Tag Archive | "commodity speculation"

The Golden Pet

What is silver?  What is gold?   Are they investments… or what?  Yesterday’s message looked at how readers used the “Silver Dip” to  turn $250 into $51,599 in three years.   The message outlined an idea for speculating in silver and currencies.  Huge profits can be made in this type of speculation, but it is really, I mean really, important to also understand the risks and precautions required, as well as the potential rewards.

The Silver Dip is an investment in silver, or is it?  Are gold and silver, investments or just speculations, or something different?


One of my worst investments, why do I keep them?

I am one of the original gold bugs, who began investing in gold and silver in the 1970s.  I made, by pure luck, some nice profits.  Then I gave more of the profits back thinking that I understood silver and gold.

A great part of investing globally for 50 years, is that one gets a feel for thirty year trends.  Feeling a trend is important because researching helps you know a trend, while not understanding the emotions that go with the numbers.   Feeling makes the difference between how prices move and what investors do.

There are many stories that explain why gold and silver are good investments, but the logical mathematics do not support these tales.   The chart below from Keppler Asset Management’s “2015 Asset Allocation” review tells the tale.

asset allocation review

89 year comparison of asset growth from Keppler Asset Management.

The reality is that over 89 years, US bonds have outperformed gold.  Gold is not really a good investment.

A Wall Street Journal article: “Let’s Get Real About Gold: It’s a Pet Rock” points this out when it says:  Since 1975, the beginning of the period in which private ownership of gold has again been legal in the U.S., the metal has returned an average of 0.8% annually after inflation, compared with 5% for bonds, 8.3% for stocks and even 1.1% for cash, according to Christophe Spaenjers, a finance professor at HEC Paris business school. “It can be very difficult to rationalize the price movements of gold, even with the benefit of considerable hindsight,” he says.

Yet I keep gold coins as insurance, even though I have to pay storage fees.  

Gold is a commodity and a currency but unlike stocks and bonds, it is extremely difficult to determine its real value because it does not generate income.  It is essentially worthless unless someone wants to use it (in jewelry or industry) or because of its rarity.  One can try to understand the supply and demand of silver and gold, but the main input to value are stories and imagination.

There are even limitations to its value as insurance.  If the global financial system world as we know it comes unglued, we probably cannot carry gold bars around to do our shopping.   If a dollar weakness turns into a downwards rout, there is plenty of precedence to assume that gold hoarding could become illegal.  Today’s government control over banks, pawn shops and metal dealers would make sure a ban more effective than in past times.   One could hoard goal, but how could one sell it?

Gold is a store of value and a great speculation.  There is still sense in holding some gold and silver as insurance, especially if you know that there will be bubbles where you can take profit.

Two ways to speculate.   The first approach is to buy gold and silver.  Hold it.  Wait.  The next bubble may take years.  When the spike comes, take profit.  The chart below from FXstop (2)  shows that we have enjoyed two of these bubbles in 50 years.  If the pattern remains true, the next bubble will be in 204o.  I have let my kids (who I hope will inherit Merri’s and my gold and silver) know this.

historic silver chart

The second way to speculate in gold and silver is to speculate in the intermediate spikes. We can see these spikes in the chart above.   Leveraged speculations in these spikes that appear every few years can be highly profitable, as was the silver dip when a $18,600 loan (that cost $250 to set up) turned into $51,599.   History suggests we are about to see one of these spikes shortly which is why I am releasing the report “Silver Dip 2015” in about two weeks.

Huge Profits Include Great Risk

I am only releasing this report to our Purposeful investment Course subcribers because that course outlines the risk and how to mitigate loss potential.

