muses of the moment

June 20, 2012

Please, think in percentages

Filed under: Gold and Silver Investing, Precious metals — totallygroovygirlfriday @ 1:14 pm

The daily volatility of the gold and silver markets is going to get worse, not better, as we move through this global debt crisis. (You can apply this to all markets if you wish.)

Everyone has a cow every time the gold market goes up $50 or down. $50 is around 3% of $1600. A three percent move does not a crash or bull-run make. From the time gold was $500, 3% daily/weekly moves are normal, not a cause for panic. Do not let dollar amounts distract you from what is really going on: we are in a long-term gold cycle currently moving up.

If you calculate the percentage in financial investments (not dollar amounts), it shows you exactly how you are doing. It also helps you compare your “profit” with the real rate of inflation over the same period of time. That’s a real eye-opener.

Look at a ten-year gold chart to make yourself feel better. What is the percent gained during that time? How does plus or minus 3% compare to that number? We still have a way to go in this gold up-trend.

Percentages will cut out most of the noise.

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6 Comments »

  1. Armstrong strongly suggests that we will want to SELL gold at the pinnacle of the economic crisis. How will we know when we are there?!

    Comment by MikePhila — June 21, 2012 @ 12:58 am

  2. So far we don’t know. Some thoughts: high hitting between 2015-2017, at least $5000, could go as high as $10,000. Those are the numbers, timeline right now. Could change depending on amount of the dollars around and investor confidence level in government policies.

    gg

    Comment by totallygroovygirlfriday — June 21, 2012 @ 10:23 am

  3. GG,

    Do you have a plan in which you will sell all your gold when it hits its peak? I think I’d have a hard time doing it as you never know what the future holds …thoughts?

    Comment by MikePHila — June 21, 2012 @ 12:50 pm

  4. MikePhil,

    I am unsure, there are many factors involved and time will tell.

    When a peak is in the sights, gg will begin to sell. It will be over at least a 6-month period (preferably with a year-end break for tax payment division), so there will be time to access the economic/investment situations. I do not see a situation where I would sell all my gold/silver in one shot.

    Some factors:
    Is there a currency panic/collapse going on and gold, even after a peak, might be useful as a store of value or trade even if the price declines? That is a confidence and global system question.
    What are the tax implications at the time I am selling vs. the possibility of tax changes (good or bad) in the future?
    What is the next investment cycle that I will purchase to replace the gold/silver investment? Is the intersection between gold’s high and that low at the best possible place to sell? Will there be an intermediate investment (such as currencies) between gold and the next investment cycle? What are the risks and tax implications of that investment?

    Excel will help me to determine all these things based on the price and gains of my initial investments.

    gg

    Comment by totallygroovygirlfriday — June 21, 2012 @ 1:41 pm

  5. I’ll be reading your blog and patiently waiting to find out when to sell. The question shortly thereafter is what then to buy?

    Comment by MikePhila — June 21, 2012 @ 11:16 pm

  6. Good question.

    gg

    Comment by totallygroovygirlfriday — June 22, 2012 @ 9:42 am


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