Zero's Commodity Dairy

[targetzero]

Zero's Commodity Diary

My Commodity Trades had been total timepass and wanted to give a structure to it. My trades so far as been, One here, one there depending on the mood and started mainly in Gold and Silver with an intention to act as a hedge against money printing and also as investment.

I started investing in gold from 31000 and silver from 62000.

Date Started: 5th Dec 2012
Purpose: Build a Leveraged Net Long Commodity Portfolio with progressive build up of Precious Metals. This is to protect myself against the printing presses of the world
Approach: Buy Silver and Gold in Steps of 500-1000.
Challenges: Rollover is turning expensive.
Max Capital for this portfolio: 10,00,000
Capital Employed: 6,00,000
Total Realized/Unrealized Loss: 3,77,633
Return on Capital: -62%

 

[arcus]

I started investing in gold from 31000 and silver from 62000.
Date Started: 5th Dec 2012
Purpose: Build a Leveraged Net Long Commodity Portfolio with progressive build up of Precious Metals. This is to protect myself against the printing presses of the world
Approach: Buy Silver and Gold in Steps of 500-1000.
Challenges: Rollover is turning expensive.
Max Capital for this portfolio: 10,00,000
Capital Employed: 6,00,000
Total Realized/Unrealized Loss: 3,77,633
Return on Capital: -62%

While your thinking is right, the manner in which it is being executed is completely wrong.
Its akin to trading yearly trends on 1 minute charts.
Before the bear market in the commodities reverse, you will probably lose your shirt.

If you feel gold will head higher then buy them without leverage (buy ETF's/physical gold bars if you will).

My personal opinion is that gold is correcting from a bubble, there is still a lot of downside left. With fears that the Fed may slow down printing money (as its getting unsustainable) and also some central banks (like Cyprus) considering liquidating their gold holdings will only add more downward pressure to gold.

I am extremely bullish on equities on the long run. Wait for the PE to drop to around 12 (now its around 16.9) and start accumulating quality stocks.

 

[targetzero]

I have no view on where the Gold or Silver is headed. Till few months back, the only gold I had seen is on my wife and whenever she wants to buy, I go mad.

Now why am I investing in Gold and Silver? It is part diversification of assets and I also believe even if global growth picks up one iota, we will see inflation big time. The current pumping of currencies by various governments is avoiding deflation and maintaining the status quo. And currency wars have started. It is matter of time Euro wants to devalue against USD and JPY.

In INR atleast, I believe we will see Gold prices going up, since we have enough CAD and government is/will splurge money on welfare schemes. It cant bank on selling PSUs forever. It is like someone selling family silver for day to day needs. Family silver has to exhaust.

I am avoiding shorts here since I dont want it as a trading business. Also, I dont have too much fundamental base here except for macro picture. All I have is macro sense, charts and looking at the ticks last few months feel for the prices. Will do bit of trading to reduce the cost of holding.

 

[targetzero]

I am extremely bullish on equities on the long run. Wait for the PE to drop to around 12 (now its around 16.9) and start accumulating quality stocks.

One thing I learnt with equities is very very very rarely you get a price you want. You have to compromise a bit on the price front.