buying silver on spread betting.

beller10

hi guys,

im thinking of buying around €5000 worth of silver i am aware of the numerous websites you can buy them from but if i was to trade silver on spread betting on paddypower trader or one of the many sites would this be a good idea i know it is a much riskier way of investing.

any advice would be great?

thanks

daveirl

This post has been deleted.

ixus

beller10 wrote: »

hi guys,

im thinking of buying around €5000 worth of silver i am aware of the numerous websites you can buy them from but if i was to trade silver on spread betting on paddypower trader or one of the many sites would this be a good idea i know it is a much riskier way of investing.

any advice would be great?

thanks

If you buy physical silver, you still have the asset even if it loses value.

If you spread bet and lose 5K you have nothing.
If you use leverage you could lose 5K very quickly with large intraday moves in the assets price.
Also, the risk with spread betting is that the asset declines more in value than the 5K your using i.e you lose 6K. You'll be on the hook for that.

But, then, you say you know spread betting is riskier so I shouldn't have to tell you all this.

Similarly, if you bought futures you would have to post margin.

beller10

ye the chances of me loosing my cash are much higher but i dont have tio pay big commisions or taxed on returns etc. i will put a gauranteed stop on my spread so hopefully i will only loose a certain amount. what woult the general consensous be guys do you think im mad to be thinking of doing this?

thanks for the replies.

digme

I bought physical silver last year at 12 Euro an ounce, it's now 15.60 not bad and it's only going to go up.Never did spread betting, but your playing in a rigged market, so i wouldn't dare attempt it.

beller10

thanks for your reply do you mind me asking what company you bought the silver from and what type of commission it was and have you bought this online or do you physically have it. sorry for all the questions.

ixus

digme wrote: »

it's only going to go up..

Foolish comment.

The Hunt Brothers and the Silver Bubble

The Hunt Brothers and the Silver Bubble
Brian Trumbore
President/Editor, StocksandNews.com

In 1973, the Hunt family of Texas, possibly the richest family in America at the time, decided to buy precious metals as a hedge against inflation. Gold could not be held by private citizens at that time, so the Hunts began to buy silver in enormous quantity.

In 1979 the sons of patriarch H.L. Hunt, Nelson Bunker and William Herbert, together with some wealthy Arabs, formed a silver pool. In a short period of time they had amassed more than 200 million ounces of silver, equivalent to half the world's deliverable supply.

When the Hunt's had begun accumulating silver back in 1973 the price was in the $1.95 / ounce range. Early in '79, the price was about $5. Late '79 / early '80 the price was in the $50's, peaking at $54.

Once the silver market was cornered, outsiders joined the chase but a combination of changed trading rules on the New York Metals Market (COMEX) and the intervention of the Federal Reserve put an end to the game. The price began to slide, culminating in a 50% one-day decline on March 27, 1980 as the price plummeted from $21.62 to $10.80.

The collapse of the silver market meant countless losses for speculators. The Hunt brothers declared bankruptcy. By 1987 their liabilities had grown to nearly $2.5 billion against assets of $1.5 billion. In August of 1988 the Hunts were convicted of conspiring to manipulate the market.

One other experience in the silver bubble worth noting, according to author Edward Chancellor ("Devil Take the Hindmost"), is the experience of an official at the Peruvian Ministry of Commerce, employed to hedge his country's silver production, who lost $80 million by illicitly selling silver short. Said Chancellor, "Although a relatively small sum for a sovereign nation, it was an omen: the 'rogue trader' had appeared on the modern financial scene."

The stock market had its own troubles during the rise and fall of silver. The Dow Jones peaked on February 13, 1980 at 903.84. The day of the collapse, March 27th, the Dow closed at 759.98, a decline of 16% in just 6 weeks. [However, intraday, the loss between the 2/13 high of 918.17 and the 3/27 intraday low of 729.95 was actually 20%.]

For many traders the collapse in silver was the final straw for a stock market already under siege from worries as diverse as the Iranian hostage crisis, the Russian invasion of Afghanistan and soaring interest rates. [The consumer price index climbed at a 13% rate for 1979. The prime lending rate hit 22% in early 1980]. But by the year's end, the whole decline was almost forgotten. The Dow ended the year at 963.99, thanks in large part to the euphoria over the election of Ronald Reagan.

mono627

digme wrote: »

but your playing in a rigged market, so i wouldn't dare attempt it.

