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Thread: Like silver?

  1. #1

    Default Like silver?

    *This is not investment advice, it is information only. If you follow my investments you will lose money!

    And want to take a little paper risk? Check out these bonds. I recently got into some and think they are a great investment.

    http://www.grancolombiagold.com/file...dNotes0811.pdf

    The gist is this. The notes pay 5% yield and the principle is linked to the price of silver, with every bond(par $1000) being equal to 66.7oz of silver. So they are priced as if silver is $15. Since silver is $31 the principle is currently valued over $2000. It begins to payout in 2015, through 2018. As you can see from the pdf, the annualized rate of return is currently around 22% and will only go higher if silver goes higher(like most on here believe). I am not a huge fan of silver any longer, but some diversification at such an attractive rate is very nice.

    The company has been operationally cash flow positive for the last several quarters. They recently did a gold linked debt offering and now have a lot of cash on their balance sheet. The insiders own a big part of the company, both equity and debt(these notes specifically). The note is a senior note, but unsecured. Per the prospectus they will store up the silver and sell it to pay off the loans.

    I own this in my 401k, so there is no foreign tax withholding on interest, so holding it outside of a tax deferred account might be tricky. Keep that in mind.

    Let me know what you guys think.
    Last edited by cubical; 01-02-2013 at 06:52 PM.



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  3. #2

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    Mind if I ask why you don't like silver now?

  4. #3

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    It's not that I don't like it, but I don't think it is or will be seen as money/wealth in the future the way gold will. I think the next financial transition will involve gold, not silver. So the revaluation of money will affect gold in a big way, not so much for silver. I view silver as a commodity, which will go higher as the dollar hyper-inflates.

  5. #4

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    Thanks, I am just trying to learn about all this.

    So pretty much you think that silver will go up as the dollar devalues, but gold is going to go up too and be safer once they try to correct everything. My coin guy was talking about how the ratio between gold and silver makes silver the better buy right now.

  6. #5
    Member Zippyjuan's Avatar
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    If you look at the last 20 years, the gold/ silver ratio is about its average these days.

    http://goldprice.org/gold-silver-ratio.html

    The last time it got anywhere near what some claim is its "historical" ration of 1:16 was in 1980- when the Hunts Brothers tried to corner the silver market which caused the price to spike and the ratio to fall.

    http://www.mineweb.com/mineweb/conte...3394&sn=Detail

    Author: Lawrence Williams
    Posted: Friday , 15 Jun 2012

    LONDON (MINEWEB) -

    Much is made by commentators of the historical gold:silver ratio (GSR) being around 16:1, while the current ratio is more like 55:1, with the implication being that silver will return to its historical ratio to gold. If this were to happen overnight it would put the current silver price at a little over $100 an ounce - in the writer's view this won't happen, even in the long term, although there is definitely room for silver to appreciate more than gold in percentage terms in the days, months and years ahead, particularly if the gold price makes a rapid climb towards the $2,000 level which many do expect.

    The reason we do not see the GSR returning to 16:1, is that silver is nowadays an industrial metal with an important investment element, while historically it was, like gold, a monetary metal. But true silver-based coinage is long behind us, while the world's Central Banks do not see silver as forming a part of their reserves. True gold coinage, where the face value represents the metal content, does not exist either, but at least Central Banks continue to maintain gold as a key element in their holdings - although interestingly it is mainly the Western Central Banks which retain the high gold ratios in reserves, rather than the Middle Eastern and Asian ones where traditionally one might expect a greater propensity to hold gold as a monetary asset. There does seem to be a move to rectify this in the East, which is gold price positive, but there is huge ground for these banks to make up to bring gold percentages in their holdings anywhere near European and American ratios - perhaps itself a positive factor for the yellow metal.
    More at link.
    Last edited by Zippyjuan; 01-02-2013 at 08:25 PM.
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  7. #6

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    It does look pretty average. I guess it just comes down to affordability then. Gold is scary at it's price right now.

