Keeping My Emotions in Check

I am extremely bullish on silver. My research tells me that 2012 is going to be a good year for the white metal, not that it matters but my gut tells me the same(never invest because your gut tells you). We are investing in silver and I personally believe that it is going to be one of the best investments not only in the next 5 years but might be the best investment opportunity in my lifetime. Only time will tell, and it will be fun to look back and see this statement, because overall that is a pretty bold statement for someone in their 30's, and hopefully I will have a long life ahead of me.

We started looking into silver in 2008 when the price pulled back strongly to around 8-10 dollars. I watched it for six months regularly as it climbed up to $16. While I was watching the price I was doing research on the fundamentals of it. I was was also looking into the best way to purchase and store it. We finally pulled the trigger at the end of 2009 at around the spot price of $18, at this point I felt confident that it was worth putting some money into.

Over the last couple of years with investing in the PM market, I have done my due diligence and spent many countless hours studying and double checking the fundamentals to make sure that I/we had made the right decision.  All you hear is that silver is volatile and its for speculators(which it is), but you never hear the fundamentals. During this time not only have I confirmed that I have made the right decision, but that I believe in it more than when I initially looked into it.

During the last two years, we have been dollar cost averaging and not trying to time the market, just regular accumulations of the metal each month, no matter the price. I believe I have a done really good job keeping my emotions in check with not worrying about the price but focus on purchasing it not matter the price and knowing that in the next few years trying to save 2-5 dollars per oz isn't going to matter.

We are now sitting in a good spot with our investment now and have our core position. I believe with the market swings, that I can start to play this investment a bit different. I believe that we can stop buying every month and save some cash for when the price swings to the downside. Then we can pick up some more at cheaper prices...or buy the dips. We still want to purchase more, I would love to purchase all the way up to around $50. I will re-asset once the price hit that mark.

Last year we saw a run up in silver from around $28 to $48 dollar over the summer and then back to finish around $28 at the end of the year. We purchased at $28 and also at $48, which overall, doesn't matter, because we also purchased at $18 and other prices during the last two years.

So far this year, the price started at around $28 and so far it's around $36 around 30%, and honestly its hard to watch the price going up and not think that you have missed the boat.  I follow some blogs that follow the metal hourly and daily, most of the people on these blogs are as bullish, if not more bullish than myself. It is funny to read the comments about the price movements. You can  start to see this timing the market mentality and I am surely guilty of it (reason of this post).

*UPDATE*

Before I could finish this post, Wed, around 10am Silver dropped from around 37.50 to under 34 which is over 7% drop. This was exactly what I was talking about, silver had been on a tear since the beginning of the year(up 30%). The 2011 ending for silver, everyone seemed defeated and some even seemed bearish on the overall trend(including me). Now the night before(Tuesday) everyone on these blogs thought they had missed the boat and that silver was going to the moon without pulling back and taking a breather. I remember telling myself that I just need to relax and let the price come back down.

Anyways, I just need to remain level headed and keep my emotions in check. We have our core position and I think that we will be well rewarded come one, two, three, etc..years down the road. A lot can change during this time and I will be watching very closely and seeing if the fundamentals change or if it is time to move our money into something that is more undervalued than silver.

I have seen how the market trade on greed and fear, and experienced it first hand.

Here is a great presentation from David Morgan on silver:

2011 Year End Update - 2012 Here We Come

Another blessed year comes to a close and despite the rocky road, we are still gaining...slowly.

2011 brought a lot of hills and valleys and especially with the portfolio. I believe this is due to the insurance/investments in the precious metals.

Even though Gold is solid and remained in the 11year uptrend finishing up 10%, silver on the other hand started the year at $30.67oz and ran up to $48.70, only to finish down around 1% at $28.18. With that, we saw the net worth move  upwards fairly fast and downwardly fast.

One place I feel like we might have mismanaged was more in cash and less in stocks/brokerage account.