Care to explain this?

D-Generate

digme wrote: »

your playing in a rigged market, so i wouldn't dare attempt it.

I think you are wrong there fella. Spread betting companies aren't like the house in casinos. They use your capital to make par trades in actual markets. If you are right both sides win and if you are wrong then your loss covers them and also the spread of others trades ensures they aren't losing. That is my understanding of it... well how IG Index work.

digme

ixus wrote: »

Foolish comment.

The Hunt Brothers and the Silver Bubble

9th of sept
http://agaupm.com/asian-hedge-funds-bought-massive-silver/

Asian Hedge Funds Bought Massive Silver


.

mickman

digme wrote: »

I bought physical silver last year at 12 Euro an ounce, it's now 15.60 not bad and it's only going to go up.Never did spread betting, but your playing in a rigged market, so i wouldn't dare attempt it.

this comment is beyond silly

mickman

D-Generate wrote: »

I think you are wrong there fella. Spread betting companies aren't like the house in casinos. They use your capital to make par trades in actual markets. If you are right both sides win and if you are wrong then your loss covers them and also the spread of others trades ensures they aren't losing. That is my understanding of it... well how IG Index work.

the spread betting company wins all the time. they are only the middle man. their profit is the spread. if you win then whoever takes your trade on the other side loses and vice versa but the spread company just takes the spread a.k.a comission for placing the trade on your behalf

namloc1980

My preference is to buy the actual metal and to physically own it. If the fiat currencies go to the wall (or are devalued) at least you have ownership of a precious metal, whereas your savings and shares in companies company etc may become devalued/worthless i.e. all those people who lost their shares in Anglo when it was nationalised. And the industrial uses for silver, given it's unique characteristics, are immense. There are literally new uses for silver found every day. The silver market is difficult to predict but it seems that given it's huge uses in industry and it's medicinal potential, having some silver as part of your portfolio is a good idea - and having physical silver acts as an insurance as such against collapse of fiat currencies. Also if you buy physical you can also get into collecting silver coins which in themselves demand a premium above spot price.

digme

BNP Paribas Buys Physical Silver At $20.58
News like that would be totally unimaginable even few weeks ago, when price of silver looked ready to go below $17.

But with new buyers of PHYSICAL silver entering this – less than $12 billion market, it’s no wonder why price of silver jumped so high in such short time.

It all started on August 24th 2010 with big German conglomerate buying huge amounts of physical silver and now also BNP Paribas (with headquarters in Paris), joined this rush to get physical silver as soon as possible.


What’s the actual deal that BNP Paribas just made?


BNP Paribas has agreed to pay $20.58 an ounce for 680,000 ounces of the white metal to be delivered from December through to June 2012.

The deal is with Jabiru Metals which will bank $14 million upfront under the hedging deal, money it can well use to speed its mine development program. The 680,000oz is 60 per cent of its forecast silver production over the period of the BNP deal.

If this deal would be done by a small bank, this wouldn’t even be such a big news.

But, since BNP Paribas is one of the largest global banking groups in the world and in 2010 ranked by Forbes as the largest company in the world by assets with over $2.95 trillion – this gets a whole new dimensions.

When one of the biggest banking groups decide to go into a deal to get PHYSICAL SILVER in exchange for their paper money, this is huge signal that price of silver is going up.

It’s not important how much the price of silver will be in a short term – going up or even having a correction.

But it’s important that in the long term – there are more and more signals and confirmations that price of silver is going UP.

Stick with your physical silver (and gold) and if you don’t have to or don’t need to,
then DO NOT SELL your PHYSICAL silver!!!


Source: http://AgAuPM.com/bnp-paribas-buys-physical-silver-at-20-58

digme

$24 Silver coming soon...Bloomberg... Quote:

Silver may rally another 15 percent in the next few weeks to $24 an ounce, which would be the highest price in 30 years, according to technical analysis by Gold Arrow Capital Management.