  8. #7
    Member Zippyjuan's Avatar
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    As for the investment in the OP, a five percent yield is very nice. What happens if the price of silver goes down? Does the yield also decrease?

    I guess if at $31 the face value is $2000 then would it go to $1,000 if silver went to say $15? You mention foreign taxes- is it also subject to currency risk (changes in the value of the currency of the issuing country vs the dollar)? That would increase your risk.

    Just asking. I can't tell from the info posted. I don't know much about these types of investments.
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  9. #8

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    Quote Originally Posted by Zippyjuan View Post
    As for the investment in the OP, a five percent yield is very nice. What happens if the price of silver goes down? Does the yield also decrease?

    I guess if at $31 the face value is $2000 then would it go to $1,000 if silver went to say $15? You mention foreign taxes- is it also subject to currency risk (changes in the value of the currency of the issuing country vs the dollar)? That would increase your risk.

    Just asking. I can't tell from the info posted. I don't know much about these types of investments.
    Yield is fixed. It pays in USD. I am not in for the interest. I am in for the principle appreciation. You are paid out $1000 or 66.7oz of silver(though it is paid out in parts from 2015-2018), whichever is higher.

  10. #9

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    Quote Originally Posted by Adrock View Post
    It does look pretty average. I guess it just comes down to affordability then. Gold is scary at it's price right now.
    If it is affordability you seek, why not stick with copper?

    Saying something that can be infinitely divided is too expensive makes no sense. Besides, it's not mom and pop that will cause the price appreciation, it is the central banks, sovereigns and wealth giants.

  11. #10
    Member Zippyjuan's Avatar
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    Quote Originally Posted by cubical View Post
    Yield is fixed. It pays in USD. I am not in for the interest. I am in for the principle appreciation. You are paid out $1000 or 66.7oz of silver(though it is paid out in parts from 2015-2018), whichever is higher.
    Thanks for the info.
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  12. #11

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    The past 20 years are a very atypical period, the last days of an epic credit bubble.

    Historical gold/silver ratio is 16:1. This implies:

    - the ratio probably isn't going to go much lower, if at all. Most likely it will converge back towards the historical mean.
    - silver has a lot more potential upside to it than gold does

    Silver has a number of advantages over gold, not the least of which it is nowhere near as likely to be confiscated by government.
    “If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen.”

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  13. #12

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    Quote Originally Posted by cubical View Post
    If it is affordability you seek, why not stick with copper?

    Saying something that can be infinitely divided is too expensive makes no sense. Besides, it's not mom and pop that will cause the price appreciation, it is the central banks, sovereigns and wealth giants.
    What I am mostly afraid of is that what goes up must come down. The historical graphs I see remind me too much of the past bubbles we have had in housing, dot com, etc. If DC ever gets serious about balancing the budget or the FED raises interest rates to combat inflation, whoever is holding precious metals is going to take a bath.

    I think of silver and gold on the same playing field when it comes to precious metals. That could be a misconception on my part. It just seems to me that you can get the same type of appreciation from silver at a lower cost (less risk). I guess I am ignorant to what other special qualities gold has.

  14. #13

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    Quote Originally Posted by cubical View Post
    It's not that I don't like it, but I don't think it is or will be seen as money/wealth in the future the way gold will. I think the next financial transition will involve gold, not silver. So the revaluation of money will affect gold in a big way, not so much for silver. I view silver as a commodity, which will go higher as the dollar hyper-inflates.
    But silver has always accompanied gold. As a means for smaller transactions. (Rothbard, Murray. Man, Economy, State with Power and Markets. Auburn Alabama: Ludwig Von Mises Institute, 2009. Print.)
    Best of luck in life.

  15. #14
    Member Zippyjuan's Avatar
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    Quote Originally Posted by thoughtomator View Post
    The past 20 years are a very atypical period, the last days of an epic credit bubble.