Currency speculation involves high risk as is evidenced in a Wall Street Journal article that shows how highly experienced, well funded specialists turned $2 billion into $50 million.   The article “Carlyle Fund Walloped in Commodities Rout” (3)  says:  Selloff has helped drive down holdings in its hedge-fund firm’s flagship fund from about $2 billion to less than $50 million.   Three years after private-equity giant Carlyle Group LP touted its purchase of a hedge-fund firm, a rout in raw materials has helped drive down holdings in its flagship fund from about $2 billion to less than $50 million, according to people familiar with the matter.  At one point, two of Carlyle’s co-founders, David Rubenstein and William Conway, put tens of millions of dollars of their own money in the fund and left it in amid the losses and redemptions, according to people familiar with the matter.  A collapsing market for raw materials is spreading pain well beyond commodities specialists to some of the heaviest hitters on Wall Street.  Commodity firms lost money for three years in a row before 2014, HFR said.  Commodities are one of the most challenging markets to invest in, because of their complexities and penchant for volatility.  Commodity prices have plunged due to a combination of factors, including a stronger dollar, an anticipated increase in U.S. interest rates and an expectation that cooling economic growth in China will undermine the country’s voracious appetite for resources.

Gold and silver can be many things.  Merri has told me a wonderful family gold story many times.  Her father was an entrepreneur and times were mostly good but, as in most endeavors, once in awhile a sticky path would occur.   When times seemed threatening her father would pull a bar of gold out of a storage drawer and remind the family, “If everything turns bad, we always have this gold to rely on”.

Years later on his passing Merri was cleaning out the storage drawer and pulled out the bar of gold.  It was a fake, a paperweight painted a gold color and of almost no value!  The weight had served its purpose though.  Providing a feeling of  security and comfort when needed most, a simple paper weight was as good as gold!

That’s what we all need, the feeling that no matter how events unfold, we’ll have some security and comfort.   If having gold stored away brings these feelings, go for it!  If hopes of a great and fast profit, with risk of loss, brings these feelings, go for it.  Gold and silver bring comfort.  So does petting our dogs!  Understand what history tells us. Gold is a pet. Gold and silver can bring profit, but be sure that the way you go about using gold and silver is suited to your finances and you.


Due to history,  I am releasing a new “Silver Dip 2015” report in the next two weeks.

This report is exclusively available to subscribers of the Purposeful investment Course.

The speculation is so time sensitive with such fast profit (but also loss) potential that I will not offer it to readers who have not received the education in Pi on when and who should and should not speculate and how to limit losses and take profits.

Subscribers to Pi also learn the 50 golden rules of investing.  The Purposeful investment  Course (Pi) looks at how to protect against shady investment advice, unreasonable and hidden fees.  This is especially true when it comes ot trading in currencies and metals.

Pi examines how to gain the ultimate form of financial security, investments with purpose and profit.  When you subscribe to Pi, we will include you in the “50 Golden Rules of Investing Program,” without any additional cost or obligation.  Each month in “Pi” we’ll delve more deeply into four or five “Golden Rules of Investing”.

Pi subscribers will receive Silver Dip 2015 on September 1, 2015.

There is also another, much safer, once every 30 year opportunity that I have described in a short, but powerful report “Three Currency Patterns For 50% Profits or More.”  This report shows how to earn an extra 50% from currency shifts with even small  good value investments.

The report also shows how to reduce trading costs and gain protection from unethical banks and investment advisers.  The report shows 22 good value investments and a really powerful tactic to use that allows you to accumulate these bargains now even in small amounts (even $5,000).  There is extra profit potential of at least 50% so the report is worth a lot.

The report “Three Currency Patterns For 50% Profits or More” is $29.95 but you get it free when you subscribe to Pi, the Purposeful investment Course.

Triple Guarantee

Enroll in Pi.  Get the first monthly issue of Pi, the first five “Golden Rules of Investing” and the report “Three Currency Patterns For 50% Profits or More” right away.

#1:  I guarantee you’ll learn ideas about investing that are unique and that can rescue stress as they help you enhance your profits through slow, worry free purposeful investing.

If you are not totally happy, simply let me know.

#2:  I guarantee to cancel your subscription and refund your subscription fee in full, no questions asked.

#3:  I guarantee you can keep the golden rules of investing you have received and “Three Currency Patterns For 50% Profits or More” report as my thanks for trying.

You have nothing to lose except the fear.  You have the ultimate form of financial security to gain.

