Tuesday, August 2, 2011
10:27 am (Hawaii) Really, is it necessary to thank the Bank of Korea for investing their wealth into gold? Tons and tons, now property of BOK. After all, that didn't help my ambition of owning fantastic amounts of physical gold and silver, buying in at cheap prices. Gold rocketed today and is near its high (1660) afterhours at 1658.
Silver benefited, as well, moving to 40.84 AH. I have a semi-stink bid in for a few shares of AGQ at 219. I almost re-opened a position at 200, but I stalled and it ran 3 bucks within 15 minutes. Or 10 minutes. It was fast. I hate to chase these days, so I figured out today's Fibonacci retrace (38.2%). Off yesterday's close at 206+ and today's high at 223+, that level is 216.69. I have the semi-stinky bid at 219, and if it drops a little more, I may get another few shares at 216+.
Otherwise, my focus is on physical. Exploring Kitco's site, I came across this "promo" item: Canadian Silver Maple 1 oz at only 43.79. I say only because that's just 3 bucks above spot and the Maple is .9999 pure. That's one extra digit compared to most fine silver coins and rounds. I know it's preferable to own coins minted in the country of your residence, but the coin fan in me wants to take this deal. It's selling at other locations for more. Provident has the Maple at 44.53 and APMEX has it at 45.29. APMEX will sell it as low as 43.79 — the same price as Kitco — but only if you buy a minimum of 500.
I like the Maple, but not quite that much. There's one catch about Kitco: spending minimum is $1,000. Also, there is a charge of $30 for shipping and a separate charge of more than $8 for insurance. Say I buy 40 Maples at $43.79. That a combined fee of $38, which is roughly 3x what I'd pay a stateside dealer. That is an extra $25 or so. That comes out to an extra $1.60 per Maple. That pretty much negates the "promo" cheapo price of $43.79. It's actually $45.39. Roughly what I would pay APMEX for the same deal. And more than I'd pay Provident.
If my attention on metal is foolish, so be it. I could ride AGQ, theoretically, to 300 or its spring-time high of 382 and bank some coin. Then I'd take that profit and buy physical ... which would then mean paying at least $50 an ounce for silver. Mathematically, it makes more sense to ride an ultra-silver ETF from 220 to 380 — a gain of 72% — than to buy silver at $50, which would be a 25% increase from the current price (40+). But that math is no guarantee of anything. If demand soars, it's possible that spot silver price could go to 50 while AGQ doesn't come close to 380 or 350 or even 300. Not probable, but possible.
Brother Turd Ferguson notes that open interest in silver is still moderate at best thanks to the May 1 shakeout by the CME mafia. So, speculators are apprehensive about re-entering these silvery waters. That works fine for physical owners and long-term holders of silver stocks. However, if today is any indication, open interest is about to take off. A market that declines by 2.2% (Dow Jones) to 2.75% (Nasdaq) takes all parties down. All ships sink with the lowering tide. That leaves only a few outlets for safety, which is why TZA was up huge today along with gold and silver.
The time to buy more physical was when spot silver was at 35, 33, even 32. I did just that. But I want and need more, so I'm leaning toward the same program of chiseling in, bit by bit, doing my version of dollar-cost averaging. It's easy to assume that a metal like gold, at all-time highs, is not the buy. Yet, nine days ago, I passed on more gold at 1600. It's now close to 4% higher. I added more silver at the time at 40.17, which is a good move so far. There's more upside, isn't there, in physical silver ... but there's also more treachery.
In both metals, there's no stopping a rising price if institutional buying is underway. Wish I knew.