    Historical gold/silver ratio is 16:1. This implies:

    - the ratio probably isn't going to go much lower, if at all. Most likely it will converge back towards the historical mean.
    - silver has a lot more potential upside to it than gold does

    Silver has a number of advantages over gold, not the least of which it is nowhere near as likely to be confiscated by government.
    We were under various forms of a gold standard until 1972. That means that the price of gold was basically fixed by the government. That makes comparisons between before 1972 and today very difficult. Since 1972, both silver and gold have been allowed to float relative to the dollar.

    But if one believes that it will eventually go to a 16:1 ratio it is possible that the price of silver is "too low" (meaning it should rise) but it is also possible that the price of gold is "too high" (and that it should fall).

    This article from 2011 suggests a 38-1 gold/ silver ratio:
    http://articles.marketwatch.com/2011...io-gold-prices


    The so-called gold-to-silver ratio, the price of gold divided by the price of silver, currently stands at 39.8 to 1. In other words, a single ounce of gold is worth 39.8 ounces of silver. That’s a decline from the end of 2010, when the ratio was around 46.

    Silver has surged 29% year to date to about $40 an ounce, compared with gold’s 13% year-to-date advance, to just over $1,600 an ounce.

    “Some traders look at the gold-silver ratio as a way to determine if one commodity is over or undervalued relative to [the] other,” said Paul Simon, chief investment officer at Tactical Allocation Group.

    “This can open up statistical-arbitrage opportunities, where a trader may try shorting the overvalued commodity and buying the undervalued commodity, with the hope of profiting from the reversion to the mean,” he said.

    Comparing gold prices to those of silver “gives a good relative feel for the price fluctuations between the two metals,” said Matt Insley, editor of the Daily Resource Hunter. “Plus, it’s another tool for metals traders to gauge future metals trends.”

    But analyzing the gold/silver ratio’s levels is a complicated task.
    Indications
    The 200-year average for the gold to silver ratio sits around 37 to 1, said Insley, and the ratio now stands very close to that historic average.
    Last edited by Zippyjuan; 01-02-2013 at 10:30 PM.
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  16. #15
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    What Zip & Cubical have to say is all correct. I have no idea , so , I just buy a little of all three

  17. #16
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    Quote Originally Posted by cubical View Post
    *This is not investment advice, it is information only. If you follow my investments you will lose money!

    And want to take a little paper risk? Check out these bonds. I recently got into some and think they are a great investment.

    http://www.grancolombiagold.com/file...dNotes0811.pdf

    The gist is this. The notes pay 5% yield and the principle is linked to the price of silver, with every bond(par $1000) being equal to 66.7oz of silver. So they are priced as if silver is $15. Since silver is $31 the principle is currently valued over $2000. It begins to payout in 2015, through 2018. As you can see from the pdf, the annualized rate of return is currently around 22% and will only go higher if silver goes higher(like most on here believe). I am not a huge fan of silver any longer, but some diversification at such an attractive rate is very nice.

    The company has been operationally cash flow positive for the last several quarters. They recently did a gold linked debt offering and now have a lot of cash on their balance sheet. The insiders own a big part of the company, both equity and debt(these notes specifically). The note is a senior note, but unsecured. Per the prospectus they will store up the silver and sell it to pay off the loans.

    I own this in my 401k, so there is no foreign tax withholding on interest, so holding it outside of a tax deferred account might be tricky. Keep that in mind.

    Let me know what you guys think.
    The key question is the viability of the company. They are a penny stock, and currently operating at a loss. Can't see how they would pay back anything if they don't start making some money. An increase in metal price would help them.