Silver futures jumped to $21.025 today on the Comex in New York, the highest price since in 30 months, before settling at $20.816, the highest closing price since Oct. 16, 1980.



http://www.bloomberg.com/news/2010-0...-analysis.html

soddy1979

Spread betting firms can take the other side of your trade. They don't always do it, but they can.

I confirmed this with a spread trading firm I opened an account with last year.

Wudyaquit

I agree it's rigged - they always seems to hit the stop loss target before gaining, but maybe just being paranoid.

Besides, a thing to bear in mind in spread betting is on average that the people betting always lose with one person winning another losing and the spread betting site taking their cut. Over time with enough trades unless you're an investment genius you'll end up losing.
Buying metals, stocks etc, your wealth will increase over time, so why waste time gambling on spread bets. Stick it all on black some Saturday night instead - you've similar odds and it's a more enjoyable experience.

ixus

Wudyaquit wrote: »

I agree it's rigged - they always seems to hit the stop loss target before gaining, but maybe just being paranoid.
.

I doubt it's that rigged. What you don't understand is that gold/silver etc have massive intra-day volatility which probably triggers your stop loss.

mickman

Wudyaquit wrote: »

I agree it's rigged - they always seems to hit the stop loss target before gaining, but maybe just being paranoid.

Besides, a thing to bear in mind in spread betting is on average that the people betting always lose with one person winning another losing and the spread betting site taking their cut. Over time with enough trades unless you're an investment genius you'll end up losing.
Buying metals, stocks etc, your wealth will increase over time, so why waste time gambling on spread bets. Stick it all on black some Saturday night instead - you've similar odds and it's a more enjoyable experience.

this must be the most stupid post i have ever read. "buying metals, stocks etc and your wealth will increase over time" - what kind of comment is that? people that bought cisco at 80 dollars in 2001 wouldnt agree with you.

you dont seem to understand that you can keep your spread betting positions as long as you wish. they will continue to roll over until you stop them, so by holding a position for a long time is the same thing as buying stock from a broker

you say to bear in mind that one person always loses, one wins and the spread company take their cut.... how do you think buying shares works? someone wins and someone loses and the broker takes his cut. the exact same way as spread betting except you dont pay any cgt in spread betting.

when you buy shares, do you want them to go down? of course not you are betting that they will go up, exact same thing as putting your money on black in a casino . the stock market is one giant casino and the only way you win is by having an edge - just like its possible to beat the casinos at blackjack by having an edge

posts like the one above make me laugh

Wudyaquit

mickman wrote: »

this must be the most stupid post i have ever read. "buying metals, stocks etc and your wealth will increase over time" - what kind of comment is that? people that bought cisco at 80 dollars in 2001 wouldnt agree with you.

you dont seem to understand that you can keep your spread betting positions as long as you wish. they will continue to roll over until you stop them, so by holding a position for a long time is the same thing as buying stock from a broker

you say to bear in mind that one person always loses, one wins and the spread company take their cut.... how do you think buying shares works? someone wins and someone loses and the broker takes his cut. the exact same way as spread betting except you dont pay any cgt in spread betting.

when you buy shares, do you want them to go down? of course not you are betting that they will go up, exact same thing as putting your money on black in a casino . the stock market is one giant casino and the only way you win is by having an edge - just like its possible to beat the casinos at blackjack by having an edge

posts like the one above make me laugh

You actually believe that on average everyone comes out level in the stock market? That stock prices generally remain static? Investing in companies that generate income which is then paid to the investors is in no way the same as betting the flip of a coin which way those prices will move. Posts like that make me laugh that someone would go on the attack on a forum before looking at any long term stock market trend to make sure their point had any validity.
Take pretty much any stock market over any period of 15 years or more and on average the investors have increased their wealth.

You've intimated that I don't understand how spread betting works, but if you think that a stock is a bet on whether the stock price goes up or down, you've no idea what a stock is.

If you don't agree with my post, you either don't agree that over time the average position of the average spread-better is a loss or that the average position of the average stock market investor is a gain. Either way, you've no clue what you're talking about.

mickman

Come out level?are u mad or something ? For every winner there is a loser on the other end and the broker takes his cut. You seem to think that if you look at a Market then the trend is always up. Look at the nikeii ,it topped out at 30000 points and is now at 9. Do you think people who invested 10 years ago in that Market made money?

