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| I see where you're coming from and I can respect it. This post is not me trying to convince you to do what I'm doing, but since you seem to be advising against what I'm doing, I thought I'd explain why I'm doing what I'm doing.
To me there are a lot of differences between what I'm doing and what I would be doing if I went to Vegas. First there are the silly differences that are really just easy shots to make it look different. Things like, I'm not wasting a week of my life, I'm not paying for transportation to and from, and I'm not buying expensive hotel rooms and food. If those types of things were my only reason, yes my position would be difficult to defend. There are other reasons for me which are much more compelling though.
We are in a political and economic environment that virtually ensures that fiat money will continue to be created out of thin air at record breaking paces. This in turn ensures that the value of precious metals and commodities in general will rise.
So let's say I have $30,000 of cash and I don't want excessive printing to erode my buying power. What am I to do? You can't buy meaningful amounts of farm ground with $30,000. You can't buy much of anything that will keep up with inflation for $30,000.
I could buy $30,000 of physical gold or silver but then I have something small and valuable which means it's easy to steal. Additionally, if I want to sell it again so I can purchase something, things are much more complicated.
Instead I can invest a much smaller amount of money in paper silver. Since that margin money is leveraged, it protects the full $30,000 against the effects of inflation. Should I desire to use that $30,000 it's as easy as exiting my position on the market and spending the money on whatever I need.
Through a tool called the futures market, I am protecting the value of real dollars by owning silver.
Now let's say something odd happens. For example, not long ago silver went up 10% in just a few days after I purchased it. I guess I've read enough about silver that I believe it can do that and keep going up, but it just seemed like too much too soon to me. So I decided to exit my position so that I could re-enter at a later date. If it would have kept going up I would have been in no worse of a position than if I had just held on to cash and done nothing. If silver goes down after I buy, I really don't care. I have the real dollars to pay the margin calls. I may have to hold my position for years for it to recover, but I'm not risking enough for that to matter to me. I'm not putting myself in the situation where a market can be irrational long enough for me to to be insolvent. It literally cannot happen because I'm not risking that much.
Now if I were to try to buy low, pick a high and then sell not only what I bought, but also short the market, and keep trying to hit that cycle over and over, yes, I'd say I'm as bad or worse than going to Vegas. That's not what I'm doing though. I'm choosing silver as my tool for protecting myself from inflation while avoiding the hassle of physical ownership.
In regards to striking it rich, I won't do that. Like I said, I'm not investing enough to come anywhere close to sinking me. Therefore, I'm not risking enough to make me rich either. Just keeping up with inflation.
Finally, the numbers I've used in this post have no reflection on my balance sheet. I just picked numbers. Please don't read more in to it than necessary.
Still sure I'm going to lose everything doing what I'm doing?
Edited because I typed this on a phone and made several mistakes.
Edited by dpilot83 11/4/2012 07:23
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Silver drop