Lets break it down:

Cash & Savings: Looking back on this year, I have to say that I probably mismanaged this area a bit. I really wanted to to get to 50K in cash. The reason for this is that we are still trying to get our core position for our in PMs. Our goal in 2012 is to get 50k sitting in cash in this bucket.

Stocks/Brokerage: 2011 saw a payoff to some selling of a few of our stocks. Eldorado Gold Corp(EGO) $269.67 +53%,  Fronteer Gold(FRG) $517.38 +64%, Avalon Rare Metals(AVL) $886.82 +189%,  Quicksilver(ZQK) $20.73 +42%  Stocks sold for a loss - Proshares Ultra Silver(AGQ)  -$55.54 -19% Ultrashort S&P500 Proshares(SDS) -$139.46 -34%.

Overall, what we sold this year, we were up $1209.46 a gain of +59%.

Here are the gains/losses based of percentages this year. Currently down 8% for 2011, I try and keep a level head and not get to excited or depressed on prices, investing in commodities/energy you see wild swings in the market. We saw our uranium stock drop 50% after the Japan earthquake this year.

The list of stocks we currently own: (AAU)(AG) (AUY)(FSM)(LYSCF)(MRO)(PAAS)(SSRI)(SLW)(SVM)(EXC)(PWE)(PHYS)(DNN)(ZQK)(XOM)(CVX)(RGLD).

*As you can see we are heavy in commodities in my brokerage account. This is all based on my thought that over the next decade the best investments are going to actually be in hard assets and assets in the ground. My Roth/IRA/401k are in pretty common index funds and mutual funds so I figure I can go more risky with brokerage. I believe these will out perform equities in the next decade and if nothing else I feel more comfortable with my portfolio being diverse. I am bearish on the US Dollar and US Economy, I believe that 16 trillion dollar deficits are not going bode well for the USA.

Precious Metals: (Spot : Gold - $1531.00 / Silver - $28.18) (Gold/Silver Ratio: 54.32)(Dollar cost - 29.94)  Precious Metals took a huge dive going into the end of the year. Gold was still up 10% and Silver down 1%. We remained dollar cost averaging in the whole year. Every 2-4 weeks we would purchase regardless of the price. The dollar cost averaging has allowed us not to try and time the market but just purchase as we get paid. The downside to this is that we purchased at the very top at $49. Even though we have made purchases when it was under $30 as well.

As it stands right now, we have a core position, and will be making purchases on dips and occasional times just to pick up some here and there. We are about half way to where I think we should be and this will increase with our overall net worth and the economics of the world/US.

...we are currently investing mostly in silver which I plan to sell and purchase gold when the silver to gold ratio is 30/1 then 20/1 the finally 10/1 if it makes it that far which I do believe it will at least reach 16/1(its historic ratio). I plan on always owning silver and gold bullion to pass along to my kids/grandchildren. We own silver as an investment and we hold gold as an insurance policy on our investments. We currently prefer to keep a percentage of our wealth in PMs instead of federal reserve paper(dollar bills).

Retirement 401k: This will jump up an bit more as I haven't been counting my wife's retirement this year. I believe it should be around an extra 5k.

Retirement IRA's: This category didn't have a great year and we actually were negative...I have been sitting in cash in some of this and the emerging markets and total stock market funds along with the precious metals funds didn't seem to perform particularly well this past year. I am currently looking to use some of the cash on the sideline go to work in their dividend paying funds. Current funds we are in: (VDIGX, VWELX, VGSTX, VEIEX, VGPMX)

Real Estate: The plan remains to keep our money that we were going to put down as a down payment in the bank or investments. We will try and hedge our payments with trying to pay off the home in 10-15 yrs depending on what comes our way. This might change along the way depending on kids, economy, jobs and so forth.

Debts and Liabilities -

Credit Cards: We currently do not hold debt in this category and prey that we never have to. 