Dividends get suspended too you know, where is the source of income then .

I agree that on average most people lose money in the stock Market regardless of whether it's s betting or not

Invest in your mature stocks bud and let them go from 3 bucks to 5 and back again :-)

Wudyaquit

mickman wrote: »

Come out level?are u mad or something ? For every winner there is a loser on the other end and the broker takes his cut.

Wrong.
If I invest in Apple and it goes up and I take a dividend and then sell it on to someone else for whom it also goes up, I've lost nothing. I've foregone additional gains - this is entirely different to my having lost money. In spread betting when someone gains the other sides loses. There's a fundamental difference which you don;t seem to be getting.

mickman wrote: »

You seem to think that if you look at a Market then the trend is always up. You seem to think that if you look at a Market then the trend is always up. Look at the nikeii ,it topped out at 30000 points and is now at 9. Do you think people who invested 10 years ago in that Market made money?

Dividends get suspended too you know, where is the source of income then .

I was being obtuse. I should have explained to you in my post that the value of your investment may go down as well as up.
Either you agree that stock markets tend to trend up and spreadbetting tends to trend down or you don't - I'm not going to dispute something so basic with you.

mickman wrote: »

I agree that on average most people lose money in the stock Market regardless of whether it's s betting or not

Invest in your mature stocks bud and let them go from 3 bucks to 5 and back again :-)

If you're worried about the effect of fluctuations will have in the short term and think spread betting for any reason other than covering a position is the resolution, good luck with that.

You still clearly can't understand the fundamental difference between stock market investing and spreadbetting so I'll leave it. But perhaps you should try to get an understanding yourself before calling others stupid.

digme

digme wrote: »

I bought physical silver last year at 12 Euro an ounce, it's now 15.60 not bad and it's only going to go up.Never did spread betting, but your playing in a rigged market, so i wouldn't dare attempt it.

Silver is now €17.20 today !

Raskolnikov

mickman wrote: »

I agree that on average most people lose money in the stock Market regardless of whether it's s betting or not

I'm sorry, but now you're the one who is making silly comments.

The Japanese stock market in 1989 and the Tech Bubble of 1999 are extreme outliers. The long-term trend for the stock market is to always go higher. When you think about that, it makes sense. As more people take part in the global economy, more goods and services are exchanged, and thus wealth is created. The stock market is merely a function of that trend which began thousands of years ago.

Spread betting on the other hand is (mostly) a zero sum game. For each pair that plays the game, there always has to be at least one loser (this is because a broker will take a cut). Over the long-term, the vast majority of people who spread bet will be losers. The only winner is the broker, and those players who are either incredibly shrewd, or just plain lucky.

I know there are traders here who make money; I tip my hat to them, they are truly unique and very special people. But quite frankly, given the choice between playing a market where most people are winners, over a market where most people lose; I would chose the former everytime.

digme

ie betfair

silver €17.70 roll on €50

digme

ixus wrote: »

Foolish comment.

haha roll on 100 euros

Cyrus

Raskolnikov wrote: »

I'm sorry, but now you're the one who is making silly comments.

The Japanese stock market in 1989 and the Tech Bubble of 1999 are extreme outliers. The long-term trend for the stock market is to always go higher. When you think about that, it makes sense. As more people take part in the global economy, more goods and services are exchanged, and thus wealth is created. The stock market is merely a function of that trend which began thousands of years ago.

Spread betting on the other hand is (mostly) a zero sum game. For each pair that plays the game, there always has to be at least one loser (this is because a broker will take a cut). Over the long-term, the vast majority of people who spread bet will be losers. The only winner is the broker, and those players who are either incredibly shrewd, or just plain lucky.

I know there are traders here who make money; I tip my hat to them, they are truly unique and very special people. But quite frankly, given the choice between playing a market where most people are winners, over a market where most people lose; I would chose the former everytime.

im a little confused about peoples perception of spread betting, winning and losing is pretty much the same as owning the shares, the difference is you are probably quicker to crystallise profits or losses.

for example if you decide that you like ryanair and that it should rise over the next 3 months, you buy on a march market, set a stop loss (guaranteed if you like) to limit the potential downside and bet an amount per point movement, with €10 a point being the same as owning 1,000 shares.