    Financial info:

    http://finance.yahoo.com/news/gran-c...023300340.html



    * Q3 2012 * Q3 2011 * YTD 2012 * YTD 2011
    Operating data: * * * * * * *
    Gold produced (ounces) 26,912 * 21,727 * 78,779 * 54,501
    Gold sold (ounces) 28,009 * 22,317 * 77,241 * 54,624
    Average realized gold price ($/oz sold) $ 1,642 * $ 1,684 * $ 1,647 * $ 1,547
    Total cash costs ($/oz sold) (1) $ 1,261 * $ 1,340 * $ 1,258 * $ 1,352
    Financial data: * ($000's, except per share amounts) * * * * * * *
    Total revenues $ 47,070 * $ 38,779 * $ 130,485 * $** 87,288
    Gross margin (2) $ 6,101 * $ 1,862 * $17,729 * ($ 1,704)
    Net loss attributable to shareholders ($ 724) * ($ 5,910) * ($ 13,320) * ($ 36,486)
    Basic and diluted loss per share $0.00 * ($0.02) * ($0.03) * ($0.13)
    Cash and cash equivalents $ 1,604 * $ 58,608 * $ 1,604 * $ 58,608
    Total debt, including current portion $ 88,185 * $ 78,557 * $ 88,185 * $ 78,557
    * (1)***** "Total cash costs" are presented on a per ounce sold basis and represent consolidated
    averages for the Company from both the Segovia Operations and Marmato Underground
    mine.* See "Additional Financial Measures".
    * (2)***** "Gross margin" represents total revenues, net of operating costs, production taxes and
    depreciation, depletion and amortization.
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  18. #17
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    Discaimer, I own no paper , never will , in metals.

  19. #18

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    How do you hold these kinds of things in your 401k?

    My company's 401K just gives me a list of mutual funds I'm able to own.

    Kinda off topic but you seem like you may know the answer to this kind of thing...is there any way to "lend" gold or silver? I have a decent amount of silver and gold bullion sitting around, would be nice to collect some interest on them if it were possible. I'm assuming its not but I can't figure out why.

  20. #19

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    Quote Originally Posted by Brian4Liberty View Post
    The key question is the viability of the company. They are a penny stock, and currently operating at a loss. Can't see how they would pay back anything if they don't start making some money. An increase in metal price would help them.

    Financial info:

    http://finance.yahoo.com/news/gran-c...023300340.html



    * Q3 2012 * Q3 2011 * YTD 2012 * YTD 2011
    Operating data: * * * * * * *
    Gold produced (ounces) 26,912 * 21,727 * 78,779 * 54,501
    Gold sold (ounces) 28,009 * 22,317 * 77,241 * 54,624
    Average realized gold price ($/oz sold) $ 1,642 * $ 1,684 * $ 1,647 * $ 1,547
    Total cash costs ($/oz sold) (1) $ 1,261 * $ 1,340 * $ 1,258 * $ 1,352
    Financial data: * ($000's, except per share amounts) * * * * * * *
    Total revenues $ 47,070 * $ 38,779 * $ 130,485 * $** 87,288
    Gross margin (2) $ 6,101 * $ 1,862 * $17,729 * ($ 1,704)
    Net loss attributable to shareholders ($ 724) * ($ 5,910) * ($ 13,320) * ($ 36,486)
    Basic and diluted loss per share $0.00 * ($0.02) * ($0.03) * ($0.13)
    Cash and cash equivalents $ 1,604 * $ 58,608 * $ 1,604 * $ 58,608
    Total debt, including current portion $ 88,185 * $ 78,557 * $ 88,185 * $ 78,557
    * (1)***** "Total cash costs" are presented on a per ounce sold basis and represent consolidated
    averages for the Company from both the Segovia Operations and Marmato Underground
    mine.* See "Additional Financial Measures".
    * (2)***** "Gross margin" represents total revenues, net of operating costs, production taxes and
    depreciation, depletion and amortization.
    Sorry, I meant they have had positive gross margins the last 5 quarters. They are right in the heart of their production growth. One of their operating mines has an average grade of 13.3g/t, which is very very high. Like I said, the insiders know better than anyone and they have a good amount invested with the company and they love the debt(silver and gold linked notes).