Car Loan:  First vehicle is paid off, it is currently 5 years old and is going to be the family car going forward since it is a SUV. After long debates and figuring out what is best for our family, we decided to purchase a new Prius. Our reasoning being that was that the second car was getting old and needed more and more service, but yet it still had good trade in value. Also with a kid on the way, a two door just wasn't going to cut in any longer. We travel to family and to the beach a lot and we just were not going to have the room to pull it off any longer. We decided on a gas efficient car since we travel to family and I travel to work everyday. We also believe that gas is not going be cheap(relatively) ever again.

Home Mortgage: Mostly paying interest on our home at the moment, so not much of a dent here.

Hard to believe 2011 came and went as fast has it has and that we are still doing such a great job with our finances. Even a small 6K jump in our net worth, which is a bit deceiving, since we went 22k into the vehicle debt. I feel like we are on the right path and we just need to keep doing what we are doing.

Headed into 2012, we now have a kid on the way now and the stakes are starting to get a bit more serious and real. We have decided to go back onto a budget and try and live off my salary only. Hopefully we can pull it off and save a lot over the next five months before the kid arrives.

We are starting to raise as much cash a possible and hopefully we will have close to a year worth of savings(salary) saved for when the kiddo comes. Well, guess this is it for 2011, welcome 2012!

November 2011 Net Worth: Update

Sorry, I have been extremely busy at work and have not had the time to devote to maintain the site on a weekly, much less a daily basis. My last update was June and from the chart above you can see the last few months have been an roller coaster ride for our net worth. These have been the most wild swings since I have started to log our net worth. This is mostly because our exposer to the precious metals, they swing pretty violently depending on what is happening in the world. Right now, I have us set up in the the McAlvany Triangle which is the 1/3 the "Foundation" – Precious Metals,  1/3 in "Savings" – Cash, Bank Accounts, and 1/3 "Growth/Income" – Stocks, Bonds, & Mutual Funds. Anyways, I have to admit that I have to ignore the everyday noise of the market and look at the long term. I still feel very good at the plan of attack and will change accordingly as we get closer to the crisis window.

Next month I will try and have a break down for our net worth.

Mike Maloney - Debt Collapse Presentation

Take the time to watch this. Mike Maloney has a way of simplifying a complicated subject to the point the average person can understand what is going on with the world economy and the collapse of fiat money.

Mainstream Media and Ron Paul

Ever wonder why our mainstream media has lost its relevancy?

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Indecision 2012 - Corn Polled Edition - Ron Paul & the Top Tier
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook

Nixon Speech - Closing the Gold Window

40 years ago today Nixon closed the Gold Window:



If you really want to know what it meant read King World News with Jim Rickards

Obama Stop Digging

Yes, Bush drove us into the ditch, but Obama will not stop digging!!

Here is a A Brief History Of Obama's Fiscal Record

Obama 2006 On Raising the Debt Ceiling

The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.

Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion.That is “trillion” with a “T.” That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President’s budget will increase the debt by almost another $3.5 trillion.

Numbers that large are sometimes hard to understand. Some people may wonder why they matter. Here is why: This year, the Federal Government will spend $220 billion on interest. That is more money to pay interest on our national debt than we’ll spend on Medicaid and the State Children’s Health Insurance Program. That is more money to pay interest on our debt this year than we will spend on education, homeland security, transportation, and veterans benefits combined. It is more money in one year than we are likely to spend to rebuild the devastated gulf coast in a way that honors the best of America.

And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on.

Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities.

Senator Barack Obama
Senate Floor Speech on Public Debt
March 16, 2006

Not sure who wrote this for Obama in 2006 but he should go back and read his speech again. This is all a farce, the debt ceiling will get raised at the last minute and both parties will come out shaking hands taking about how that they got a deal done…"Status Quo" err "Kicking the can down the road"

I lean more toward Jim Rogers take on this subject:

June 2011 Net Worth: Another Down Month

Another down month for our net worth, with our assets down -1.31% and overall percentage change being -3.88%. This is the FIRST TIME since I tracking my net worth that we had a falling net worth back to back months. It is also the biggest percentage drop since September 2009.