Order the report “Three Currency Patterns For 50% Profits or More”  $29.95

Subscribe to Pi and save $102 (Pi is priced at $299 per year but we have an introductory discount available now; only $197 for the first year), plus received the “50 Golden Rules of Investing” and “Three Currency Patterns For 50% Profits or More” report” free.

Save $131.95.   Subscribe to the Pi for $197.

(1) Wall Street Journal Let’s Get Real About Gold: It’s a Pet Rock

(2)  Fxtop pound dollar historical charts

(3) Wall Street Journal Carlyle Fund Walloped in Commodities Rout

Gain From Election Volatility

Here we are again… another election on its way… all the robo calls from politicians… the dirty tricks and the innumerable amounts of nonsense this vital process brings.

However America’s politics turn out, one thing is sure.  There will be volatility in stock markets during the election process.

The first reason markets will bounce has nothing to do with politics or policies.   A market correction is due regardless of the party or the person in office.

Second the new politics has created an uncertain era.  Everyone has been shaken over the past three years whether they are pleased with the government or not.

Nothing frightens markets like uncertainty.

Third if we see rising interest rates, this will push markets down.

Despite these pitfalls, there is a way to profit using the strong US dollar and undervalue non dollar stock markets to pick up good value shares.

During nearly five decades of global investing I have noticed found that good value strategies are the best way to profit long term, through good politics and bad.  The steps to take are simple.

The first tactic is to seek safety before profit.

We can look at Warren Buffett’s investing strategy as an example.  Buffett success is talked about a lot, but rarely does anyone explain how he make so much money.  That was the fact until some researchers really stripped his operation bare.  They looked at everything and learned the deepest of Buffett’s wealth management secrets.  Fortunately they published all in a research paper at Yale University’s website. that reveals important truths about extending wealth.

This research shows that the stocks Buffett chooses are safe (with low beta and low volatility), cheap (value stocks with low price – to – book ratios), and high quality (stocks of companies that are profitable, stable, growing, and with high payout ratios).

The second tactic is to maintain staying power.  At times Buffet’s portfolio has fallen, but he has been willing and able to wait long periods for the value to reveal itself and prices to recover.

A 45 year portfolio study shows that holding a diversified good value portfolio (based on a  good value strategy) for 13 month’s time, increases the probability of outperformance to 70%.

However those who can hold the portfolio for five years gain a 88% probability of beating the bellwether in the market and after ten years the probability increases to 97.5%.

Time is your friend when you use a good value strategy.  The longer you can hold onto a well balanced good value portfolio the better the odds of outstanding success.

The Buffett strategy integrates time and value for safety and profit.

A third tactic is using limited leveraging, tactic in the strategy boosts profit.  Buffett leverages his portfolio at a ratio of approximately 1.6 to 1.   The Yale published research paper shows the leveraging methods used by Warren Buffett to amass his $50 billion fortune.  The researchers found that the returns from Buffett’s investment company, Berkshire Hathaway, far outweighed those achieved by any rival that has operated for 30 years or more.  The research shows that neither luck nor magic are involved.  Instead, the paper shows that Buffet’s success hinges on using leverage at the rate of 1.6.

To sum up the strategy, Buffet uses limited leverage to invest in large purchases of “cheap, safe, quality stocks”.  He limits leverage so he can hold on for very long periods of time, surviving rough periods where others might have been forced into a fire sale or a career shift.

Stated in another way buffet uses logic (buy good value) to have the conviction, wherewithal, and skill to invest with leverage over many decades.

What do we do when we are not Warren Buffett?

May I introduce the Purposeful Investing Course (Pi) for those who want to invest like Warren Buffet, but know they are not.  This course is based on my 50 plus years of investing experience combined with wisdom gained from some of the world’s best investment managers and economic mathematical scientists.

Enjoy Extending Wealth

Pi’s mission is to make it easy for anyone to create a three point strategy, like Buffett’s even though they do not have a lot of time for or knowledge about investing.

Pi reveals investing secrets and the sciences that make investing easy, safer, less time consuming and increases the chances of profit.

