Silver

Is it time to buy gold and silver? These insiders at mining companies certainly think so

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There is something eternal, beautiful and innate to the human psyche when it comes to gold and silver. It’s been a store of wealth forever and with the massive manipulation of the monetary system by central bankers, you have to wonder when that bill is coming due.  No doubt gold and silver will hold some value but like everyone else, I have no precise idea of what that is.  As I sit staring at the 10 oz .999 silver bar paperweight in front of me, I was thinking about how much it has declined in value.  In fact I started … Read more

USA Miners a Buy as Nations Tighten Grip on Resources

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USA Miners a Buy as Nations Tighten Grip on Resources     USA Miners a Buy as Nations Tighten Grip on Resources A new dynamic is developing in the flow of natural resources, countries from Indonesia and India to China and Russia are tightening their grip on natural resources as they limit exports to build up domestic industry in a trend that will spawn many challenges to World Trade Organization rules. However the move is not going to stop, this makes natural resource owners and miners in large consumption markets in the USA a strong buy. USA Industry will have … Read more

Global Markets Declare War On Speculators: Shanghai Gold Exchange Follows CME Hiking Silver Margins

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According to Mr. Durden at ZeroHedge, the Fed has now ordained Japan to carry out the global reliquification scheme in the form of a new, and powerful batch of QE, so the regional war on (Fed liquidity engorged) speculators has just gone global. Following 5 consecutive silver margin hikes by the CME (which oddly did nothing on yesterday’s price collapse even as the silver vol surged to near record levels) at which point it would appear silly for the exchange to continue its speculator eradication campaign, the memo has now been sent to foreign bourses. Sure enough, the Shanghai Gold Exchange … Read more

Fun with Dick (AGQ) and Jane (ZSL) and Spot (SLV)

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Seventeen years ago we saw the first leveraged mutual fund with daily reset.  Now we have dozens of them along with ETFs that work the same way.  Yet after all this time, many investors still don’t understand what leveraged funds can and cannot do.  Even professional investors ignorantly called these products “failures” because the long-term performance is not a multiplicative factor of the unleveraged performance.

Numerous hypothetical examples attempt to “prove” that leveraged funds will lose money over time.  To paraphrase a famous line: “Hypos?  We don’t need no stinkin’  hypos.”  Why use hypothetical examples when we have real-life actual examples right in front of us?

Today we will examine the performance of leveraged performance over more than one day.  This is not rocket-science.  It is elementary school math.  So in our real-life example I will call on some old friends from elementary school: Dick and Jane, and their dog Spot.

Being just a dog, Spot doesn’t know much math so he just follows the prevailing price, which is why it is called the “Spot” price.  We will use silver to illustrate.  The iShares Silver ETF (SLV) doesn’t buy stocks; it holds actual bars of silver in an attempt to track the spot price.  Therefore, SLV will represent our Spot.

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