Lets break it down:

Cash & Savings: Down this month big...this is because my wife does not receive her regular pay check for July/August. We put money a side so that money goes into our budget but it comes from saving over the two months. She will be receiving a paycheck from her part time job which we will just be putting into savings. This might drop again over the next month for the same reason, along with summer vacations and have a lot of fun over the summer(smile).

Precious Metals: (Spot : Gold - $1485.00 / Silver - $33.77) (Gold/Silver Ratio: 43.97)(Dollar cost - 28.94) Another big down month for the metals portfolio, but this allows us to purchase more at a lower price. Currently, we are still buying monthly and the plan is still to keep buying until we see fiscal restrain from our government. Currently, this part of the portfolio feels the best. I sleep very well knowing we have invested in PMs (this could change, but as of right now I feel very good) Just my thoughts from the people I read and the feeling from them is that come this fall we could possibly see some fireworks in the metals market.

...we are currently investing mostly in silver which I plan to sell and purchase gold when the silver to gold ratio is 30/1 then 20/1 the finally 10/1 if it make it that far which I do believe it will at least reach 16/1(its historic ratio). I plan on always owning silver and gold bullion to pass along to my kids/grandchildren. We own silver as an investment and we hold gold as an insurance policy on our investments. We currently prefer to keep a percentage of our wealth in PMs instead of federal reserve paper(dollar bills).

Stocks/Brokerage: Pulled the trigger on (AG - FIRST MAJESTIC SILVER CORP @ $17.82) bought a initial position and might look to add if we see it back down near $18.00)

I am also looking into buying some options on (AUY) that I am still trying to figure out. Have also been thinking about getting in to some Natural gas plays like a Marathon(MRO) or Chesapeake Energy (CHK).

The list of stocks we currently own: (AG)(FVITF)(SLW)(SVM)(SSRI)(PAAS)(AAU)(DNN)(EXC)(PWE)(PHYS)(EGO)(AUY)((LYSCF)(RGLD)(XOM)(CVX).

*As you can see I am heavy in commodities in my brokerage account. This is all based on my thought that over the next decade the best investments are going to actually be in hard assets/natural resources. My Roth/IRA/401k are in pretty common index funds and mutual funds so I figure I can go more risky with brokerage. I believe these will out perform equities in the next decade and if nothing else I feel more comfortable with my portfolio being diverse. I am bearish on the US Dollar and US Economy, I believe that trillion dollar deficits are not going bode well for the USA.

Retirement 401k: This bracket is just both my wife and my retirement, adding money to our retirement funds every month.

Retirement IRA's: (Same as last month) Still having some cash on the sideline and will figure out what this market wants to do and see if I can put it to work. In this bracket I have all Vanguard Funds (VTSMX, VGSTX, VEIEX, VGPMX)

Real Estate: All units of our development have now sold. This is a huge relief as we were the second purchase out of the eight that were available. We will try and hedge our payments with trying to pay off the home in 10-15 yrs depending on what comes our way. This might change along the way depending on kids, economy, jobs and so forth.

Debts and Liabilities -

Credit Cards: Debt from couple monthly purchases - will be paid in full.

Car Loan: I am paying 4% APR on it so I am paying a little, but not a ton. When it hits 3k I might just write a check and pay it off. Will see how the economy and money goes the next couple of months.

Home Mortgage: Mostly paying interest on our home at the moment, so not much of a dent here.

So we have had a couple of down months and will be looking to have a positive month for July. I believe it might be hard unless the stock market helps us out. The cash(flow) situation is a bit tight for right now and will hopefully get back on track once the summer comes to an end. It is hard to save with everything we have going on this summer. We might just have to tighten our belts come the fall. We will be enjoying the rest of the summer and wait to see what comes our way...

Economic Armageddon and You

This is the best example I have seen of summing up the economic mess we are in. It is easy to understand and the average joe on the street should be able to grasp.