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hey all, just thought i'd share an anecdote that i previously thought totally irrelevant, and kept to myself, but might help some people out there, regarding holding precious metals. (i REALLY do not care to start yet another macro-debate about holding metals, the USD, zombies or lack thereof, bubble ben bernanke, etc, so please just take this at face value, as it is a real-world experience of mine.)
remember a few months back when commodities totally ate crap super fast? like within several days gold dropped around $100 an ounce, silver down 30% or something? the week after that happened, i sold off some(ok, most) of my metal holdings. i was still up ~15-20% or so, so i wasnt in the red, but here's the thing: when i called any of the local dealers that week, they didnt wanna touch it with a ten foot pole. at all. i literally could not get someone on the other side of a trade, in terms of a retailer, locally. i ended up trading through one of the larger wholesalers, and luckily the price didnt move too much in the SEVERAL days it takes to ship an insured, tracked, package of such nature, but i actually consider that luck.
the point is this: JUST like when CDO's tanked super fast in 2008, and investment banks had a hard time finding a warm body on the other side of a trade for them because it was so obvious that prices were literally going to be cheaper the next day(couldnt dump at 80% of face value cause any party knew they would be at 70% tomorrow), such a scenario is plausible if PM's ate it. so, in theory, such a commodity could literally have like 5 interested parties as buyers-all big wholesalers. again, that's fine, as long as your choice of those 5 or so wholesalers continue to accept trades. if that contingency falls through, it could be serious trouble for someone who NEEDS to get out quick.
just something to think about if ones' strategy is NOT "buy and hold". if the price of really ANY commodity is plunging literally day to day, it could be very hard to execute a trade in any effective time frame that doesnt involve alot of shirt eating.
remember a few months back when commodities totally ate crap super fast? like within several days gold dropped around $100 an ounce, silver down 30% or something? the week after that happened, i sold off some(ok, most) of my metal holdings. i was still up ~15-20% or so, so i wasnt in the red, but here's the thing: when i called any of the local dealers that week, they didnt wanna touch it with a ten foot pole. at all. i literally could not get someone on the other side of a trade, in terms of a retailer, locally. i ended up trading through one of the larger wholesalers, and luckily the price didnt move too much in the SEVERAL days it takes to ship an insured, tracked, package of such nature, but i actually consider that luck.
the point is this: JUST like when CDO's tanked super fast in 2008, and investment banks had a hard time finding a warm body on the other side of a trade for them because it was so obvious that prices were literally going to be cheaper the next day(couldnt dump at 80% of face value cause any party knew they would be at 70% tomorrow), such a scenario is plausible if PM's ate it. so, in theory, such a commodity could literally have like 5 interested parties as buyers-all big wholesalers. again, that's fine, as long as your choice of those 5 or so wholesalers continue to accept trades. if that contingency falls through, it could be serious trouble for someone who NEEDS to get out quick.
just something to think about if ones' strategy is NOT "buy and hold". if the price of really ANY commodity is plunging literally day to day, it could be very hard to execute a trade in any effective time frame that doesnt involve alot of shirt eating.