Pandemic Exit Oriented Buying Strategy

Discussion in 'General Precious Metals Discussion' started by Skyblues, Mar 26, 2020.

  1. Skyblues

    Skyblues Member

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    It feels like the gold and silver prices will be suppressed and then it is almost definite now that it will eventually sky rocket when the hyper inflationary trend begins as a result of this unprecedented currency creation. When, who knows, but looks like this is it. At such a time, there is a chance to quickly swap our gold and silver, and devise a buying strategy for investment/speculation purposes rather than ONLY for wealth preservation.

    I am wondering what you are thinking in terms of alternative buying strategies to the obvious preferable method of acquiring physical gold & silver in hand. This is not a question asking a lecture about how the only and best option is physical gold, what you can have at hand is the best strategy etc, yes I agree with that.

    What I would like to confer about is opinions regarding alternative options such as gold related indices, shares etc. that can enable a faster exit strategy with an investment/speculation angle than being able to sell physical PMs whilst trying to time the exit. I couldnt exit back when Ag hit $50 coz it was just too hard, no regrets, but I am 10 years older now and wouldn't mind catching the wave now.

    Anyone thinking of investing in the exchanges with a view to quickly dump it for profit? This is the first time I am thinking of this as an option.
     
    Last edited: Mar 26, 2020
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  2. BiGs

    BiGs Active Member

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    Ideally you want to buy physical. But if your purchase avenues have dried up as a lot have, you can use the securities version of physical to hedge a buy with the intention of transitioning into physical when the market become more fluid.

    This is how I hedged my stock when i ran a bullion business for a few years. This will also work for selling into the uptrend, locking a sell price in and reducing the contract as you sell your stock later.

    ETFs are physically linked securities (supposedly) while CFD spot & forward markets are definitely not. If you want to try keep the physical attribute then go with one of the ASX commodity ETFs via your stock broker such as GOLD or ETPMAG. Brokerage charges are per transaction so it becomes unfeasible to cut down the hedge bit by bit over time like you can do with a CFD. This in mind, if we are heading for the worst economic recession we have ever seen into a possible collapse, no paper contract will hold true. To be 100%, you need to hold it physically. I would only use the paper markets as a tool for your physical, at least until the future is more certain.

    In terms of speculated trading for profit. Yes definitely this is a good time for that. Close stop losses and follow a pre written plan and you should make some dosh.
     
  3. Jason1

    Jason1 Well-Known Member

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    exiting is way more straight forward with dirty old bars, as you dont have to worry about premiums, sales are much more quicker.
    I pitty the fool with 1000+ one ounce coins of different values, they will never be able to sell those quick enough unless they are prepared to sell with no premium.
    Premium is a perk of cheap Prices, they become smaller as prices go up high those Premiums usually becomes harder to get

    so if your preparing for an exit, get rid of all the premium shit and convert it to low premium while gaining a few more ounces as a result
     
  4. 66rounds

    66rounds Well-Known Member Silver Stacker

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    I would be keen to hear more about your hedging strategy if you're willing to share with us. I understand the basics of hedging using a PM depository account but no idea how it would work using ETFs
     
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  5. SilverDJ

    SilverDJ Well-Known Member

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    If you want physical metal then definitely keep it in an allocated or pool allocated account so you can easily sell it. Keeping it in some safe deposit box or home safe is just silly as the bargains will be had in shares and property once this all blows over, and you don't want to have to onesies and twosies face to face or at a dealer or on ebay etc in vast quantities, what a PITA.
    Might be ok if you only have a a few thousand worth of metal or something, but those with metal in their super funds and personal savings in the six figure category will want the ability to easily sell and shift to other bargain assets quickly.
    For super funds ETF's might be easier paperwork than allocated metal.
     
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  6. Ag bullet

    Ag bullet Well-Known Member

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    What about buying physical pm's with super if allowed to access it like has been proposed?
     
  7. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Paper is a double edged sword. You can easily sell it off, sure. Let's say silver rises to $25 you dump all of it to put into stocks. Stocks go up and loses steam. Meanwhile, after 2 years, silver parabolics to $100.
     
  8. SilverDJ

    SilverDJ Well-Known Member

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  9. jroly

    jroly New Member

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    Open a Perth Mint online account and buy unallocated. You can then sell it any time 24/7 online and much cheaper than buying and selling physical and is more convenient than trading a security on the asx between 10am-4pm Mon-Fri.
     
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  10. madaw1

    madaw1 Well-Known Member

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    Hopping your information doesn't come from NSM...
     