One secret is to invest with a purpose beyond the cash.  One tactic as mentioned is staying power.  This means not being caught short and having to sell during a period of loss.  This also means having enough faith in a strategy that we stick to the plan.  When we invest with purpose, doing what we love, we enjoy the process more and are more likely to hold on during down times, when most poor investors panic and sell.

Slow, Worry Free, Good Value Investing

Stress, worry and fear are three of an investor’s worst enemies.  They create the Behavior Gap, a trait exhibited by most investors, that causes them to underperform any market sector they choose.  The behavior gap is created by natural human responses to fear.   Pi helps create profitable strategies that avoid losses from this gap.

Spanning the Behavior Gap

Behavior gaps are among the biggest reasons why so many investors fail.  Human evolution makes fear the second most powerful motivator.  (Greed is the third.)  Fear creates investment losses due to behavior gaps.  Fear motivates us more strongly than desire.  By nature investors are risk adverse.

Winning investors though embrace risk because they have a plan based on good value.

Purpose is the most powerful motivator,  stronger than fear and greed, so a strategy with purpose is the most powerful of all.

Combine your needs and capabilities with good value secrets and the math to back up your value selections through the Pifolio – The Pi Model Portfolio

Lessons from Pi are based on the creation and management of a Primary Pi Model Portfolio, called the Pifolio.  There are no secrets about this portfolio except that it ignores the stories (often created by someone with vested interests) and is based entirely on good math.

The Pifolio is a theoretical portfolio of MSCI Country Benchmark Index ETFs that cover all the good value markets using my (almost) 50 years of global experience and my study of the analysis of four mathematical investing geniuses (and friends).

The Pifolio analysis begins with a continual research of international major stock markets that compares their value based on:

#1:  Current book to price

#2: Cash flow to price

#3: Earnings to price

#4: Average dividend yield

#5: Return on equity

#6: Cash flow return.

#7: Market history

We follow this research of a brilliant mathematician and have tracked this analysis for over 20 years.    This is a complete and continual study of international major and emerging stock markets.

This analysis forms the basis of a Good Value Stock Market Strategy.   The analysis is rational, mathematical and does not worry about short term ups and downs.   This strategy is easy for anyone to follow and use.  Pi reveals the best value markets and provides contacts to managers and analysts and Country Index ETFs so almost anyone can create and follow their own strategy.

A country ETF provides diversification and cost efficiency by spreading one simple, even small investment into a basket of equities in a good value stock market.  The costs are low and this type of ETF is one of the hardest for institutions to cheat.  Expense ratios for most ETFs are lower than those of the average mutual fund.

Little knowledge, time, management or guesswork are required.  The investment is simply a diversified portfolio of good value indices.  Investments in an index are like investments in all the shares of a good value market.

Pi matches this mathematical certainty with my fifty years of experience. This opens insights to numerous long term cycles that most investors miss because they have not been investing long enough to see them.

For example in the 1980s, a remarkable set of two economic circumstances helped anyone who spotted them become remarkably rich.  Some of my readers made enough to retire.  Others picked up 50% currency gains.  Then the cycle ended.  Warren Buffett explained the importance of this ending in a 1999 Fortune magazine interview.  He said:  Let me summarize what I’ve been saying about the stock market: I think it’s very hard to come up with a persuasive case that equities will over the next 17 years perform anything like—anything like—they’ve performed in the past 17!

I did well then, but always thought, “I should have invested more!”  Now those circumstances have come together and I am investing in them again.

The circumstances that created fortunes 30 years ago were an overvalued US market (compared to global markets) and an overvalued US dollar.

The two conditions are in place again!  There are currently ten good value (non US) developed markets,  plus 10 good value emerging markets.

Pi shows how to easily create a diversified, worry free portfolio in some of these good value markets using Country Index ETFs.

The current strength of the US dollar is a second remarkable similarity to 30 years ago.   The dollar rose along with Wall Street.  Profits came quickly over three years.  Then the dollar dropped like a stone, by 51%  in just two years.  A repeat of this pattern is growing and could create up to 50% extra profit if we start using strong dollars to accumulate good value stock market ETFs in other currencies.

