relatively close to that of physical silver?

Please explain to me how your defense against owning, specifically SLV, compares at all to owning UNG? The rest of your paragraph states dis-belief in them actually owning the silver. That's fine, but it's not proof.

Sorry... but I didn't write

Sorry... but I didn't write the article

I'd rather die on my feet than live on my knees...

I'm sorry. I didn't realize

I'm sorry. I didn't realize that. But still I think I have a valid point.