  11. BiGs

    BiGs Active Member

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    It's the same process as an un-allocated account. For example, say you wanted to buy 100oz of silver when the price dipped under 11 USD. You use an online stock broker account (commsec, Selfwealth, etc) and buy 100oz worth of the ASX silver ETF (ETPMAG), locking in the spot price at the time. When your local bullion store has stock in again, you wonder down and buy 100oz worth of silver and at the same time you sell your ETF stocks. The profit/loss of the ETF holding will reflect the change of price in the physical when you buy it. ETFs are actually not so good to use like this for many reasons. They require 100% of the capital to do it, brokerage fees are 10-30$ per trade minimum, and you can only initially hedge in one direction, a purchase. The only good thing for ETFs is that most aussies will have a stock broker account already and linked to there bank account ready to go. Ideally you want to do this via a CFD account (such as IG Markets). CFD on a silver contract has no brokerage fee (only the spread), only requires sub 2-4% capital required for the hedge (plus covering running losses) and you can go directly to the selling position without holding a trade, allowing you to hedge sell points with your existing physical stock (so you can later sell the stock for spot+$x knowing you have already locked in your sell price. CFD free brokerage means you can easily offload partial hedges too, while ETFs would become unfeasible to do that. Probably still not worth doing this for anything under 50oz AG for CFDs or 500oz AG for ETFs.

    For longer term hedges like this (and what i had to do for the business) you also hedge the AUD/USD forex market. When you buy into gold or silver as an Aussie, you are effectively shorting the AUD in addition to longing the gold or silver market because commodities are spot priced in USD. If you're wanting to fully hedge a buy you need to long the PM market, plus short the AUD/USD. (cannot do this one on un-allocated or ETFs)

    On a side note, there are ETFs and CFDs (futures) markets that remove the AUD/USD variable from the mix. You buy into the US price point and movements but you pay in AUD pinned to the USD price. This could be an additional tool for paper speculators not wanting to short the AUD for the long term but want to LONG silver/gold. If you want to uncouple the forex change on your physical, you need to long the AUD/USD CFD market for the value of the PM in question.

    and I think that's the most in depth i've ever got on this site hah.
     
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  12. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    What’s NSM? I think $100 in the next spike is very conservative looking at the severity of the coronavirus crisis as compared to 2008.

    Silver production was already declining in the last couple of years even before this and with falling copper, lead and soon crashing nickel prices when the EV bubble blows due to low oil prices, silver supply from base metal mining is going to fall off sharply while demand for silver bullion is rising.

    Added to this fact is everyone is focusing on mining gold and there are almost no primary silver miner left - even for first majestic, silver is only 60% of their output. I also found out that the Pan American silver which I bought a week ago is actually a gold miner with only 30% silver output, a joke. Most of the “primary silver miners” actually produce more gold.
     
    Last edited: Mar 28, 2020
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  13. oziwassabi

    oziwassabi Well-Known Member Silver Stacker

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    This proviso only covers the "hardship access " to super already in place.
    I believe @Ag bullet is talking about the 2 lots of 10k amounts that can be accessed due to covid 19.

    Will be interested to see how this is implemented as hopefully it can be issued without the "hardship" strings.

    I have been stood down until further notice and am not elligble for centerlink and my personal belief is the government will be "garnishing" super in some/various ways in the future so rather use this money during these times than my personal savings.
     
  14. alor

    alor Well-Known Member Silver Stacker

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  15. Ag bullet

    Ag bullet Well-Known Member

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    as oziwassabi says, if i can get MY money out of super and place it under MY control that would be great.
    the trouble is the govt views super as 'THEIR asset', which is why i would get the 2x$10k lots out if i could.
     
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  16. SilverDJ

    SilverDJ Well-Known Member

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    Also known as a Self Managed Super Fund :D
     
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  17. madaw1

    madaw1 Well-Known Member

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    New Stream Media...
     
  18. Ag bullet

    Ag bullet Well-Known Member

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    yeah i was aware this exists but i haven't looked into it to be honest. from the little i've heard from on here there are on going audits and such so there is a limit to what you can do with it.

    if i can get it out of super i can invest it as i see fit and it's something not exposed to the ever changing goal posts set by govt.
     
  19. SilverDJ

    SilverDJ Well-Known Member

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    Sure there are limits, but you at least get to choose to invest in almost anything you like. And although you aren't allowed to use the assets personally, if you have a business you can certainly do that. For example, your SMSF can buy a commercial investment property and then rent it out to your own business.
    Also, if SHTF, and you didn't care about the future legal consequences, you have direct and immediate access to all your super money.
     
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  20. Skyblues

    Skyblues Member

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    Thank you very much all and BiGs especially, this is exactly the kinda convo I was hoping for. I find IG Markets quite exiting, can I ask all what platforms you are using and how do you like them. I hadnt heard of Selfwealth for example and I wish to take a look at all such viable options before I settle in my trading and/or CFD platform.

    So:
    -Commsec, and the trading platforms of other big bangs
    -Selfwealth
    -IG Markets, lots and lotsa gimmicks
    -BellDirect, didnt like the look
    -Anything else I am not aware of, is there an Australian equivalent of RobinHood?

    AND 1 question:
    -What are the differences between buying ETPMAG vs buying UNallocated from Perth Mint, in terms of quickness to sell, safety, price, flexibility, other factors I am blind to etc.
     
    Last edited: Mar 29, 2020

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