A Trader’s Guide to Precious Metal Profits
→ Comex Insider Spills the Beans
I was shocked by the raging hysteria on eBay last week when I listed a dozen gold bullion coins for sale.
In one auction more than 45 people were bidding on a single coin!
There are dozens of ways to make money in the precious metals markets. I’ll show you several of them today.
But know this….I’ve traded precious metals from the floor of Comex (largest trading exchange). I know the tricks, gimmicks and games.
Most people….let’s say 90%....have been trained by Wall Street to believe the only way to make money with investing is by purchasing stock (in the companies they represent).
On top of that, most investors believe the ONLY way to make money with gold, silver, platinum or palladium is to buy low and sell high. This is one of the greatest deceptions in financial markets.
If you know what you’re doing and if we take the time to learn how the world and markets work in the real world (can you say MF Global?)….then we can make money when gold surges, plunges, stagnates or goes back and forth for weeks on end.
In the coming days there will be opportunities of a lifetime in dozens of markets, sectors and industries.
One market in particular is precious metals.
In my view, more money is lost in the precious metals market than any other market.
In my experience, as a former Comex precious metal trader, here are the two biggest reasons for LOSING MONEY in precious metals:
1. Following the masses or general public
2. Following or listening to people who have never made money in precious metals.
Today I’ll provide a short overview of the different ways to invest in precious metals. You’re probably familiar with most of these ways, but let’s just review.
I’ve included little-known strategies for generating profit and REMOVING IT from the market.
Most novice investors never have a strategy for removing profits.
Granted, most people know how to buy gold coins these days or ETFs.
But novice investors rarely have an exit strategy.
Whatever approach you choose to invest or speculate in precious metals it’s important to establish an exit strategy.
The gold I unloaded on eBay recently was part of a five year exit strategy. I bought some of this gold below $575 an ounce. I sold most of the gold for more than $500 per quarter ounce!
An exit strategy should include the best and worst case scenarios.
For example, the “buy and hold for a lifetime strategy” beat into our heads by Wall Street rarely works with precious metals.
Therefore, if you invest in a precious metals exchange trade fund (ETF) you should know the average price per share since the fund inception, the historical low and the historical high prices.
Armed with this information you can enter a trade knowing where the price is in relation to the average, high and low, helping you establish a general exit point.
For example, if you purchase a precious metal ETF near the average price of $5 and the historical high is $10, one exit strategy would be to sell before the historical high, say $8.50.
Granted, the ETF share price could exceed the historical high.
After you sell at $8.50 and REMOVE profits, you can always re-enter the trade at $8.50 and if the price exceeds the historical high you can profit accordingly.
The objective is ALWAYS to remove profits, and start over again small.
One key component to trading precious metals profitably is probability.
Probabilities, averages and constants are mathematical statistics the largest and most profitable precious metals and hedge funds use to make money.
Ways to Invest in Precious Metals
Numismatics and Rare Coins
Numismatics is the study or collection of currency, including coins, tokens, paper money, and related objects. Numismatists are usually characterized as collectors of coins. Numismatics includes the broader study of money and other payment media used to resolve debts and the exchange of goods. Rare and historical coins fall into this category.
A bullion coin is a coin struck from precious metal and kept as a store of value or an investment. Investment coins are generally coins which have been minted after 1800, have a purity of not less than 900 thousandths and are or have been a legal tender in their country of origin.
Bullion coins are available in gold, silver, platinum and palladium. The only exception would be the Krugerrand and the Swiss Vreneli which are only available in gold.
The American Eagle series is available in gold, silver and platinum, and the Canadian Maple Leaf series is available in gold, silver, platinum and palladium.
Exchange-traded Funds (ETF)
ETFs are available for gold, silver, platinum and palladium. ETFs are traded on most world exchanges. They typically track the price of the physical metal. ETFs are also available to short precious metals. In addition, there are ETFs which enable you highly leverage the precious metals market too.
Precious metals futures currently trade on various exchanges around the world and over-the-counter (OTC) directly in the private market. In the U.S., gold futures are primarily traded on the New York Commodities Exchange (COMEX) and Euronext LIFFE.
In India, gold futures are traded on the National Commodity and Derivatives Exchange (NCDEX) and Multi Commodity Exchange (MCX). Future contract prices are listed on financial websites and on exchange websites. The product symbol for gold futures is GC, and it is traded in a standard contract size of 100 troy ounces.
Precious metals options are option contracts in which the underlying asset is a gold futures contract.
The holder of an option possesses the right (but not the obligation) to assume a long position (in the case of a call option) or a short position (in the case of a put option) in the underlying gold futures at a given strike price. This right terminates when the option expires after a market closes or on the expiration date.
These do not represent the actual price of precious metals. These are shares in gold, silver, platinum and palladium mining companies. If the precious metals prices rise, the profits of the gold mining company may rise. But there are many factors to consider. Share price do not always rise when the price of a particular precious metal increases.
Mint and Commemorative Sets
Commemorative coin programs were created by an act of Congress to honor a person, place or event. Surcharges from the sales of these coins help fund a variety of organizations and projects that benefit the public. Commemorative coins are only available from the United States Mint for a limited time, as specified by public law.
Bars are a popular way of investing in precious metals. In some countries, like Canada, Argentina, Austria, Liechtenstein and Switzerland, gold and silver bars can easily be bought or sold at the major banks. There are also reputable bullion dealers around the world which provide the same service. Bars are available in various sizes.
Gold certificates were issued by the US Treasury from the Civil War until 1933. There are denominated in dollars.
The paper certificates were used as a gold standard and could be exchanged for an equal value of gold.
Gold certificates offer investors a way of holding gold without taking physical delivery.
This is how paper money got its start. But of course, bankers soon realized they could issue paper certificates and not be forced to store or back up certificates with actual gold.
Millions of precious metals jewelry exchanges hands every year. Jewelry is not usually considered a serious investment. It can hold and increase in value.
The most popular unit trust is BlackRock Gold & General. They invest in the shares of gold mining companies as well as other commodity businesses. Another unit trust is JPM Natural Resources. Gold mining equities are typically more volatile than the gold price.
“The King of Business Opportunities”
(Ed Note: Marc Charles is referred to as "The King of Business Opportunities" ....and for good reason. He should be known as "The King of Legitimate Business Opportunities"...because he's launched, bought, sold reviewed and advised on hundreds of businesses and money making opportunities. He understands legitimate opportunities. Marc has agreed supply League of Power members with crucial updates regarding legitimate business and money making opportunities.)
What is your plan with precious metals?
Would you like to trade precious metals futures, options or ETFs in the short term to make money?
Are you looking to develop a longer term precious metals plans with bullion coins, unit trusts or Mint Sets?
Select one of the ways to profit with precious metals in today’s issue and make an investment. It doesn’t have to be a large or risky investment. You can even “short” precious metals if you think the price will go down.
The most important thing to do after you have the right information is ACT.
Kitco (excellent precious metals resource)
Morningstar (all things ETF)
US Mint (precious metals Mint Sets)
Investopedia (unit trust information)
Affordable Jewelry Precious Metals (Outstanding prices, service and care)
CME Group (precious metals futures, options, and more)
Seeking Alpha (Mining Stocks)