Leveraged exposure to silver

Discussion in 'Silver' started by jezebel, Aug 15, 2019.

  1. jezebel

    jezebel New Member

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    Hi everyone
    I am a silver bull. its finally sinking in. Right now I want to increase my silver exposure but cannot afford to pay cash for the physical. Has anyone on this site used leverage to gain exposure? I am considering all my options at the moment because opportunity only knocks once. Appreciate any ideas/thoughts
     
  2. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    I would sell all your numismatics and high premium coins and buy bullion bars. You may be able to increase your stack without spending a penny.
     
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  3. jezebel

    jezebel New Member

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    Thanks Sammy, unfortunately I only have bullion ounces with a minimum premium.
     
  4. Bullion Baron

    Bullion Baron Well-Known Member Silver Stacker

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    Silver is a volatile metal and there are a lot of indicators pointing to a slow down in global growth (possibly recession), which could weigh on silver's industrial demand.

    I once speculated heavily on silver options (which are a form of leveraged price exposure) and they expired worthless.

    Opportunity is always knocking if you broaden your horizons :)
     
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  5. Silverman99

    Silverman99 Well-Known Member Silver Stacker

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    Hey BB

    Would you care to expand on this quote
     
  6. jezebel

    jezebel New Member

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    Thanks BB I get the picture. Like you I've "been caught with my pants down" previously but never with metals because I've always stacked physical, until now. Like Silvermann 99 I would like to hear more about your experiences. I am prepared to speculate, since my gut feeling is that the upside is close for silver (as an investment instrument chasing gold that is, not so much as an industrial commodity). Because the silver market investment percentage use is minuscule, perhaps 10% of its overall usage, the upside, if and when the gold/silver ratio contracts, will be huge. Whats your thoughts?
     
  7. jezebel

    jezebel New Member

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    I second that...............
     
  8. GoldenEye

    GoldenEye Well-Known Member Silver Stacker

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    I used to buy options which involve putting down about 10%. If the price goes up 10% you've doubled your money, and if it goes down 10% you're wiped out. Keep in mind that you should always keep some funds aside so if the price drops a bit your broker doesn't sell you out.
     
  9. jezebel

    jezebel New Member

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    Golden Eye, thanks that's sounds a little too risky for my stomach and form. What about using my metal as collateral with a broker to purchase more? Is that doable?
     
  10. GoldenEye

    GoldenEye Well-Known Member Silver Stacker

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    I'm not sure how you would do that, although "Bullion Now" in Melbourne might be able to help, or give some advise.
     
  11. openeyes

    openeyes Well-Known Member Silver Stacker

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    I agree. I like the saying

    An opportunity of a lifetime comes once a month.

    There are opportunities that come from places you never expected. You have to look for them and be will and able to respond.
     
  12. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Agree on this, it's all speculation.
     
  13. Bullion Baron

    Bullion Baron Well-Known Member Silver Stacker

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    All I mean is that there are investment/speculation opportunities all the time outside of the silver market. Even with silver, the market is fairly cyclical, so an investor may have multiple opportunities to buy in the early stages of a bull market over their life time.

    I think silver has the potential to outperform gold. I wouldn't go 100% silver, because if the global financial system gets into real trouble, I honestly don't think it will act as the safe haven that gold will. Central banks hold gold and not silver for a reason. These is no substitute for gold.

    Being leveraged makes it much more difficult to control your emotions when the price is jumping around. Over the past decade I have leveraged precious metals exposure using options, CFDs, mining stocks and a revolving line of credit against a property (to purchase physical/miners). In hindsight, the leverage made it difficult to think clearly and at times I found myself trying to chase losses, which then became more like gambling. I think mining stocks are a good place to start with leverage, if you start small, take time to understand the market, read announcements and financial statements, spread your risk over multiple companies, etc, but it also adds different risks (company, sovereign, etc).

    I would be very wary of leaving your physical metal with a dealer as collateral to buy more. You wouldn't want to end up as an unsecured creditor if the dealer went under (see: https://www.silverstackers.com/forums/index.php?threads/perth-bullion-liquidation.92182/).
     
    Last edited: Aug 15, 2019
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  14. jezebel

    jezebel New Member

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    thank you for the tip
     
  15. jezebel

    jezebel New Member

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    Thanks BB - food for thought
     

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