silverInvariably, as the price of silver and gold begins moving higher, more investors will be drawn in to the mostly paper precious metals market.
Most of these buyers will be looking only at the price and could therefore be setting themselves up for a substantial disappointment. Many will simply take their losses and exit the market feeling scorned, perhaps never to return.
Those who see few alternatives, or who perhaps actually take delivery of physical metal will be faced with a steep learning curve that will hopefully be overcome by necessity at the least, and curiosity at best.
All long term precious metal investors will probably at some point end up asking themselves the following questions about the precious metals market.

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By Dr. Jeffrey Lewis, Silver Coin Investor:

The Importance of Asking Questions

All long term precious metal investors will probably at some point end up asking themselves the following questions about the precious metals market.  This helps illustrate the complexity of what seems to be on the surface a quite simple and barbarous investment.

Furthermore, it is those who can answer most of these questions that will be more likely to see the connections and the good reasons to keep at least some portion of their wealth diversified into precious metals.

 

40 Questions Long Term Precious Metals Investors Should Look to Answer

  1. What is a futures contract?
  2. What is a short or long position?
  3. What does concentration mean?
  4. What is a market corner?
  5. What is a margin call?
  6. What is stock to flow, and why does it matter?
  7. What is paper versus physical?
  8. What is the ratio of paper gold or silver versus physical?
  9. Why is that ratio important?
  10. What is the silver/gold ratio?
  11. What is covering?
  12. How many ounces of gold are there per futures contract?
  13. What does J.P. Morgan Chase have to do with the commodities market?
  14. What does it mean to ‘deliver’ into a commodities contract?
  15. What is a short squeeze?
  16. What is an ETF or Exchange Traded Fund?
  17. Why is ETF inflow important?
  18. Cannabis Ad

    What is the CFTC?

  19. Why has the CFTC been investigating the silver futures market for five years?
  20. What does J.P. Morgan Chase have to do with the aluminum market?
  21. Why does Germany want its gold repatriated (i.e. returned to Germany)?
  22. Why does (or did) the United States have Germany’s gold? (Clue: WWII)
  23. Why will it take seven years for the United States to return Germany’s gold?
  24. Why are gold and silver producers’ stocks trading at all-time lows?
  25. Why should investors not buy gold or silver stocks?
  26. What is the GOFO rate?
  27. Why is the GOFO negative?
  28. What are silver leasing rates?
  29. What is permanent backwardation in the gold futures market?
  30. How does permanent backwardation affect global markets?
  31. What is COMEX?
  32. Can a COMEX default occur?
  33. What is confiscation and how likely is it to happen again?
  34. Why have Central Banks closed their short positions and opened long positions in the gold futures market?
  35. Why are silver futures shorted so heavily by major players?
  36. How long do fiat currencies typically last once they have abandoned a gold or silver backing?
  37. What is hyperinflation?
  38. Why did President Nixon unilaterally remove the U.S. Dollar from the Gold Standard in 1971?
  39. Why did President Johnson remove silver from currency circulation in 1965?
  40. What is the current purchasing power of a pre-1965 silver or dime ?

Basically, finding accurate and well-informed answers to these forty pertinent questions seems crucial for long term investors who anticipate riding the silver bull market of a lifetime.

  1. When the news came out that Germany wanted its gold repatriated, that was the flag for me when they were told YEARS would pass before they could have their gold. That proved to me that there was little or no gold on the shelves where it’s supposed to be.
    Ghost gold……is in the west,
    actual metal is stacked in the east, except for us stackers of course.
     

  2. @SilverSlicker my thoughts exactly! The economic news is nothing more than fog and funny mirrors and the news in general shows me that times they are a changing very fast……….wait till this obuma care BS goes into affect.  Our government can no longer be trusted !!!!!!!!
    Be prepared for WAR

    • But you don’t NEED investments….you NEED to know what’s going on with Jodi Arias….(waves hand) “These aren’t the droids your looking for…”

  3. There they go again, talking about INVESTING in gold and silver.  Those who can exit that paradigm will find great comfort in gold and silver, not as investments to be worried and fussed over, but as:  1) a store of wealth; 2) real money; and 3) an insurance policy against a US dollar devaluation or full blown collapse.  
     
