Pay now or risk price increase?

[Pirocco]

. . . In this dealer order case the gain/loss only materializes when he sells. Before that moment, he loses or gains nothing.

Rubbish. This is a fallacy and is simply denial.
A gain or loss is taken regardless of whether or not you have sold.
A loss in purchasing power is a financial loss measured in any unit you like.
If you refuse to believe this, and only consider losses real when materialised in fiat, then why bother stacking?
Ask yourself this - Are gains in the value or purchasing power of your physical silver imaginary too?

"Rubbish".
"Fallacy".
"Denial".
= arguments?

It's simply what the margin account associated with a futures position is about.
In contrast to nearly all the rest (including stocks/bonds), the gain or loss materializes immediately. It doesn't need a purchase or sale.

A gain or loss in the price/purchasing power of any item you possess (a stack silver for ex), is only IF you sell.
IF you sell.
IF you sell.
IF you sell.
Noticed the IF now?
IF you do NOT sell, then that gain or loss doesn't materialize.
You can LATER sell, and the price on that later moment will matter, NOT the price now.
A futures positions margin account doesnt need your trade.
It automatically updates your gain or loss on your margin account.
Until you decide to dump the position.
Then you STOP the updating.

Yes, gains or losses in the purchasing power of my physical silver do not matter if I don't sell.
Of course not.
Why do you think half this forum talks about selling high? And buying low?
Because the own choice is there whether to sell or buy when the price you have in mind arrives. You can undo an unmaterialized loss by waiting for a higher price to sell.
The taking of a futures position is an immediate value adjustment according to the price move. As long as you keep the position. It materializes instantly with the price moves. Dumping the position just stops the accumulation of gain or loss.

 

[wrcmad]

IMO you are still in denial.
This line of thought is characteristic of an investor who won't admit when they have made an investment mistake. It is quite common, because it is human nature to always want to be right.
But it can be a disaterous way of thinking regarding investments. Sooner or later you wil get burnt by this fallacy.

 

[2003dve]

Anomeric, have PM'd ya

Keep Rockin'

 

[grinners]

I agree with wrcmad.

I have some shares I bought for 2 cents. They are now worth 0.2 cents.

They will never go back up.

If I never sell, have I never made a loss? Of course I have.

 

[Pirocco]

IMO you are still in denial.
This line of thought is characteristic of an investor who won't admit when they have made an investment mistake. It is quite common, because it is human nature to always want to be right.
But it can be a disaterous way of thinking regarding investments. Sooner or later you wil get burnt by this fallacy.

It's easy to find X versions of 'you're wrong'.
It's harder to find arguments.
You are an example.

 

[Pirocco]

I agree with wrcmad.

I have some shares I bought for 2 cents. They are now worth 0.2 cents.

They will never go back up.

If I never sell, have I never made a loss? Of course I have.

I'll do the same as you here.

===========
I have some silver I bought for $1000. It's now worth $750.

It will never go back up.

If I never sell, have I never made a loss? Of course I have.
===========

Notice how the choice of values (in your case shares and 2 versus 0,2) predefines the conclusion.
What's the point?
That a futures position is an instantly updating gain/loss, leaving you no choice except for dumping the position and thus stop the updating.
That a silver stack gives you the choice to sell at a higher price.
In the past 15 or so months, some people sold their silver when spot was $26-27.
How many times did they see 25% higher prices afterwards?
Enough to DO the higher price sale.
And that's the difference in this topic, if it had been a futures position, the margin account runs too low (hello margin call) and if you can't replenish it it's over. Hello loss, like it or not.
So if wrcmad likes to talk about fallacies and human nature, my advice is to take a mirror as target.

 

[wrcmad]

I'll do the same as you here.

===========
I have some silver I bought for $1000. It's now worth $750.

It will never go back up.

If I never sell, have I never made a loss? Of course I have.
===========

Notice how the choice of values (in your case shares and 2 versus 0,2) predefines the conclusion.
What's the point?
That a futures position is an instantly updating gain/loss, leaving you no choice except for dumping the position and thus stop the updating.

Not true. If you purchase the equivalent oz's silver in a future contract as you would otherwise have purchased in physical, then the outlay is a lot less for the futures contract, but initial value the same. You would therefore have funds left over to cover any margin account deficit, and would not be forced to sell. Your argument is misleading, as it assumes many more oz's purchased under a contract, than would be in physical.

That a silver stack gives you the choice to sell at a higher price.

Your example predefines the conclusion - you are assuming price will rise.

In the past 15 or so months, some people sold their silver when spot was $26-27.
How many times did they see 25% higher prices afterwards?
Enough to DO the higher price sale.

