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Kevin McElroy  

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  • The Dollar Will Fail - No 'Ifs' About It [View article]
    Dal, thanks for the helpful input.

    Instead of coming to the conclusion that there's "not enough gold," I guess I come to the conclusion that there are too many dollars chasing too few goods. Hence, I think we'll see continued appreciation in gold prices denominated in dollars. I guess that makes me a crazy end-game gold bug who believes we should mine the moon for gold and line our houses with tin foil, etc.

    You can label me crazy if that helps you gloss over the obvious and major problems affecting the dollar. My crazy ideas have made me some nice gains...
    Nov 7, 2011. 04:07 PM | Likes Like |Link to Comment
  • The Best Time To Own Gold Begins Now [View article]

    My rule of thumb for a minimum amount of physical gold and silver to own is at least 6 months of living expenses. Tally up your grocery bill, your heating/cooling bill, your fuel, electricity, and other living expenses for a 6 month period, and buy that much gold and silver.

    That's a really quick and dirty calculation that will probably give you the bare minimum of PM holdings that you might need during the absolutely worst case scenario of a currency crisis.

    I don't own any paper gold or silver, though I will occasionally trade options on the bigger gold and silver ETFs.

    I know some gold-minded advisors will recommend 50% of your holdings in gold and silver. That's a lot of eggs in one basket, especially if that basket is all in one place - either at your home or in an ETF or bank. So if you're inclined to own that kind of a significant chunk of your portfolio in gold, think about diversification within the asset class. Diversification of locations where you store your physical. Diversification of the different types of paper gold holdings. Diversification among PM miners, etc.
    Nov 7, 2011. 08:18 AM | 1 Like Like |Link to Comment
  • The Dollar Will Fail - No 'Ifs' About It [View article]
    Besides the irony of calling me sophomoric as your first point - I happen to agree with everything else you say.

    But most of those problems that you list have a direct link to a dishonest unit of account. I don't think a currency needs to be hidebound to gold necessarily, in order to be honest, but it should be hidebound to something. Maybe it's a balanced budget amendment. Maybe it's gold. Maybe it's moon rock - but something (anything!) needs to constrain the tendency of government currency stewards to NOT destroy that currency for political gain.

    Wars are a symptom of keynesian policy, (and btw, Keynes and MMT theorists have more than the current batch of wars on their hands). Corrupt banking systems? That's a direct result of the Fed's dishonest money policy. Corporatism...corrupt government...inflated University and healthcare costs... everything you've mentioned is a direct or indirect consequence or symptom of a politicized and completely unrestrained fiat currency. I'm not going to connect the dots, because I'm sophomoric, and dot-connecting is more of a pre-schooler activity.
    Nov 7, 2011. 08:01 AM | Likes Like |Link to Comment
  • An Essential Follow-Up On Platinum [View article]

    The problem with jewelry as an investment is that out of the gate, you typically have to pay 100%+ markups on the metal value of each piece.

    There are exceptions of course, but the second problem is that jewelry is not very fungible. Whereas a one ounce gold coin is standardized for weight, purity and recognizability, the same can't be said of jewelry.

    But if you're interested in investment grade jewelry, I know the folks over at Asset Strategies have sold gold bracelets and necklaces with specific weight and purity content. Check them out:
    Nov 3, 2011. 02:30 PM | Likes Like |Link to Comment
  • The Best Time To Own Gold Begins Now [View article]
    I've gone over this many times - but if you want to profit from the bull market in gold, gold might be the worst way to play the trend. Look into gold stocks for real profits. GDXJ isn't the worst place to get started.

    But I own physical gold for safety. Reliability. Surety. Physical gold is the only monetary asset that isn't simultaneously someone else's liability as Doug Casey says.

    In the likely or unlikely event that we're met with a full scale currency game-over, do you think your paper gold will do you a lick of good?

    Gold is money. For me it's something of an emergency money. It's a lifejacket. Sure I might not ever have to use my lifejacket, but that's not a compelling reason to keep it in a vault far away from my boat. Currencies sink with greater regularity than boats - so I'm keeping my gold physical, in a safe, hidden place.
    Nov 3, 2011. 01:40 AM | Likes Like |Link to Comment
  • The Best Time To Own Gold Begins Now [View article]
    Hack, this argument of yours must be worn through in the knees. It gets drug out any time someone mentions buying physical precious metals.

    I own gold. You don't know where it is. The bad guys don't know where it is. I have guns. I have ammo. It's not an either/or situation. I also own dollars! And stocks! I have a 401(k)!

    I'm not crazy, though I guess it makes your decision to eschew sound money much more palatable when you paint gold owners with the crazy brush.

    I'm not convinced we'll see a total meltdown of the dollar, but I'm prepared for that circumstance. I'm also prepared for the opposite. The question is: why are you only prepared for the "all is well with the dollar forever" scenario?

    The real concern here isn't Armageddon either. It's a currency crisis - one which by degrees gets worse nearly every day. Things don't have to turn biblical in order for them to be more than mildly unpleasant. Pay attention to history, and you'll see that capital controls, property seizure and frozen accounts are often some of the solutions governments enact when fiat money runs into trouble.

    Owning physical gold gives you insurance protecting against the likelihood of such byzantine measures.
    Nov 3, 2011. 01:32 AM | 2 Likes Like |Link to Comment
  • The Best Time To Own Gold Begins Now [View article]
    Three days seems too far for my comfort. When does a serious crisis ever give you a 3 day head start?

    In the circumstance that you actually want your coins, you're not going to be able to get them. It would be like storing your scuba gear in a flood plain. If you need it, you won't be able to get it.
    Nov 2, 2011. 04:43 PM | 2 Likes Like |Link to Comment
  • The Best Time To Own Gold Begins Now [View article]
    1) you can get robbed of your paper holdings.

    2) You can still transport or ship gold out of this country. It's not easy, but any of the serious reasons why you'd flee to another country would probably prevent you from moving your paper holdings around as well.

    3) Liquidity is moot if your gold doesn't exist. Or if Uncle Sam decides to halt trading for any number of made up reasons.

    I know these reasons seem somewhat specious, but you ostensibly own gold and silver because you see the currency situation in the West continuing to deteriorate. Currency crises don't tend to end in a whimper.
    Nov 2, 2011. 03:34 PM | Likes Like |Link to Comment
  • The Best Time To Own Gold Begins Now [View article]
    I agree, calls are expensive. That's mostly because GLD is a $169 etf.

    And while most investors probably don't have the permission from their brokerage to sell options, I think selling puts can be a GREAT strategy if used correctly.

    I have 2 rules for selling puts:

    1) Position sizing. Okay, this rule actually transfers to all investing, but with options it's acutely important. Don't sell more puts than you can comfortably afford to. If you get filled, or you need to buy the puts back at a loss, you don't want to be up to your eyeballs. Each trade should ideally only effect less than 15% of your total account. That way if you are down 50% in the trade, you'll only be down 7.5% overall.

    2) This rule is more options-specific. Only sell puts at a strike price that you would LOVE to own the underlying if your trade gets exercised. That way, the worst case scenario is that you're buying the underlying at a price you like.

    For a trade, I'd look at far out of the money puts to expire in January. Maybe 135 or 129 puts. Have a plan for stop losses. Have a plan for gains. If you're up 20-50% with a month left - it might make sense to take the money off the table and buy to close the trade.

    I'm not really an options expert, but I can personally vouch for my buddy Andrew Crowder here on SA. He's a solid 12+ year options veteran.
    Nov 2, 2011. 12:53 PM | Likes Like |Link to Comment
  • PPLT: Why I'm Buying This Precious Metals ETF [View article]
    Jimmy, my thesis for gold includes higher prices over the next year at least. I'm just trading PPLT until it reverts to mean, and as long as there's sustained strength in the gold market - which will be the case as long as these pesky sovereign debt issues stick around - I think this PPLT trade has legs.

    BTW are you short gold? Buying long dated puts? Selling GLD?
    Nov 2, 2011. 09:25 AM | Likes Like |Link to Comment
  • PPLT: Why I'm Buying This Precious Metals ETF [View article]
    Yeah, looks like I might miss the boat unless I readjust my bid. Good job getting in early.
    Oct 27, 2011. 11:08 PM | Likes Like |Link to Comment
  • Be Careful What You Wish For [View article]
    Would one (unpalatable) investment implication be to go long banks?
    Oct 24, 2011. 12:45 PM | Likes Like |Link to Comment
  • Gold: Be Patient, Be Diligent [View article]
    I like this strategy! It reminds me of the Asset Allocation strategy used by University endowments - and popularized in this book:

    Stick with it and I think you'll do fine.
    Oct 17, 2011. 11:01 AM | Likes Like |Link to Comment
  • Puda: The Chinese Coal Conundrum [View article]

    If you look into this company's financials and history you'd have to be suicidal to buy or hold at this level. Unless you want to trade some kind of dead-cat bounce...

    Cutting a big loser is not an emotional move. It's a mathematical one. In the first place it would have been nice to cut this when it was a small loss - back before Alfred Little exposed the company. Now that it's a big loss, the plan is to avoid taking a total loss. You can come back from a big loss. It takes time and diligence. But a total loss is just that: the capital is completely gone, and it's not coming back.

    Avoid losses. And certainly avoid total losses. Holding this stock at this point would be a bizarre admission that there aren't better opportunities out there - which of course is not remotely true.
    Oct 14, 2011. 09:52 AM | Likes Like |Link to Comment
  • What Is Operation Twist Designed To Accomplish? [View article]
    Nice piece Tom.
    Oct 13, 2011. 02:17 PM | Likes Like |Link to Comment