Ha! Dash can't ignore me!
I'm the only other legitimate highschool dropout here, and besides.... I'm smarter than him, as he readily has proven by his own evidence!
So.... when are you getting out of Silver, Dash. How much did you buy and at what price? I look forward to your brilliant prognostications. I've bought 1 trillion ounces of silver based on your recommendation. The only question, as with all markets, is WHEN DO I GET OUT???? Help me, Dash! Please!!! I'm relying on your brilliance. (Me and OneShoteKi11... who's invested his entire lunch money and allowance in silver.)
And how come you and your b*tard child can't recognize the diffference between statements of GHWB and RR? Do tell, Oh, enlightened one. I want so much to learn from you.
Why so much hostility?
I'm not a high school dropout, I graduated from high school. I dropped out of college -- I attended UCB for a couple of years.
Regarding GHWB and RR quotes, the point is irrelevant, as I explained above. I use the term "Voodoo economics" in a different way, in a different context, in a different era. It doesn't matter who used the term first.
Anyway about when to get out of silver -- very good question. It's important to pay attention to the gold/silver ratio. Historically it is around 15 to 1. Today it's around 49 to 1. That means silver is undervalued with respect to gold.
A lot of smart people are planning on trading silver for gold as the ratio gets back down to normal levels -- say 15 to 1. Now because silver has all sorts of industrial uses, and because it is really really scarce, it might just go below 15:1 ratio with gold. Some people have speculated it could spike down to 1:1 ratio -- an ounce of gold is the same cost as an ounce of silver. So some smart guys I know are planning on trading silver for gold, bit by bit, as the ratio gets down to 1:1.
It may be safer to store wealth as gold. Antol Fekete has a whole essay on why gold is more safe than anything else. The main argument is that there is just so godawful much gold that has been dug up. And the amount being added to due to mining is small compared to the aboveground stockpile. That means there is a good deal of stability. It's not going to go up quickly, it's not going to go down quickly.
Silver, on the other hand, is much more scarce, in terms of how much is used in industry, and how much has already been used up. It's inherently more volatile.
Anyway I haven't really given much though as to when to sell silver. Perhaps never. I might just pass it on to my children. I'm only about 20% invested in silver anyway. I'm also invested in mining stocks and energy trusts. I expect I'll sell these as I need cash to live on.
The thing about bubbles is you need to pay attention to the man on the street. In 1929 a rich fellow was riding in the elevator, and he overheard the elevator operator discussing his portfolio. He said he was doing really well. In those days people could buy on margin, maybe 10 to 1. Meaning for $100 you could buy $1000 in stocks. Anyway hearing this elevator operator talking about his investents scared the heck out of the rich fellow. He sold his portfolio that day. The stock market crashed shortly thereafter.
When you see rampant borrowing to buy something, that's a sign of danger. When you see every random person you talk to discussing their investments in something, that's a danger sign. What it means is that there are no more people to buy into the bubble. So it must collapse. What goes up, must go down. That's the time to sell out.
It was predictable in the 1999 timeframe -- the dot-com boom was crashing. It was predictable in the 2007 timeframe -- the housing boom crashed (and is still crashing). Regarding the housing boom, the prevalence of ARM loans (teaser loans), the 0 money down loans, the sheer volume of people investing in real estate -- these are all danger signs.
The ride hasn't even begun in earnest on precious metals, or their associated mining stocks.
Just as important as knowing when to sell, is knowing what to move wealth into. It's not just a matter of selling silver and switching back to dollars. Heavens no. Suppose you buy $100 worth of silver. Then silver goes up by a factor of 10, so it's now worth $1000. So you sell and hang onto your $1000, congratulating yourself. But then silver keeps rising, and it goes to $10,000. You've just given back all your gains.
Keep in mind the dollars are declining in value, so some rise in precious metals is due to inflation (or dollar devaluation). Some rise is due to investor speculation. Some is due to scarcity as industry keeps using it up.
Anyway I'm not even close to consider selling any of the silver I have. Rather, I'd love to buy more. But I'm already 100% invested.
Hope this post was informative.
-Dave
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