Lose profit or lose capital

SilverSanchez

SilverSanchez

Active Member
I did a bit of selling today - about 10% of my smsf and 20% of my personal portfolio

Gold is over bought, the stocks are showing signs of buyer exhaustion (gap up, hanging man candlesticks, and shooting stars)
Why is gold being bought? News of Euro easing in line with momentum causing it to become over bought.

There is no backwardation, no shortages - mere speculation of global currencies

So I believe gold's run is not sustainable and as a result will fall pretty violently.
The AUD is falling against the USD, so Gold in AUD might retest 1300 (which seems to be the floor in AUD)
The USD is strong and been rising with Gold, so Ive bought USD (5% of my smsf portfolio)

I reason thus,
If I am wrong and gold continues im only losing profit - not capital. If Gold has started its new bull market then there is plenty of time to get back in.
Im still holding core positions in Aussie gold stocks, gold and silver bullion - I don't count my bullion in the total so % is just of stocks, etf and cash - so I wont be put out that much if it goes up more.

BUT

If I am right and gold falls - I want to preserve my capital in order to take advantage of the lower prices ( as I used all of it for short term trading before christmass)
So I have gone into 10% AUD Cash, 10% USD via ETF, 10% Dow Index via ETF the rest is my core positions.

I did something REALLY hard and liquidated all my shares in SilverLake at a big loss - but Im sure ive done the right thing for my portfolio, (it may not be the right thing for yours)
Im not telling anyone what to do with their money, im just telling you what I am doing with mine. And offering this perspective for consideration.

There is good arguments on both sides for gold to go up or down from here. If gold breaks 1300 usd and holds above - ill be reconsidering carefully
 
People were pretty sure that $1250 was the key level to close at as a really positive sign. Closing solid above $1250 on the comex into a 3 day weekend tells you something about sentiment generally.

I'm with you on australian equities but I think the world is so scared of its own shadow at the moment it could be quite easy for something like a Greek exit or a default in energy bonds to spark something serous.

I could understand getting out of miners since they are exposed to the whims of the share market but when it comes to the price of gold I can see plenty of things that could send people running for gold in a big way but not a whole lot of factors beyond the recent buyers getting out that would drive the price down hard.

More and more we're seeing the gold price decouple from the us dollar index and if that was all the pressure on gold I think you would see that happening slowly enough to get out before things got too bad. Getting out after a few days of double digit price rises seems a little early. We might see a $1300 close tonight.

Definitely food for thought though. I think I'll be cutting the last of my shares loose soon. I'm more and more convinced the getting is as good as it's going to get for a while regarding the asx.
 
SilverSanchez said:
I reason thus,
If I am wrong and gold continues im only losing profit - not capital.
Click to expand...
Smart.
Capital preservation is paramount in investment.
It takes priority over all else.
Lose your capital, and you have just lost future profits as well.
 
Will the market ever let me make a bullish statement without making me look like an idiot within the hour (like bloody clockwork, I open my mouth and ruin prices for everyone).
2015_01_20_22_31_06.jpg


*edit* look at the time stamps, 2.5 hours ago I posted the above and almost to the minute 30 cents starts coming off silver.
 
"I did something REALLY hard and liquidated all my shares in SilverLake at a big loss"

you're got to be willing to take a loss occasionally if you want to make money.
Selling at a loss can be good business, rather than holding onto falling shares.
 
Hell I'm trying not to sell my SLR shares. Up 20% over purchase at the mo, holding out for 40c. If I had more invested I'd probably sell, but I need to make up for brokerage and CGT...
 
I'd be interested in briefly hearing reasons for selling SLR if you wouldn't mind.

Am finding myself in a similar position with them but haven't quite managed to pull the plug yet.

While not happy about it as I like their story, I don't mind taking the loss 'cause it could always be worse.
 
http://forums.silverstackers.com/topic-43805-silver-lake-resources-slr-page-7.html

I can give you my reasons for not selling, some of it is covered in the link above. Good assets, low debt and adequately hedged, they seem resilient enough if spot price drops, which I don't think it will significantly.

bellinvest said:
Jump on the ASX and have a read through a few of the reports for reference. These will be their latest publicly announced information.

They have put some operations on maintenance, sold/leased mills and are scrambling to bring all-in cost under control with their lower cost operations. They are really just in a fetal position trying to weather these lower prices - mining just enough to pay their bills. With so much negative news about the metals most are very unloved. SLR have many low-cost deposits which would be cashflow positive however, capital raising etc. in the current environment would spell more dismay for these guys in the short term.

I like their overall business operation which is made up of some fantastic assets. The only thing holding them back from their full potential, like most gold stocks, is a low price in Au. With a market cap <$100m and holding so many great assets i might pick up another parcel in the New Year. I won't catch the falling knife with these guys - but at $0.15/share it could make for a turnaround story of the decade.

DYOR.
Click to expand...

The above post was on boxing day 2014 when they bottomed out. I was down 40% and hating it, when I should have doubled down with another buy.


As for my reasons for selling? None apart from the fact I'll make a profit today. I'm more inclined to be patient and make a bigger profit next year though. I see 40c as very realistic in the short-medium term, with a reasonable possibility of higher in the medium-long term, especially with the current $AUD situation and rising spot price.

I recon it'll dip a bit before rallying up again. More sellers than buyers at the moment, I figure there are a few cutting their losses while they have a chance. It's been a bit of a roller-coaster so that's understandable.
 
Ive seen this a million times, teasing isn't breaking through
it needs volume and buyers to break through, and I don't know if there are any left
we'll see

aud gold is doing well :) back to above my average buy-in price
 
Ok ill tell you guys what my play is

Sold my DOW index (again about 2 days too early) - will buy back after a pullback (but might do some more research to decide whether I buy DOW, Russel, S&P or Nasdaq or something like the IOO etf)

Im going to buy more USD via etf - target for AUD/USD is 0.625-0.65 (or partial exit when the next two occur)
Buy Gold miners when Gold gets close to $1050USD
Buy oil and energy stocks when oil gets to about $30USD

I have 20% of my portfolio in cash for the above
We'll see how we go.
 
Gold right now for me is very heavily dependent on how events in the EU play out. The situation there has never been worse. That plus Putin and his new Russian empire antics will support gold for the rest of the year - so I don't see gold crashing. Even if Greece reaches a deal there will be chaos as Spain repeats the exercise. Due to this I don't see gold taking a big hit this year and it has a lot of upside if you are in the EU and holding Euros.

The dow is definitely on peak as it wobbles back close to 18K and you made the right call although it will probably only sell off 500 points and bounce.

If oil were to get to 30USD the junk bond market will throw a fit.

Despite pump and dump hype built around 'social media' FB, Twitter, Groupon, Amazon et all hAve stupid PE. 'Real' tech such as dell is hitting a brick wall of commoditisation and apple is just a pile of cash and hype with falling margins, Apple is becoming MS is becoming IBM and IBM just looks like it's being wound up in slow motion . Tech is in a rut and has long cycles.

I agree with your silverlake call.

On the USD - it is trading at a peak right now - given a choice between USD and Gold, I would take gold or Swiss Franc on as an outsider UK pounds ahead of it.



Disclaimer
All of the above came to me in a vision after consuming out of date tuna and should be considered as artistic prose only.
 
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