This is the most exciting opportunity I have seen since we started sending our reports on international investing ideas more than three decades ago.  There is so much more to write and the trends are so clear that I have created a short, but powerful report “Three Currency Patterns For 50% Profits or More.”   This report shows how to earn an extra 50% from currency shifts with even small investments.  I kept the report short and simple, but included links to 153 pages of  Good Value Stock Market research and Asset Allocation Analysis.

The report shows 20 good value investments and a really powerful tactic that shows the most effective and least expensive way to accumulate these bargains in large or even very small amounts (less than $5,000).  There is extra profit potential of at least 50% so the report is worth a lot.

This report sells for $29.95 but you’ll receive the report “Three Currency Patterns For 50% Profits or More” FREE when you subscribe to Pi.


Pi also explains when leverage provides extra potential without undo risk.  For example in 1986 I issued a report called “The Silver Dip” that showed how to borrow 12,000 British pounds (at almost 1.6 to 1 dollars per pound the loan created US$18,600) and use the loan to buy 3835 ounces of silver at around US$4.85 an ounce.

Silver had crashed, I mean really crashed from $48 per ounce.  As prices decreased from early 1983 into 1986, total supply had fallen to 449.7 million ounces in 1986.  Mine production was restricted by the low prices at this time, with silver reaching a low for this period of $4.85 in May 1986.  Secondary recovery also was constricted by these low prices.

Then silver’s price skyrocketed to over $11 an ounce within a year.  The $18,600 loan was now worth $42,185.

The loan was in pounds and in May 1986 the dollar pound rate was 1.55 dollars per pound.  So the 12,000 pound loan purchased $18,600 of silver.  The pound then crashed to 1.40 dollars per silver.  The loan could be paid off for $13,285 immediately creating an extra $5,314 profit.  The profit grew to $47,499 in just a year.

Conditions for the silver dip have returned.  The availability of low cost loans and silver are at an all time low.  The price of silver has crashed from nearly $50 an ounce to below $14 as did shares of the iShares Silver ETF (SLV).

finance.yahoo.com chart SLV

iShares Silver Trust (symbol SLV) from www.finance.yahoo.com

Imagine investing in a spike like this… with leverage!

At the same time the silver gold ratio hit 80, a strong sign to invest in precious metals.

I have updated a special report “Silver Dip 2019” about a leveraged silver speculation that can increase the returns in a safe portfolio by as much as eight times.  The purpose of the report is to share long term lessons gained through 30 years of speculating and investing in precious metals.  While working on the report, when the gold silver ratio slipped to 80 and the price of silver dropped below $14 an ounce, I knew I needed to share this immediately.

I released a new report “Silver Dip 2015” so readers were able to take advantage of these conditions and leverage 1.6 times as a speculation.  That report generated profits as high as 212% and a revised 2019 issue has been produced.

“The Silver Dip 2109”  sells for $39.95 but  you receive  “Silver Dip 2019” FREE when you subscribe to Pi.


Subscribe to the first year of The Personal investing Course (Pi).  The annual fee is $299, but to introduce you to this online, course that is based on real time investing, I am knocking $102 off the subscription.  Plus you receive the $29.95 report “Three Currency Patterns For 50% Profits or More” and the $39.95 report “The Silver Dip 2019” free.

Triple Guarantee

Enroll in Pi.   Get the first monthly issue of Pi, and the report “Three Currency Patterns For 50% Profits or More” and “The Silver Dip 2019” right away.

#1:  I guarantee you’ll learn ideas about investing that are unique and can reduce stress as they help you enhance your profits through slow, worry free purposeful investing.

If you are not totally happy, simply let me know.

#2:  I guarantee you can cancel your subscription within 60 days and I’ll refund your subscription fee in full, no questions asked.

#3:  I guarantee you can keep “Three Currency Patterns For 50% Profits or More” and “The Silver Dip 2109” report as my thanks for trying.

You have nothing to lose except the fear.   You have the ultimate form of financial security to gain.

Subscribe to the Pi for $197.   You Save $158.95.

Your subscription will be charged $299 a year from now, but you can cancel at any time.