It matters not if you want to measure in oz's or $ - if price falls you are now holding less value or purchasing power, ie a LOSS.
While that loss may recover over time, this only constitutes a loss followed by a recovery. This does not constitute a neutral position.
If a drop in value was not a real loss, you would not be able to trade GSR - trading GSR defines trading the loss or gain of purchasing power of real money (gold and silver) against each other.

And that's the difference in this topic, if it had been a futures position, the margin account runs too low (hello margin call) and if you can't replenish it it's over. Hello loss, like it or not.
So if wrcmad likes to talk about fallacies and human nature, my advice is to take a mirror as target.

:lol: See above. IMO your veiw is self-delusional.

 

[Pirocco]

Your example predefines the conclusion - you are assuming price will rise.

I said I would do the same as grinners, to illustrate how he predefines.
There goes your
I just changed the price figures, as to make clear how the predefinition works in both price directions.
My example makes clear the invalidity of the argumentation.
So please talk to grinners about this.

It matters not if you want to measure in oz's or $ - if price falls you are now holding less value or purchasing power, ie a LOSS.

As said, a gain or loss only materializes upon the act of trading, selling it.
It DOES matter, because your 'price' IS $.
And second, a lower $ does not mean a lower purchasing power.
Or do you think that silvers price can only drop alone?
So you're wrong (1) and wrong (2).

While that loss may recover over time, this only constitutes a loss followed by a recovery. This does not constitute a neutral position.

No, without the act of trading, there is no loss or gain (your "recovery").

If a drop in value was not a real loss, you would not be able to trade GSR - trading GSR defines trading the loss or gain of purchasing power of real money (gold and silver) against each other.

The act of trading.
Selling... buying...
Where the gain or loss materializes
Unlike a futures position, where you don't need to trade, your gain or loss is immediately updated with the price movements of the underlying (silver) on the associated margin account.
That's what this discussion started with.
That's what you denied.
That's what you ended up with yourself.

:lol: See above. IMO your veiw is self-delusional.

Remember I talked about a mirror?
Follow your own discussion.
You start with a denial and end with saying the same.
Talking about self-delusional, what was your contribution then to the discussion?

 

[wrcmad]

It matters not if you want to measure in oz's or $ - if price falls you are now holding less value or purchasing power, ie a LOSS.

As said, a gain or loss only materializes upon the act of trading, selling it.
It DOES matter, because your 'price' IS $.
And second, a lower $ does not mean a lower purchasing power.

You are still assuming the $ holds a constant value over time..... predefining the conclusion.

While that loss may recover over time, this only constitutes a loss followed by a recovery. This does not constitute a neutral position.

No, without the act of trading, there is no loss or gain (your "recovery").

You don't need the act of trading to realise a loss or gain - this is your fallacy.
You have forgotten about opportunity loss.
Opportunity loss is the cost (measured in oz's, $, GSR etc.) of buying at a higher price than the current price.
This is real, and is evident when buyers groan that spot has dropped immediately after a purchase.

I pass the mirror back to you.

 

[mmm....shiney!]

Whao!! There's some words that are confusing me in this thread. :lol:

 

[wrcmad]

The point is this:

A lot of stackers claim to buy physical metals as protection against the destruction in value (purchasing power) of fiat currencies. The stacker sees the destruction of value of fiat they are holding as a loss, and thus the philosophy is to preserve wealth by holding precious metals instead. This defines the stackers veiw - that holding fiat which is losing value becomes a loss. It is a financial loss. It is the stacker mantra.

However, if their precious metals holdings drop in market value (purchasing power), they claim it is not a loss until that loss is realised by selling the metal. WTF?

A loss is not realised until metals are converted into the very fiat currency they claim they are avoiding because it is worthlessly backed and being destroyed of any value?

You can't have it both ways! This is very contradictory, and delusional.

 

[Ernster]

A loss is not realised until metals are converted into the very fiat currency they claim they are avoiding because it is worthlessly backed and being destroyed of any value?

You can't have it both ways! This is very contradictory, and delusional.

It's pretty simple to understand.

Most people here believe silvers price/purchasing power will rise much higher than any so called loss off fiat value. Uh there I said it.... "fiat"

*washes mouth with soap*

 

[wrcmad]

^^^ You are correct. However, that takes us back to the sticking point of predefining the conclusion.

 

[AngloSaxon]

Totally hijacked thread.

I have nothing to offer the original poster but I think its' sad you can't buy domestically because of value added tax on an item that never is the same through time - silver bullion.

And sad for the German businesses they have an export cap? That's government intervention gone mad. Is that a German govt thing or an EU govt restriction?