  21. #20

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    Quote Originally Posted by matt0611 View Post
    How do you hold these kinds of things in your 401k?

    My company's 401K just gives me a list of mutual funds I'm able to own.

    Kinda off topic but you seem like you may know the answer to this kind of thing...is there any way to "lend" gold or silver? I have a decent amount of silver and gold bullion sitting around, would be nice to collect some interest on them if it were possible. I'm assuming its not but I can't figure out why.
    I can chose to self-direct my 401k, which is nice. No you can not loan out your gold or silver unless you have a lot at a big bank.

  22. #21

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    To the bolded:

    Remain patient. Remonetization via commercial banking will occur. If you are on the front 9 of your life, you will see it younger than you think.

    Do not lend out your metal until the systemic shift has already occured.

    Quote Originally Posted by matt0611 View Post
    How do you hold these kinds of things in your 401k?

    My company's 401K just gives me a list of mutual funds I'm able to own.

    Kinda off topic but you seem like you may know the answer to this kind of thing...is there any way to "lend" gold or silver? I have a decent amount of silver and gold bullion sitting around, would be nice to collect some interest on them if it were possible. I'm assuming its not but I can't figure out why.
    "Like an army falling, one by one by one" - Linkin Park

  23. #22

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    Zip,

    The chart you posted references 40 years, not 20. Referencing "the last 20 years", silver's up 30% over the average. If one expects a settling to the mentioned so-called historical average of 37:1, you have a 50% upside potential from where the ratio stands today.

    Also, referencing silver to USD (or, IOW, believing that "the price of silver is too low") has nothing to do with the average G:S ratio and everything to do with the devaluation of the USD.

    Since the USD has been grossly devalued and the actual amount of devaluation obscured, the "price" can be, and most certainly is being manipulated.

    Ron has said that the USD has lost 96% of it's value. That would put the price of silver today at around $32, so, if Ron is right, it's gold that's priced too high and silver has preserved the value of your USD. But, Ron offered that assessment 5 years ago. If gold is correctly valued against the USD, then the USD has lost 98.7% of its value (is now worth less than a penny and a half) and it's silver that's too low being actually worth $85 against the USD.

    So, it would be helpful to know what todays USD is worth vs the 1913 USD when any of these "price of silver" discussions go off course into historical ratios, commodity use, economic conditions, supply-demand, mental states, mining production, etc. discussions.

    Since I believe PMs have been manipulated against the USD since 1980 or so, I tend not to think that gold is overpriced and silver is correctly valued against the USD.

  24. #23

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    Quote Originally Posted by Adrock View Post
    What I am mostly afraid of is that what goes up must come down. The historical graphs I see remind me too much of the past bubbles we have had in housing, dot com, etc. If DC ever gets serious about balancing the budget or the FED raises interest rates to combat inflation, whoever is holding precious metals is going to take a bath.
    I saw this over at DP. This is what I am afraid of. At this point even talk of tightening monetary policy causes gold and silver to tumble 1-2%.

    LINK

  25. #24

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    Quote Originally Posted by Adrock View Post
    I saw this over at DP. This is what I am afraid of. At this point even talk of tightening monetary policy causes gold and silver to tumble 1-2%.

    LINK
    It is just talk. If they stop buying our country will implode under its debt. Consider it all a buying opportunity.

  26. #25

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    Yes, exactly this.

    It's QEtillwedrop.

    If the Fed ends QE it will bankrupt the Government by rendering it EXPLICITLY insolvent. The Govt is the institution that explicitly backs the pillage by the big banks. These banks REQUIRE the government backstop to continue their ponzi scheme. If the Govt goes down, so do they.


    Quote Originally Posted by cubical View Post
    It is just talk. If they stop buying our country will implode under its debt. Consider it all a buying opportunity.
    "Like an army falling, one by one by one" - Linkin Park





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