Back in those heady days of plus-forty silver, I used to tell myself that only I wish I had been enlightened just a few months earlier.
My actual “date of enlightenment” was about September 15, 2010.
Oh! I would have bought lots more silver at $18-24 per ounce in the Fall of 2010.
As it was, I had just discovered metals and was picking and choosing, looking for sub-spot pricing, wondering if it really would go higher.Well it did.
Then it went back down and I was frustrated—frustrated at those who illegally drove it down, frustrated at myself for not taking the “naysayers” seriously—these were regulars on the blog who warned us that a drop was approaching.
I was frustrated at myself for not loading up my trading account and buying AGQ out of the money puts to hedge my stack.
Frustration led to disgust, disgust led to a suspension of my buying, the suspension led to a place of hopelessness about learning to invest wisely. I got burned! So here we are with a chance to purchase $20 silver again while gold meanders around at $1300.
And this time I am enlightened.
Submitted by Dr Jerome, TFMetalsReport:
Well many of you know the old saying “Burn me once, shame on you, burn me twice, shame on me!”
So here we are with a chance to purchase $20 silver again while gold meanders around at $1300.
And this time I am enlightened.
But will I take the advice of the old saying, become cynical and refuse to keep adding to the stack at these once desired prices because I fear another big price drop to (gasp) $10 per ounce? Or will I learn from that mistake, buy more at these prices and learn how to hedge my stack most effectively if metals rise?
What WAS my mistake anyway? Buying more silver at $35-45, or neglecting to hedge?
I say it was neglecting to hedge for a downside attack. It was assuming that the “moonies” were right because it resonated with my greed. And I will not make that mistake again. This time around I will continue buying at these low prices, and if we do make a run above $26 per ounce, I’ll inquire among the pros on this blog (or Jim Commisky) about some sensible hedging techniques to lock in those gains.
If the paper markets fail, there is probably no need to hedge my metal. Who knows what happens then? But if markets stay intact in some form as this economy continues its inexorable slide into the pits of Keynesian hell, I should be able to purchase derivatives that will let me sleep at night ( /SI futures options, AGQ puts, ZSL calls). I’ll cross that bridge when we get over $26. Until then I am going to stack what I can as we pay down the mortgage, within an allotment formula that keeps the wife happy.
And so what is the proper response to $20 silver? Stack with both hands—well at least one…