Hello FC.
You know the truism, that a key component of being smart is knowing what you don’t know. So far as commodity prices, there are many self-appointed experts who think they were singled-out to receive supernatural powers, which defy the popular wisdom and be above it. They think they’re in the fast lane of the select. Investors should not waste a moment’s time subscribing to the boundlessly wise pronouncements of those superior intellects of the world.
I’m not a subscriber nor am I one purporting, myself, to have anything worthy of subscription. Number One: No matter how great the cranial capacity of any one person, no matter how great or talented that person’s dedicated staff, I do not believe one source (or even multiple sources, in aggregate) will do much better for you—so far as truly understanding Silver Market Fundamentals—than reaching into your pocket for a coin and flipping it.
Number Two: I’m a contrarian. The consensus opinion is more often wrong than right. You will note at the bottom of the Gold Chart I posted, the comparison volumes of institutions who buy to Hedge, compared to those who buy to Trade. Almost invariably, those who Hedge are right at market turning points. Almost invariably, those who Trade (to speculate) are wrong at market turning points.
These are my Commodity Trading Lessons:
1) Don’t believe prognosticators. You will do yourself a world of good by totally ignoring them. The commodity markets of the world are far too vast for any human intelligence or computer intelligence to master, according to understanding their future direction (in terms of days, weeks, or months).
2) What is known (and well known and unmistakable) is that commodity prices are cyclical. Play the percentages. Avoid the markets, except at major turning points. Even then, be realistic. Those turning points can only be approximated with uncertainty.
3) Gold and Silver prices, more often than not, move in the same direction. Silver prices, almost always, are far more volatile than Gold prices. Consequently, the trading risk is considerably higher. On the other hand, the Silver price swings are considerably greater than the Gold price swings; so you get far greater leverage on Silver trades. So far as trading Silver, do not fall into the trap of over-thinking it.
So far as Iron prices (as do Silver prices), more often than not, they move in tandem with Gold prices. If you believe we are closer to a bottom than a top (and want the liquidity of margin to trade on a reversal in direction), I suggest that you take a look at Arcelormittal, which is presently in the bargain basement. It’s the largest steel company in the world. Number One: The European markets are hurting. Arcelormittal is an important component (even though most of its business is outside of Europe). Number Two: The steel they produce is being sold into a terrible down market. Number Three: They’ve been beaten farther down because of their vast holdings of Iron ore.