So if ryanair rises 15cent you are up 150 quid, if it drops 15 cent you are down 150 quid and if it drops to your stop loss or if at 31 March it hasnt hit the stop loss but isnt in profit you loss, at the same time you can take a profit at any time between then and march at the click of a button.

the only way physically buying shares makes you less likely to loose is that you can hang onto them indefinately, like all the people who watched aib and boi drop to near zero.....

obviously you are exposed to inter day fluctuations but you set a stop loss far enough away to protect yourself,

it isnt some dark art or place where people get rountinely ripped off tho

mickman

Cyrus wrote: »

im a little confused about peoples perception of spread betting, winning and losing is pretty much the same as owning the shares, the difference is you are probably quicker to crystallise profits or losses.

for example if you decide that you like ryanair and that it should rise over the next 3 months, you buy on a march market, set a stop loss (guaranteed if you like) to limit the potential downside and bet an amount per point movement, with €10 a point being the same as owning 1,000 shares.

So if ryanair rises 15cent you are up 150 quid, if it drops 15 cent you are down 15 quid and if it drops to your stop loss or if at 31 March it hasnt hit the stop loss but isnt in profit you loss, at the same time you can take a profit at any time between then and march at the click of a button.

the only way physically buying shares makes you less likely to loose is that you can hang onto them indefinately, like all the people who watched aib and boi drop to near zero.....

obviously you are exposed to inter day fluctuations but you set a stop loss far enough away to protect yourself,

it isnt some dark art or place where people get rountinely ripped off tho

exactly

ixus

digme wrote: »

haha roll on 100 euros

Nice one. 100 euros what?

From your original post, Silver hit approx $25 then dropped approx $3 after that. If you had entered long then you would have been hurt. Nothing only goes up.

Two things have changed since those initial posts. QE2 and more importantly, JPM and HSBC have CFTC and a RICO suit on their case which means they will not short this. Did you kow this would happen? Do you even know what the CFTC is?

Also, you don't need two threads on this.


Congrats on your P&L though and hold onto the ride for as long as you can!

Wudyaquit

Cyrus wrote: »

im a little confused about peoples perception of spread betting, winning and losing is pretty much the same as owning the shares, the difference is you are probably quicker to crystallise profits or losses.

for example if you decide that you like ryanair and that it should rise over the next 3 months, you buy on a march market, set a stop loss (guaranteed if you like) to limit the potential downside and bet an amount per point movement, with €10 a point being the same as owning 1,000 shares.

So if ryanair rises 15cent you are up 150 quid, if it drops 15 cent you are down 150 quid and if it drops to your stop loss or if at 31 March it hasnt hit the stop loss but isnt in profit you loss, at the same time you can take a profit at any time between then and march at the click of a button.

the only way physically buying shares makes you less likely to loose is that you can hang onto them indefinately, like all the people who watched aib and boi drop to near zero.....

obviously you are exposed to inter day fluctuations but you set a stop loss far enough away to protect yourself,

it isnt some dark art or place where people get rountinely ripped off tho

They're not directly comparable. Spreadbets are much more highly geared for one thing. Another is you can guess the right direction a price is going to move and still lose money with a spreadbet.
In your example, you're 50-50 to make a profit in guessing how exactly Ryanair's price will go. However, we know that Ryanair's price, like most share prices, is more likely to rise over time, so the person holding the stock has a higher than 50-50 chance of earning, as well as receiving a dividend.

There's a reason why all these companies are desperate to give free "Trading lessons" for spreadbetting and that's because it's a high profit game for them, but not the gamblers who use their sites. It's not a case of people being ripped off, no more than if they log onto Betfair and put a punt on Liverpool to be relegated - it's just that without exceptional market insights they're unlikely to make money long term.
You're betting that you know the market sufficiently better than the counterparty to make a profit, so isn't a game to be in without a deep understanding of the market. At a bare minimum, without understanding that there's a difference to stock market investment, you should definitely stay away.

digme

digme wrote: »

ie betfair

silver €17.70 roll on €50

21.70 and rising can't wait for 100 euro silver !!!!!!!

Fiat is for idiots