Invariably, as the price of silver and gold begins moving higher, more investors will be drawn in to the mostly paper precious metals market.
Most of these buyers will be looking only at the price and could therefore be setting themselves up for a substantial disappointment. Many will simply take their losses and exit the market feeling scorned, perhaps never to return.
Those who see few alternatives, or who perhaps actually take delivery of physical metal will be faced with a steep learning curve that will hopefully be overcome by necessity at the least, and curiosity at best.
The Importance of Asking Questions
All long term precious metal investors will probably at some point end up asking themselves the following questions about the precious metals market. This helps illustrate the complexity of what seems to be on the surface a quite simple and barbarous investment.
Furthermore, it is those who can answer most of these questions that will be more likely to see the connections and the good reasons to keep at least some portion of their wealth diversified into precious metals.
40 Questions Long Term Precious Metals Investors Should Look to Answer
- What is a futures contract?
- What is a short or long position?
- What does concentration mean?
- What is a market corner?
- What is a margin call?
- What is stock to flow, and why does it matter?
- What is paper versus physical?
- What is the ratio of paper gold or silver versus physical?
- Why is that ratio important?
- What is the silver/gold ratio?
- What is covering?
- How many ounces of gold are there per futures contract?
- What does JPMorgan Chase have to do with the commodities market?
- What does it mean to 'deliver' into a commodities contract?
- What is a short squeeze?
- What is an ETF or Exchange Traded Fund?
- Why is ETF inflow important?
- What is the CFTC?
- Why has the CFTC been investigating the silver futures market for five years?
- What does JPMorgan Chase have to do with the aluminum market?
- Why does Germany want its gold repatriated (i.e. returned to Germany)?
- Why does (or did) the United States have Germany's gold? (Clue: WWII)
- Why will it take seven years for the United States to return Germany's gold?
- Why are gold and silver producers’ stocks trading at all-time lows?
- Why should investors not buy gold or silver stocks?
- What is the GOFO rate?
- Why is the GOFO negative?
- What are silver leasing rates?
- What is permanent backwardation in the gold futures market?
- How does permanent backwardation affect global markets?
- What is COMEX?
- Can a COMEX default occur?
- What is confiscation and how likely is it to happen again?
- Why have Central Banks closed their short positions and opened long positions in the gold futures market?
- Why are silver futures shorted so heavily by major players?
- How long do fiat currencies typically last once they have abandoned a gold or silver backing?
- What is hyperinflation?
- Why did President Nixon unilaterally remove the U.S. dollar from the gold standard in 1971?
- Why did President Johnson remove silver from currency circulation in 1965?
- What is the current purchasing power of a pre-1965 silver or dime ?
Basically, finding accurate and well-informed answers to these forty pertinent questions seems crucial for long term investors who anticipate riding the silver bull market of a lifetime.