Friday, October 23, 2009

You Bought Silver at $8!!! Fool!!!

It was October of last year, silver was around $8.90 or so. I ran into someone who is an aspiring financial advisor. He asked me how I was doing and I told him fine and that I was buying as much silver as I could. He started shaking his head at me and told me the silver play was amusing (I'm used to people shaking their head at me).

Now, I guess when you see silver go from $21 an oz to less than $9 an oz you would think that play was over, right? Just like the play was over for Goldman, Bank of America and Citi, right? Wrong. Oh but they're mainstream....and when you buy their stock advisors get commissions. I digress.

So now, here we are and all the buzz is precious metals (if you're paying attention). Had I taken his advice I may have made some returns in the stock market, true. But how much risk will I have subjected myself to? The S&P has a P/E ratio of over 140. 140!!!!! Not only that but the validity of the rally is in serious doubt. Where is all this growth coming from? Earnings? Sure I could show earnings too if I laid off half my workforce. The growth wouldn't be from the Fed and banks intervening and speculating in the markets would it? Check out this chart from James Turk's website .

He wasn't sure of the author of the chart and I'll give props if that person contacts me. Looks a little suspicious doesn't it? How long can that go on? Will you still be in the market? If it crashes will you sell in time? Will you keep all those gains? Good luck. You probably never saw the last shellacking you got coming did you?

The reason I have been buying silver and have been telling everyone I know to do so as well and did not take my friend's advice is because I had the AUDACITY to conduct my own research. Much of it. Many, many hours. While most folks were watching American Idol I studied. Rigorously. And for my efforts, this is what I get, read an email I recently received (but first read my disclaimer at the bottom of the page)...

"I have been buying Gold & Silver for about 18 months. I moved my 401k Plan completely into gold stock mutual funds last June. Last fall my portfolio was crushed, as was most of the world. I stayed in the game and continued to buy at very attractive levels. I have made a lot of money (on paper) this year. My 401K plan is actually about 5% higher now than when I moved everything into gold last June. Of course in hindsight, if I had the foresight to move out of gold before the crash and back into it after the crash I would have about 150% return on my money. No one is that good, but when I read someone saying there is going to be a large correction, I listen because of the potential opportunities.

In the last 12 months I have been buying gold and silver at every dip in the road. Based on some of your recommendations in the Spring, I bought a number of Silver stocks that are up 125 to 175 % since I bought them. (Thank you, Steve)"

That folks is why I do what I do. That is exactly why I write this blog.

Thank you R for writing that message to me.

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