    Many of us have had any faith we once had in our leaders so thoroughly abused that it is no longer possible to look at them and think, “Yes, these guys know what they are doing and will solve our economic and financial problems”.  Considering all the foolish things they have done, the necessary things they have failed to do, and their general incompetence in most things but especially economics and finance, there is no way in hell that these guys can not screw this up.  Given that, the only people we can trust with our wealth and our financial future is US.
     
    The best way I know to build up a nice stack of real wealth is to buy silver and gold on a routine basis.  The amounts can be small but the steady buying of these metals over time WILL build up a nice stash.  It is also helpful to double down and buy more when prices have pulled back.  This can lower our cost per ounce and result in more ounces purchased for the fiat we have available.  It’s not about the Benjamins, it IS about the ounces.  Do not worry about PM price tops and bottoms.  It is possible to do very well in many things without buying at the very bottom or selling at the very top.  There is a very nice chunk in the middle that can provide all the wealth any of us really needs.
     
    Once purchased, these metals are securely stored away against a time of future need.  Just as people who buy insurance policies do not drag them out frequently to check their value, so too do stackers not worry too much about what they paid for the silver and gold that they have.  If we do have a financial disaster of some kind, these ounces of real wealth could well make the difference between eating well and not eating at all.  Most of us feel very strongly about protecting our family and friends.  This is just another way in which we can do that.  
     
    It is this insurance aspect of precious metals ownership that I find most attractive.  In many cases, when insurance is bought, we hope that we never have to use it.  We pay our money, get our policy, file it away, and then don’t think of it again unless something bad happens that will activate the policy pay-out.  Our money is gone but we have some assurance that either we or our family will be protected from financial loss.  While collecting PMs as financial insurance is similar, it has a huge difference from most insurance policies… it’s basically free!  If we buy X dollars worth of insurance today, we get the protection it offers but it runs out in time and becomes worthless.  If we buy X dollars worth of silver today, it is likely to be worth more than that in 10 or more years; perhaps even much more.  It could be sold at that point if spending money is desperately needed or we can continue to hold it, perhaps passing it on as a family legacy to our children or grand children so that they might have the benefit of this insurance should something bad happen in their lifetime.  Since this is a form of insurance, it is held for a long time and not sold off for any but a real emergency… and, no, an exotic vacation, luxury car, or the latest electronic gizmo is NOT an emergency.
     
    Real emergencies come in the form of life altering situations that can and sometimes do happen to anyone.  A serious disease or injury and the large medical costs it can bring if we are not suitably insured for medical care.  The death of a spouse.  The loss of a good job.  A house fire or other substantial home damage that is not fully insured.  Or those things that other countries have suffered that would be financially devastating to most people:  the loss of world reserve currency status for the US dollar, a large devaluation of the dollar, a collapse of the world economy via the derivatives bubble popping, or a collapse of the dollar / UST bonds.  Most of these are beyond our capacity to affect in any way but we can handle some of the effects that they produce… such as providing real money that most merchants and farmers will accept once a collapse has occurred and paper money has resumed its intrinsic value of zero.
     
    Paper money that has been converted into PMs does not need to be converted back and forth if it is your savings.  This is money that you have no pressing need for and can afford to leave it in PMs for several years, if not longer.  Since we only experience a loss if we are forced to sell when prices are below what we paid, being able to hold on for the long term is quite valuable to a stacker.  Think of PMs as being more like a long-term CD than like a stock or a bond.  If it isn’t needed for short term use, then we don’t have to worry about the price of these metals because we aren’t going to be selling them anyway unless some very bad circumstances force us to do so.  Otherwise, we just continue to hold these metals and add to their weight when and as we can.
     
    Of course, no plan is ever perfect.  It’s an imperfect world and it is possible that our PMs will not perform as expected.  While this is certainly possible, life is frequently a game of odds and any time we can bend the odds in our favor, even a little, it is usually worthwhile to do so.  While we do not necessarily know what the future holds for PMs, we most certainly do know at least part of the future for US dollars.  They shrink in value with time, buying less as time passes.  They have been doing this for the past 100 years and will likely continue to do so as long as our Gov and Fed refuse to embrace sound money policies.  Given all this, isn’t is a pretty good idea not to have all of our financial eggs in the same shrinking fiat basket?
     

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