Monday, November 24, 2014 08:32pm
North Adams, MA now: 64 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
@theMarket: Let Silver Be A Lesson
By: Bill Schmick On: 03:24AM / Saturday May 07, 2011
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

"You sold silver too soon," grumbled a client. "Look, it's almost $50 an ounce."

That was just one of the conversations I had with disgruntled investors only one week ago. There is no question I felt bad since I had advised readers to sell at least half their silver investments between $36 to $37 an ounce a few weeks ago. Beginning Monday, silver began to drop as the CME hiked margin requirements. By Friday, silver had dropped over 25 percent to as low as $33.05 and ounce.

Parabolic moves such as the kind we have had in silver, and to a lesser extent gold, always revert to the mean. I learned that lesson many times over 30 years of investing in commodities. My strategy is to pick a price level and stick with it, regardless of whether the commodity overshoots my target.

Oil was another commodity where I suggested investors take profits at $100 a barrel. It has subsequently climbed higher, overshooting my target by almost $14 a barrel before it, too, plummeted this week to $99 a barrel. I remain a seller until oil breaks $85 barrel on the downside.

Of course, now that precious metals are in free fall, the knee-jerk reaction from the uninitiated is "at what price do we get back in?"

The easy answer is: whenever investors stop asking that question. When the talking heads and strategists throw in the towel, when precious metals commercials disappear from the airwaves and nobody wants to be bothered with silver, only then will I be willing to reenter the precious metals.

Unfortunately, the sharp correction in silver as well as a bounce in the dollar has impacted the equity markets overall. That is unfortunate and yet for those with steady nerves and grim resolve it is an opportunity.

Most commodities have dropped along with gold and silver. That is understandable given that the majority of traders had purchased commodities on margin (borrowed money). When prices decline substantially (as they have this week) margin calls escalate and notices from lenders flow out through Wall Street like floodwaters through the Mississippi Delta. Margin lenders demand more collateral to maintain their loans to these silver speculators and they want this money immediately.

Speculators, caught with owing huge sums of margin money, did what they always do — sell other investments, usually their winners, to meet the margin call. Oil, gas, base metals, soft commodities — whatever they can sell — which increases the selling pressure on everything and the ripple effect soon reaches high flying stocks and finally equities in general. Welcome to today's markets.

For those of us with cooler heads and steadier nerves, treat this sell off as simply another gift horse in the making. And I'm not about to examine its mouth. I would be buying instead. You see, lower energy as well as other commodity prices are good for the global economy. At some point investors will wake up to that fact. In the meantime, expect more volatility.

"How low can we go?" asked several clients ranging from a doctor in Salisbury, Conn.,  to a retired engineer in Williamstown.

We're almost there, in my opinion. Let's call the low somewhere between 1,305 and 1,325 on the S&P 500 Index (and I may be too negative in my guess). If we dropped as low as 1,300, it would still only be a 5 percent correction from the top. Our last decline was about 7 percent. Since then we have powered as high as 1,370 on the S&P (the intraday high reached on May 2). Remember, you should expect at least three pullbacks a year in the stock market of up to 5 percent. This is simply one of them and the cost of doing business in the stock market.

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.



0 Comments
Tags: metals, oil      
News Headlines
Berkshire Arts & Tech School Celebrates Successes
MCLA Gallery 51 Presents Annual Affordable Art Show
Holiday Farmers Market Freshens Up Williamstown
Pittsfield Manufacturer Celebrates Growth In New Facility
Adams Man Starting Organization to Target Animal Abuse
Williamstown Housing Trust Asked to Help With Cable Mills Bond
North Adams Workers, Students Donate 800 Pounds of Food to Pantry
Pittsfield Parks Light Up With Memorial, Holiday Events
Louison House 25th Anniversary Fetes Namesake
New Clark Exhibit Marries Contemporary, Traditional Art

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (151)
Independent Investor (204)
Archives:
November 2014 (3)
November 2013 (2)
October 2014 (9)
September 2014 (5)
August 2014 (7)
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
January 2014 (8)
December 2013 (8)
Tags:
Interest Rates Stocks Pullback Stimulus Election Jobs Fiscal Cliff Congress Stock Market Euro Europe Europe Markets Commodities Deficit Metals Housing Banks Currency Crisis Federal Reserve Economy Retirement Recession Selloff Bailout Greece Taxes Rally Oil Debt Ceiling Energy Fed Debt Japan
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
The Independent Investor: The Pipeline Made Simple
@theMarket: Markets Are in Half Time
The Independent Investor: U.S. and China Square Off
The Independent Investor: Workers Get to Save More in 2015
@theMarket: All Clear
The Independent Investor: The Elephant in the Room
@theMarket: So far, So Good
The Independent Investor: OPEC's Oil Ploy
@theMarket: Are We There Yet?
The Independent Investor: Why Is This Recovery Different?


View All
McCann Football's Run Ends in...
The McCann Tech Hornets road to Gillette Stadium and a...
Berkshire Chamber Showcase...
The Berkshire Chamber of Commerce held its Business 2...
Berkshire Grown Holiday...
Berkshire Grown held its Holiday Market in Williamstown on...
Wizards at Hoosac Valley
The Harlem Wizards faced off against Hoosac Valley staff...
St. Mary's Church Tour in...
Residents, business people, elected officials and Friends...
Williamstown's Mather House...
Traffic came to halt for several hours Wednesday morning as...
Girls Soccer: Nipmuc vs...
Although the Wahconah girls' season ended on Tuesday, its...
Boys Soccer: Belchertown vs...
Belchertown Downs Mount Greylock Boys in PKs
Football: Pittsfield vs...
Shade himself ended up taking it in from the 1 on third and...
Football: Turners Falls vs...
After completing the first-ever undefeated regular season...
Festival of Trees 2014
The Berkshire Museum kicked off its Festival of Trees...
Farmers' & Artisans' Harvest...
organic and handcrafted goods were sold at the special...
Football: Agawam vs Wahconah
The Wahconah football team was down eight points heading...
Girls Soccer: Granby vs...
Wahconah girls soccer over Granby, 1-0, for WMass Div. III...
Girls Soccer: Lee vs Gateway
The No.3 Lee Wildcats fell to No. 2 Gateway 4-0 Wednesday...
Girls Soccer: Sabis vs...
After coach Pat West called a timeout with 3 minutes, 19...
McCann Football's Run Ends in...
The McCann Tech Hornets road to Gillette Stadium and a...
Berkshire Chamber Showcase...
The Berkshire Chamber of Commerce held its Business 2...
Berkshire Grown Holiday...
Berkshire Grown held its Holiday Market in Williamstown on...
Wizards at Hoosac Valley
The Harlem Wizards faced off against Hoosac Valley staff...
St. Mary's Church Tour in...
Residents, business people, elected officials and Friends...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved