Every few days or so I get a question from someone about purchasing physical gold. Randall Oliphant of Barrick Gold recently said in an interview that most new gold production goes into the jewellery market, predominantly in India, and talked about the gold business benefiting from a jeweler marketing campaign.
Walking down a typical Mumbai or New Delhi Street would you then expect to see women laden down with bangles?
Of course not, and this is where the fundamental error in understanding spawns silly misguided attempts by the World Gold Council and others to "promote" gold by using fashion models and such.
Indian jeweler is usually 24 carat gold and is not meant to be worn, except on very special occasions. On her wedding day a typical middle class bride wears nearly 32 ounces of gold. Family wealth is passed along maternal lines in the form of golden dowries.
Wedding guests also give gold coins as lucky wedding gifts. Gold is deeply embedded in the Indian culture. No need to advertise gold here, its appreciation is almost instinctive.
It's not so much for adornment as for investment. As the whole of India moves upscale, the demand for gold is increasing.
Contrast: In the "enlightened" West, if you were to ask most people on the street the price of gold you would probably be surprised that most think it is worth much more than it truly is. Try it yourself.
And, if you showed them a standard 400 oz bar all of them (bar none) would estimate its value higher than it really is. A few will say "a million dollars".
Gold is also deeply embedded in the western psyche, though perhaps as "repressed memory". But it lurks there in the back of our consciousness, which is why films like "The Treasure of Sierra Madre", "Gold finger", and "Kelly's Heroes" were such big hits.
That's why rubbish gold-fill jeweler in the mall sells - people have an inaccurate idea of its value, but they know gold is valuable. Not many people are even aware that they can purchase and own a gold coin or a gold brick.
Would a "Diamonds are Forever" De Beers-type ad campaign change this? Probably not. Ostentatious display is considered vulgar, and the idea of wearing thick heavy jeweler "on those special occasions" just won't fly.
Besides, the most popular jeweler in the USA is 10 carat (only 42% gold by weight) and that is unlikely to change.
To my mind a much more effective campaign would be to target the small investor. Unlike every other commodity, the demand for gold runs counter-cycle to the price, and actually increases when the price increases.
You will see misinformed media stories forecasting doom for the gold market "when gold gets too expensive for jeweler fabricators", but history has shown that any slack in demand is always taken up by investment.
When the gold price rockets, the media reports of the lengthening queues at the gold wicket in the bank will be the best advertisement.
This will happen, in time. For now, there's a major disconnect between the subconscious perception here in the West that "gold is valuable" and the belief that is front and centre in Eastern Europe and the whole of Asia - "gotta have some for a rainy day".
Private gold ownership in Latin America is shockingly low, though gold ownership in countries like Mexico and Peru which issued their own coins was once strong.
The lust for gold was the driving force that sent the conquistadores far and wide, but now what is left sits in museums and cathedrals, and what is produced is exported.
Promoting gold in Asia is like preaching to the converted. Publicly promoting gold in the USA will not be effective unless at the same time war is publicly declared on paper currency.
The mainstream media won't have the guts to do that - not in the short term anyway.
But, the World Gold Council could do no worse than to run a continuous series of ads in the major newspapers of Latin America, exhorting their wealthy citizens to forego that trip to Disneyworld this year and sock the money away in gold, just in case your government stops doing its job.
Could there be no better alternative for wealth-preservation? Especially when the US dollar is looking shaky? Could there possibly be a more potentially receptive audience? It seems that every few years one or other Latin American country has their currency devalued into oblivion.
With the recent changing-of-the-guard at the WGC, perhaps we'll see some aggressive marketing along these lines.
There has been a lot of buzz on the internet in recent weeks about gold confiscation. Could it happen again in America? I doubt it, though it might be tried. As one person wrote on a forum, "They'll have to confiscate my gun before they confiscate my gold".
If they tried to confiscate gold there would be a Black Market in the US the likes of which have not been seen since the days of the Bootleggers and Speakeasies during Prohibition.
Remember the unheeded calls to invest in the stock market in the immediate days after September 11th, in "the name of patriotism" ? The American government no longer occupies the moral high ground that it did in 1933. We've impeached Nixon and Clinton since then.I don't know if the following story is apocryphal or true. It comes from "Silver" by Thomas Patrick Mohide, pg. 282
Saturday, September 20, 2008
Symmetrical Triangle Explained
To calculate the minimum price objective, calculate the "height" of the formation at its widest part - the "base" of the triangle.
The height is equal determined by projecting a vertical line from the first point of contact with the trend line on the left of the chart to the next point of contact with the opposite trend-line.
In other words, measure from the highest high point on one trend-line to the lowest low point on the opposite trend-line.
Symmetrical Triangle looks like a copy of the Classic ABCD Price Pattern.
Measuring the Triangle - To project the minimum short-term price objective of a triangle, an investor must wait until the price has broken through the trendline.
When the price breaks through the trendline, the investor then knows whether the pattern is a consolidation or a reversal formation.
To calculate the minimum price objective, calculate the "height" of the formation at its widest part - the "base" of the triangle.
The height is equal determined by projecting a vertical line from the first point of contact with the trendline on the left of the chart to the next point of contact with the opposite trendline.
In other words, measure from the highest high point on one trendline to the lowest low point on the opposite trendline.
Both these points will be located on the far left of the formation. Next, locate the "apex" of the triangle (the point where the trendlines converge).
Take the result of the measurement of the height of the triangle and add it to the price marked by the apex of the triangle if an upside breakout occurs and subtract it from the apex price if the triangle experiences a downside breakout.
For example, working with a symmetrical triangle, assume the highest high of the pattern occurs at 100 and the lowest low at 80.
The height of the pattern is 20 (100 - 80 = 20). The apex of the triangle occurs at 90.
The pattern has an upside breakout. Using the measuring rule, the target price is 110 (90 + 20 = 110).
Duration of the Triangle - As mentioned before, the triangle is a relatively short-term pattern.
It may take up to one month to form and it usually forms in less than three months.
Forecasting Implications - Once breakout occurs, the symmetrical triangle tends to be a reliable pattern.
Calculating the failure rates ranging between 2% and 6% for symmetrical triangles after a valid breakout.
Shape of Symmetrical Triangle - The pattern should display two highs and two lows, all touching the trendline - a minimum of four reversal points is necessary to draw the two converging trendlines.
The height is equal determined by projecting a vertical line from the first point of contact with the trend line on the left of the chart to the next point of contact with the opposite trend-line.
In other words, measure from the highest high point on one trend-line to the lowest low point on the opposite trend-line.
Symmetrical Triangle looks like a copy of the Classic ABCD Price Pattern.
Measuring the Triangle - To project the minimum short-term price objective of a triangle, an investor must wait until the price has broken through the trendline.
When the price breaks through the trendline, the investor then knows whether the pattern is a consolidation or a reversal formation.
To calculate the minimum price objective, calculate the "height" of the formation at its widest part - the "base" of the triangle.
The height is equal determined by projecting a vertical line from the first point of contact with the trendline on the left of the chart to the next point of contact with the opposite trendline.
In other words, measure from the highest high point on one trendline to the lowest low point on the opposite trendline.
Both these points will be located on the far left of the formation. Next, locate the "apex" of the triangle (the point where the trendlines converge).
Take the result of the measurement of the height of the triangle and add it to the price marked by the apex of the triangle if an upside breakout occurs and subtract it from the apex price if the triangle experiences a downside breakout.
For example, working with a symmetrical triangle, assume the highest high of the pattern occurs at 100 and the lowest low at 80.
The height of the pattern is 20 (100 - 80 = 20). The apex of the triangle occurs at 90.
The pattern has an upside breakout. Using the measuring rule, the target price is 110 (90 + 20 = 110).
Duration of the Triangle - As mentioned before, the triangle is a relatively short-term pattern.
It may take up to one month to form and it usually forms in less than three months.
Forecasting Implications - Once breakout occurs, the symmetrical triangle tends to be a reliable pattern.
Calculating the failure rates ranging between 2% and 6% for symmetrical triangles after a valid breakout.
Shape of Symmetrical Triangle - The pattern should display two highs and two lows, all touching the trendline - a minimum of four reversal points is necessary to draw the two converging trendlines.
Understanding and Using Capitulation for Reversal Daytrades
Capitulation means that there are no more sellers for the moment, and the stock price will rebound sharply
The most important aspect is not to confuse capitulation with the low-grade drip, drip of continuing distribution, better known as the infamous falling knife.
The two down legs are distributive in nature, though quite vigorous, while the third and final leg down represented capitulation.
Another important aspect is being able to know when they are happening— it’s my watching the hi/lo ticker that finds these kinds of trades.
At first, the beginner needs to focus on identifying the basic capitulation
pattern and differentiating it from on-going distribution, and then learning the variations which can occur—set-ups with a different number of
Down legs
Different bottoms other than a V-shaped one
Double/triple bottom
Reverse head and shoulders
Cup and handle
and different time frames for the support level where the capitulation reversal takes place.
Capitulation checklist:
1) Have a means of being able to identify stocks which may be in the process of capitulating.
2) Check for any news which could explain the extreme selling.
3) Verify substantial support—price, trend line, and moving average supports—on different time frames, including the daily.
4) Look for the price and volume pattern (especially the downward curvature morphing into a straight line) plus the time of day—afternoon—which is markedly correlated with capitulation.
5) Identify your price target, calculate your risk, size your lot appropriately, and enter the trade either on the first pullback on lower volume than the volume which occurred during the first capitulation bounce, or when price surmounts the first new resistance on the developing reversal.
In other words, wait for the beginning of the reversal to show itself.
6) Exit per partial profiting out at various resistance levels, or by complete profit-booking once your target is reached.
The most important aspect is not to confuse capitulation with the low-grade drip, drip of continuing distribution, better known as the infamous falling knife.
The two down legs are distributive in nature, though quite vigorous, while the third and final leg down represented capitulation.
Another important aspect is being able to know when they are happening— it’s my watching the hi/lo ticker that finds these kinds of trades.
At first, the beginner needs to focus on identifying the basic capitulation
pattern and differentiating it from on-going distribution, and then learning the variations which can occur—set-ups with a different number of
Down legs
Different bottoms other than a V-shaped one
Double/triple bottom
Reverse head and shoulders
Cup and handle
and different time frames for the support level where the capitulation reversal takes place.
Capitulation checklist:
1) Have a means of being able to identify stocks which may be in the process of capitulating.
2) Check for any news which could explain the extreme selling.
3) Verify substantial support—price, trend line, and moving average supports—on different time frames, including the daily.
4) Look for the price and volume pattern (especially the downward curvature morphing into a straight line) plus the time of day—afternoon—which is markedly correlated with capitulation.
5) Identify your price target, calculate your risk, size your lot appropriately, and enter the trade either on the first pullback on lower volume than the volume which occurred during the first capitulation bounce, or when price surmounts the first new resistance on the developing reversal.
In other words, wait for the beginning of the reversal to show itself.
6) Exit per partial profiting out at various resistance levels, or by complete profit-booking once your target is reached.
Trading Glossary
Abandoned baby -- A 3-bar candlestick reversal pattern. A single bar gaps up or down but then immediately gaps back in the opposite direction on the next bar.
The shadow of the lone candle never crosses the shadow of the bar before the 1st gap or after the 2nd gap.
Accumulation-distribution (Acc-Dis) -- The underlying buying or selling pressure within a particular stock.
Adam and Eve (A&E) -- Top or bottom reversal pattern noted by its sharp, volatile first high (low) and slower, rounded second high (low).
Ascending triangle -- A common continuation pattern that forms from a rising lower trendline and a horizontal top resistance line.
Avg LOSS -- A performance measurement that shows the total losses divided by the number of losing trades.
Avg WIN -- A performance measurement that shows the total profits divided by the number of winning trades.
Bawoooosh -- stock chart falling like a meteor
Bear hug -- A trading strategy that finds short sale opportunities in weak markets that rally into resistance or narrow range bars on the verge of breakdown.
Bollinger bands (BB) -- Elastic support and resistance channels above and below price bars that respond to the tendency of price to draw back to center after strong movement in either direction.
The Bollinger Band center band sets up at the moving average chosen for the indicator.
Breakaway gap -- A classic gap popularized in Technical Analysis of Stock
Trends that signals the start of a new trend after a prolonged basing period.
Bucket shops -- Early 20th century stock gambling parlors that catered to short-term speculation.
Fictional trader Jesse Livermore discusses his experiences in them in the classic Reminiscences of a Stock Operator.
Charting landscape -- A 3 dimensional view that evaluates complex price action through multiple layers of information on a single price chart.
Coiled Spring -- A trading strategy that executes a position at the interface between a rangebound market and a trending market.
Continuation gap -- A classic gap popularized in Technical Analysis of Stock Trends that signals the dynamic midpoint of an ongoing trend.
Convergence-divergence -- The tendency of two or more charting landscape features to confirm or refute an expected price outcome.
Clear air (CA) -- Pockets of thin participation and ownership that often lead to wide range price bars.
Cross-verification (CV) -- The convergence of unrelated directional information at a single price level.
Cross-verification x 4 (CVx4) -- A high probability trade in which a single price and time emerges from analysis through at least 4 unrelated methods.
Cup and handle (C&H) -- A popular pattern that triggers a breakout through a triple top.
The formation draws a long and deep base after an intermediate high.
The market rallies into a double top failure that creates the "cup".
It pulls back in a small rounded correction that forms the "handle" and then surges to a new high.
Cup and two handles (C&2H) -- A Cup and Handle variation that draws two congestion zones on the right side of the pattern before price ejects into a strong breakout.
Dark cloud cover -- A 2-bar candlestick reversal pattern. The first bar draws a tall rally candle.
The next candle gaps up but closes well within the range of the prior bar.
Descending triangle -- A common reversal pattern that forms from a descending upper trendline and a horizontal bottom support line.
Dip trip -- A trading strategy that buys pullbacks in an active bull market.
Doji -- A 1-bar candlestick reversal pattern in which the open and close are the same (or almost the same) price and the high-low range is above average for that market.
Double bottom (DB) -- A common reversal pattern in which price prints a new low, reverses into a rally and returns once to test it before moving higher.
Double top (DT) -- A common reversal pattern in which price prints a new high, reverses into a selloff and returns once to test it before moving lower.
Dow theory -- Observations on the nature of trend by Charles Dow in the early 20th century.
It also notes that broad market trends verify when the 3 major market averages all move to a new high or low
Electronic communications networks (ECNs) -- Computer stock exchanges that rapidly match, fill and report customer limit orders.
Elliott wave theory (EWT) -- A pattern-recognition technique published by Ralph Nelson Elliott in 1939 that believes all markets move in
5 distinct waves when traveling in the direction of a primary trend and 3 distinct waves when moving in a correction against a primary trend.
Empty zone (EZ) -- The interface between the end of a quiet rangebound market and the start of a new dynamic trending market.
Execution target (ET) -- The predetermined point in price, time and risk that a trade entry should be considered.
Execution zone (EZ) -- The time and price surrounding an Execution Target that requires undivided attention in order to decide if an trade entry is appropriate.
Exhaustion gap -- A classic gap popularized in Technical Analysis of Stock Trends that signals the end of an active trend with one last burst of enthusiasm or fear.
Fade -- A swing strategy that sells at resistance and buys at support.
Failure target -- The projected price that a losing trade will be terminated. The price at which a trade will be proven wrong.
Farley's accumulation-distribution accelerator (ADA) -- A technical indicator that measures the trend of accumulation-distribution.
Fibonacci (Fibs) -- The mathematical tendency of trends to find support at the 38%, 50% or 62% retracement of the last dynamic move.
First rise/first failure (FR/FF) -- The first 100% retracement of the last dynamic price move after an extended trending market.
Finger finder -- A trading strategy that initiates a variety of tactics based upon single bar candlestick reversals.
Fractals -- Small-scale predictive patterns that repeat themselves at larger and larger intervals on the price chart.
5-8-13 -- Intraday Bollinger Bands and moving average settings that align with short-term Fibonacci cycles.
Set the Bollinger Bands to 13-bar and 2 standard deviations. Set the moving averages to 5-bar and 8-bar SMAs.
5 wave decline -- A classic selloff pattern that exhibits 3 sharp downtrends and 2 weak bear rallies.
Flags -- Small continuation pattern that prints against the direction of the primary trend.
Gap echo -- A gap that breaks through the same level as a recent one in the opposite direction.
Hammer -- A 1-bar candlestick reversal pattern in which the open-close range is much smaller than a high-low range that prints well above average for that market.
The real body must sit at one extreme of the high-low range to form a hammer.
Harami -- A 1-bar candlestick reversal pattern in which the open-close range is much smaller than the high-low range and sits within the real body of a tall prior bar.
Hard right edge -- The location where the next bar will print on the price chart. This also points to the spot where the swing trader must predict the future.
Head and shoulders -- This classic reversal pattern forms from an extended high that sits between two lower highs.
3 relative lows beneath the 3 highs connect at a trendline known as the neckline. Popular opinion expects a major selloff when the neckline breaks.
Historical volatility -- The range of price movement over an extended period of time as compared to current activity.
Hole in the wall -- A sharp down gap that immediately follows a major rally.
Inside Day -- A price bar that prints a lower high and higher low than the bar that precedes it.
Iccarus Chart -- chart has taken off so high and so fast...wings set to melt and bawooosh back.
Inverse head and shoulders -- This classic reversal pattern forms from an extended low that sits between two higher lows.
3 relative highs above the 3 lows connect at a trendline known as the neckline. Popular opinion expects a major rally when the neckline breaks.
January effect -- The tendency for stocks to recover in January after end of year, tax-related selling has completed.
Moving average convergence-divergence (MACD) -- A trend-following indicator that tracks two exponentially smoothed moving averages above and below a zero line.
Mesa top -- A double top reversal pattern that declines at the same angle as the initial rally.
Moving average crossover -- The point where a moving average intersects with another moving average or with price.
Moving average ribbons (MARs) -- Wide bands of mathematically related and color-coded moving averages.
Narrow range bar (NR) -- A price bar with a smaller high-low range as compared to the prior bar's high-low range.
Narrowest range of the last 7 bars (NR7) -- A low volatility time-price convergence that often precedes a major price expansion.
A price bar with a smaller high-low range as compared to the prior 6 bars high-low ranges.
NR7-2 -- The 2nd NR7 in a row. A low volatility time-price convergence that often precedes a major price expansion. neckline --
A trendline drawn under the support of a Head and Shoulders pattern over the resistance of an Inverse Head and Shoulders pattern.
Negative feedback -- Directionless price action in which bars move back and forth between well-defined boundaries.
Noise -- Price and volume fluctuations that confuse interpretation of market direction.
Numbie -- numbnut message board posters that haven't a clue.
On balance volume (OBV) -- A volume indicator that measures the progress of accumulation-distribution.
Oscillator -- A subset of technical indicators that accurately measures flat market conditions by assigning overbought and oversold price levels.
Overbought -- The evolution of price action to a state in which it runs out of buying pressure.
Oversold -- The evolution of price action to a state in which it runs out of selling pressure.
Pattern analysis -- Price prediction through interpretation of the crowd behavior seen in repeating chart formations.
Pattern cycles -- The tendency of markets to repeat identical price formations through different stages of development in all time frames.
The master market blueprint that generates all chart patterns.
Pennants -- Small continuation pattern that prints against the direction of the primary trend.
%WIN -- A performance measurement that shows the total winners divided by the total number of trades.
Positive feedback -- Directional price action in which bars gather momentum and move from one level to the next.
Power spike -- A trading strategy that seeks high volume events and executes positions to capitalize on their special characteristics.
PREdickor -- numbie who insist on trying to predict the future of the markets
Profit target -- The projected price that a successful trade will be terminated. The price at which a trade faces 1st resistance.
Putz -- puts on a stock, betting the stock falls in fast order.
Ribbon crosspoint -- A horizontal support and resistance zone created by a moving average crossover.
Rectangle -- Small continuation pattern that prints sideways to the primary trend.
Relative strength index -- A technical indicator that measures a stock's ability to close up rather than down for a specific period of time.
An oscillator invented by J. Welles Wilder that measures overbought, oversold and divergent market situations.
Rising wedge -- Reversal pattern that slowly rises in an uptrend until price suddenly ejects into a selloff.
Seasonality - The predictable appearance of certain market characteristics that reflect specific and repeating calendar events.
Shooting star -- A 1 to 3-bar candlestick reversal pattern with a small real body and tall shadow that pushes into an intermediate high or low before a sudden change in direction.
Slippage -- The difference between expected transaction costs and actual transaction costs.
Silent alarm -- A rare high volume signal that prints a narrow range bar and flags an impending breakout.
6-18 swing -- A moving average crossover system used to track intraday buying and selling pressure.
Tandard deviation (std dev) -- The positive square root of the expected value of the square of the difference between a random variable and its mean.
Stochastics -- An overbought-oversold oscillator that compares the current bar to a preset selection of high and low prices.
The indicator plots the results on a graph between 0 and 100.
Support/resistance (S/R) -- Horizontal and non-horizontal barriers that current price should not pass without the application of sufficient directional force.
Swing trader -- folks who swing and trying to get the meat out of a chart move and then exit with good gains.....a swing trade can be days...weeks...or months.
Swing trading -- A complex execution strategy that relies on identification of market opportunity through the charting landscape.
Symmetrical triangle -- A common pattern formed from a descending and rising trendline. The formation has an equal bias of breaking out in either direction.
Technical analysis -- Market prediction that studies crowd behavior through evolving price and volume activity.
Tell -- particular stocks that give the true 'tell" of the strength of weakness of the market...i.e INTC, IBM, C, etc.
3rd watch -- A trading strategy that executes a long position on a triple top breakout.
Trend mirrors (TM) -- Past chart activity that influences the direction and development of current trend and range.
Trend relativity error -- A common mistake committed when a trader prepares an analysis in one time frame but executes in another.
Trendline -- A line that connects a series of highs or lows. The trendline can represent support in an uptrend or resistance in a downtrend.
Horizontal trendlines mark support-resistance and rangebound conditions. triangles -- A related set of common 3-sided congestion patterns.
Wave -- Sustained price movement in one direction marked by clear high and low reversal boundaries.
Whipsaw -- Erratic price behavior that triggers false signals and incurs trading losses.
Window dressing -- Institutional buying or selling near the end of a quarter that makes reported results appear better than actual results.
Wooooosh -- stock taking of like a rocket.
Woopdewoo -- stock going good fast
Link to my favorite glossary
http://stockcharts.com/school/doku.php?id=chart_school:glossary_a
My Technical Bible
http://www.amazon.com/Encyclopedia-Technical-Market-Indicators-Second/dp/0070120579
The shadow of the lone candle never crosses the shadow of the bar before the 1st gap or after the 2nd gap.
Accumulation-distribution (Acc-Dis) -- The underlying buying or selling pressure within a particular stock.
Adam and Eve (A&E) -- Top or bottom reversal pattern noted by its sharp, volatile first high (low) and slower, rounded second high (low).
Ascending triangle -- A common continuation pattern that forms from a rising lower trendline and a horizontal top resistance line.
Avg LOSS -- A performance measurement that shows the total losses divided by the number of losing trades.
Avg WIN -- A performance measurement that shows the total profits divided by the number of winning trades.
Bawoooosh -- stock chart falling like a meteor
Bear hug -- A trading strategy that finds short sale opportunities in weak markets that rally into resistance or narrow range bars on the verge of breakdown.
Bollinger bands (BB) -- Elastic support and resistance channels above and below price bars that respond to the tendency of price to draw back to center after strong movement in either direction.
The Bollinger Band center band sets up at the moving average chosen for the indicator.
Breakaway gap -- A classic gap popularized in Technical Analysis of Stock
Trends that signals the start of a new trend after a prolonged basing period.
Bucket shops -- Early 20th century stock gambling parlors that catered to short-term speculation.
Fictional trader Jesse Livermore discusses his experiences in them in the classic Reminiscences of a Stock Operator.
Charting landscape -- A 3 dimensional view that evaluates complex price action through multiple layers of information on a single price chart.
Coiled Spring -- A trading strategy that executes a position at the interface between a rangebound market and a trending market.
Continuation gap -- A classic gap popularized in Technical Analysis of Stock Trends that signals the dynamic midpoint of an ongoing trend.
Convergence-divergence -- The tendency of two or more charting landscape features to confirm or refute an expected price outcome.
Clear air (CA) -- Pockets of thin participation and ownership that often lead to wide range price bars.
Cross-verification (CV) -- The convergence of unrelated directional information at a single price level.
Cross-verification x 4 (CVx4) -- A high probability trade in which a single price and time emerges from analysis through at least 4 unrelated methods.
Cup and handle (C&H) -- A popular pattern that triggers a breakout through a triple top.
The formation draws a long and deep base after an intermediate high.
The market rallies into a double top failure that creates the "cup".
It pulls back in a small rounded correction that forms the "handle" and then surges to a new high.
Cup and two handles (C&2H) -- A Cup and Handle variation that draws two congestion zones on the right side of the pattern before price ejects into a strong breakout.
Dark cloud cover -- A 2-bar candlestick reversal pattern. The first bar draws a tall rally candle.
The next candle gaps up but closes well within the range of the prior bar.
Descending triangle -- A common reversal pattern that forms from a descending upper trendline and a horizontal bottom support line.
Dip trip -- A trading strategy that buys pullbacks in an active bull market.
Doji -- A 1-bar candlestick reversal pattern in which the open and close are the same (or almost the same) price and the high-low range is above average for that market.
Double bottom (DB) -- A common reversal pattern in which price prints a new low, reverses into a rally and returns once to test it before moving higher.
Double top (DT) -- A common reversal pattern in which price prints a new high, reverses into a selloff and returns once to test it before moving lower.
Dow theory -- Observations on the nature of trend by Charles Dow in the early 20th century.
It also notes that broad market trends verify when the 3 major market averages all move to a new high or low
Electronic communications networks (ECNs) -- Computer stock exchanges that rapidly match, fill and report customer limit orders.
Elliott wave theory (EWT) -- A pattern-recognition technique published by Ralph Nelson Elliott in 1939 that believes all markets move in
5 distinct waves when traveling in the direction of a primary trend and 3 distinct waves when moving in a correction against a primary trend.
Empty zone (EZ) -- The interface between the end of a quiet rangebound market and the start of a new dynamic trending market.
Execution target (ET) -- The predetermined point in price, time and risk that a trade entry should be considered.
Execution zone (EZ) -- The time and price surrounding an Execution Target that requires undivided attention in order to decide if an trade entry is appropriate.
Exhaustion gap -- A classic gap popularized in Technical Analysis of Stock Trends that signals the end of an active trend with one last burst of enthusiasm or fear.
Fade -- A swing strategy that sells at resistance and buys at support.
Failure target -- The projected price that a losing trade will be terminated. The price at which a trade will be proven wrong.
Farley's accumulation-distribution accelerator (ADA) -- A technical indicator that measures the trend of accumulation-distribution.
Fibonacci (Fibs) -- The mathematical tendency of trends to find support at the 38%, 50% or 62% retracement of the last dynamic move.
First rise/first failure (FR/FF) -- The first 100% retracement of the last dynamic price move after an extended trending market.
Finger finder -- A trading strategy that initiates a variety of tactics based upon single bar candlestick reversals.
Fractals -- Small-scale predictive patterns that repeat themselves at larger and larger intervals on the price chart.
5-8-13 -- Intraday Bollinger Bands and moving average settings that align with short-term Fibonacci cycles.
Set the Bollinger Bands to 13-bar and 2 standard deviations. Set the moving averages to 5-bar and 8-bar SMAs.
5 wave decline -- A classic selloff pattern that exhibits 3 sharp downtrends and 2 weak bear rallies.
Flags -- Small continuation pattern that prints against the direction of the primary trend.
Gap echo -- A gap that breaks through the same level as a recent one in the opposite direction.
Hammer -- A 1-bar candlestick reversal pattern in which the open-close range is much smaller than a high-low range that prints well above average for that market.
The real body must sit at one extreme of the high-low range to form a hammer.
Harami -- A 1-bar candlestick reversal pattern in which the open-close range is much smaller than the high-low range and sits within the real body of a tall prior bar.
Hard right edge -- The location where the next bar will print on the price chart. This also points to the spot where the swing trader must predict the future.
Head and shoulders -- This classic reversal pattern forms from an extended high that sits between two lower highs.
3 relative lows beneath the 3 highs connect at a trendline known as the neckline. Popular opinion expects a major selloff when the neckline breaks.
Historical volatility -- The range of price movement over an extended period of time as compared to current activity.
Hole in the wall -- A sharp down gap that immediately follows a major rally.
Inside Day -- A price bar that prints a lower high and higher low than the bar that precedes it.
Iccarus Chart -- chart has taken off so high and so fast...wings set to melt and bawooosh back.
Inverse head and shoulders -- This classic reversal pattern forms from an extended low that sits between two higher lows.
3 relative highs above the 3 lows connect at a trendline known as the neckline. Popular opinion expects a major rally when the neckline breaks.
January effect -- The tendency for stocks to recover in January after end of year, tax-related selling has completed.
Moving average convergence-divergence (MACD) -- A trend-following indicator that tracks two exponentially smoothed moving averages above and below a zero line.
Mesa top -- A double top reversal pattern that declines at the same angle as the initial rally.
Moving average crossover -- The point where a moving average intersects with another moving average or with price.
Moving average ribbons (MARs) -- Wide bands of mathematically related and color-coded moving averages.
Narrow range bar (NR) -- A price bar with a smaller high-low range as compared to the prior bar's high-low range.
Narrowest range of the last 7 bars (NR7) -- A low volatility time-price convergence that often precedes a major price expansion.
A price bar with a smaller high-low range as compared to the prior 6 bars high-low ranges.
NR7-2 -- The 2nd NR7 in a row. A low volatility time-price convergence that often precedes a major price expansion. neckline --
A trendline drawn under the support of a Head and Shoulders pattern over the resistance of an Inverse Head and Shoulders pattern.
Negative feedback -- Directionless price action in which bars move back and forth between well-defined boundaries.
Noise -- Price and volume fluctuations that confuse interpretation of market direction.
Numbie -- numbnut message board posters that haven't a clue.
On balance volume (OBV) -- A volume indicator that measures the progress of accumulation-distribution.
Oscillator -- A subset of technical indicators that accurately measures flat market conditions by assigning overbought and oversold price levels.
Overbought -- The evolution of price action to a state in which it runs out of buying pressure.
Oversold -- The evolution of price action to a state in which it runs out of selling pressure.
Pattern analysis -- Price prediction through interpretation of the crowd behavior seen in repeating chart formations.
Pattern cycles -- The tendency of markets to repeat identical price formations through different stages of development in all time frames.
The master market blueprint that generates all chart patterns.
Pennants -- Small continuation pattern that prints against the direction of the primary trend.
%WIN -- A performance measurement that shows the total winners divided by the total number of trades.
Positive feedback -- Directional price action in which bars gather momentum and move from one level to the next.
Power spike -- A trading strategy that seeks high volume events and executes positions to capitalize on their special characteristics.
PREdickor -- numbie who insist on trying to predict the future of the markets
Profit target -- The projected price that a successful trade will be terminated. The price at which a trade faces 1st resistance.
Putz -- puts on a stock, betting the stock falls in fast order.
Ribbon crosspoint -- A horizontal support and resistance zone created by a moving average crossover.
Rectangle -- Small continuation pattern that prints sideways to the primary trend.
Relative strength index -- A technical indicator that measures a stock's ability to close up rather than down for a specific period of time.
An oscillator invented by J. Welles Wilder that measures overbought, oversold and divergent market situations.
Rising wedge -- Reversal pattern that slowly rises in an uptrend until price suddenly ejects into a selloff.
Seasonality - The predictable appearance of certain market characteristics that reflect specific and repeating calendar events.
Shooting star -- A 1 to 3-bar candlestick reversal pattern with a small real body and tall shadow that pushes into an intermediate high or low before a sudden change in direction.
Slippage -- The difference between expected transaction costs and actual transaction costs.
Silent alarm -- A rare high volume signal that prints a narrow range bar and flags an impending breakout.
6-18 swing -- A moving average crossover system used to track intraday buying and selling pressure.
Tandard deviation (std dev) -- The positive square root of the expected value of the square of the difference between a random variable and its mean.
Stochastics -- An overbought-oversold oscillator that compares the current bar to a preset selection of high and low prices.
The indicator plots the results on a graph between 0 and 100.
Support/resistance (S/R) -- Horizontal and non-horizontal barriers that current price should not pass without the application of sufficient directional force.
Swing trader -- folks who swing and trying to get the meat out of a chart move and then exit with good gains.....a swing trade can be days...weeks...or months.
Swing trading -- A complex execution strategy that relies on identification of market opportunity through the charting landscape.
Symmetrical triangle -- A common pattern formed from a descending and rising trendline. The formation has an equal bias of breaking out in either direction.
Technical analysis -- Market prediction that studies crowd behavior through evolving price and volume activity.
Tell -- particular stocks that give the true 'tell" of the strength of weakness of the market...i.e INTC, IBM, C, etc.
3rd watch -- A trading strategy that executes a long position on a triple top breakout.
Trend mirrors (TM) -- Past chart activity that influences the direction and development of current trend and range.
Trend relativity error -- A common mistake committed when a trader prepares an analysis in one time frame but executes in another.
Trendline -- A line that connects a series of highs or lows. The trendline can represent support in an uptrend or resistance in a downtrend.
Horizontal trendlines mark support-resistance and rangebound conditions. triangles -- A related set of common 3-sided congestion patterns.
Wave -- Sustained price movement in one direction marked by clear high and low reversal boundaries.
Whipsaw -- Erratic price behavior that triggers false signals and incurs trading losses.
Window dressing -- Institutional buying or selling near the end of a quarter that makes reported results appear better than actual results.
Wooooosh -- stock taking of like a rocket.
Woopdewoo -- stock going good fast
Link to my favorite glossary
http://stockcharts.com/school/doku.php?id=chart_school:glossary_a
My Technical Bible
http://www.amazon.com/Encyclopedia-Technical-Market-Indicators-Second/dp/0070120579
Locating The Shortest Support and Resistance
How I Find The Next Day Shortest Support and Resistance. Using the current day opening price makes more sense than using the previous day, as I’I looked at pivots drawn with various combinations of current high, lows, and closes.
Daily Average Formula =(H + L + C)/3 (divided-by3) 1 day pivot.
Daily Average Formula =(H + L + C)/3 (divided-by3)
Using the opening price it makes more of a difference on the a 1 day pivot.
Using the current day opening price makes more sense than using the previous day, as I’I looked at pivots drawn with various combinations of current high, lows, and closes.
I learned this daily average formula from a Market Maker formal money manager of S&P Fund.
He used the formula to calculate the next day support and resistance probability.
I then experimented it throughout the day using this formula and found it to be an excellent price follower.
All you need is a calculator, add the H + L+ Last prices of the day throughout the day if you like to follow the price reversals the trading day.
The close price becomes the bench price for the very next trading day.
It goes like this:
1. If yesterday's close remains at the close price maybe lacking demand trading sideways.
2. If today's price trading above yesterday's close or low could be a signal of possible buying interest.
3. If the price is trading above yesterday's high could be signaling demand and could expect the price to move higher and maybe a strong close.
4. If the price is trading below yesterday's low or close below the daily average, generally a gap down usually follow at the next day open.
Using The Daily Average During The Trading Secession
I use the same formula calculations with the current H+L+L (high,low,last)
When I'm using these calculations after I had selected my stock to buy I'd done my due diligence's, but the stock is making me have doubts.
I'll re-calculate if the number ends up being lower than the Last Price or the daily average price, I'll keep checking if the price keep dropping.
Wait to buy until the last 10 minutes I might get a cheaper price same with selling I follow the price direction.
However, I'll already had figured out how much I was willing to pay for the stock.
I selected the 3 price ranges, to take the excitement out of the play. I work with numbers from my trade plan when I was setting up my trade not my emotions.
I don't need to be freaking out with only...YIKES 5 or 10 minutes to spare before the market close trade my plan. Scottrade is good for executing this time frame.
Using A streamng Chart To Follow The Shortest Resistances And Supports of the day.
Another good tip is to draw a line on a streaming or Live chart for the Open price; High; and Low in the first hour or 1/2 hr of trading.
Those trend-lines locates the prices, which becomes resistance and support lines.
You'll see that the prices will repeat to those levels sometimes throughout the day.
SIRIUS SATELLITE
7/22/08 H 2.44 + L 2.06 + C 2.38 = 6.88/3 =2.29
7/23/08 H 2.70 + L 2.23 + C 2.68 = 7.61/3 =2.53
Daily Average for Friday
7/24/08 H 2.75 + L 2.31 + C 2.42 =7.48/3 =2.49
The main objective....is the price going in the direction according to the plan?
Daily Average Formula =(H + L + C)/3 (divided-by3) 1 day pivot.
Daily Average Formula =(H + L + C)/3 (divided-by3)
Using the opening price it makes more of a difference on the a 1 day pivot.
Using the current day opening price makes more sense than using the previous day, as I’I looked at pivots drawn with various combinations of current high, lows, and closes.
I learned this daily average formula from a Market Maker formal money manager of S&P Fund.
He used the formula to calculate the next day support and resistance probability.
I then experimented it throughout the day using this formula and found it to be an excellent price follower.
All you need is a calculator, add the H + L+ Last prices of the day throughout the day if you like to follow the price reversals the trading day.
The close price becomes the bench price for the very next trading day.
It goes like this:
1. If yesterday's close remains at the close price maybe lacking demand trading sideways.
2. If today's price trading above yesterday's close or low could be a signal of possible buying interest.
3. If the price is trading above yesterday's high could be signaling demand and could expect the price to move higher and maybe a strong close.
4. If the price is trading below yesterday's low or close below the daily average, generally a gap down usually follow at the next day open.
Using The Daily Average During The Trading Secession
I use the same formula calculations with the current H+L+L (high,low,last)
When I'm using these calculations after I had selected my stock to buy I'd done my due diligence's, but the stock is making me have doubts.
I'll re-calculate if the number ends up being lower than the Last Price or the daily average price, I'll keep checking if the price keep dropping.
Wait to buy until the last 10 minutes I might get a cheaper price same with selling I follow the price direction.
However, I'll already had figured out how much I was willing to pay for the stock.
I selected the 3 price ranges, to take the excitement out of the play. I work with numbers from my trade plan when I was setting up my trade not my emotions.
I don't need to be freaking out with only...YIKES 5 or 10 minutes to spare before the market close trade my plan. Scottrade is good for executing this time frame.
Using A streamng Chart To Follow The Shortest Resistances And Supports of the day.
Another good tip is to draw a line on a streaming or Live chart for the Open price; High; and Low in the first hour or 1/2 hr of trading.
Those trend-lines locates the prices, which becomes resistance and support lines.
You'll see that the prices will repeat to those levels sometimes throughout the day.
SIRIUS SATELLITE
7/22/08 H 2.44 + L 2.06 + C 2.38 = 6.88/3 =2.29
7/23/08 H 2.70 + L 2.23 + C 2.68 = 7.61/3 =2.53
Daily Average for Friday
7/24/08 H 2.75 + L 2.31 + C 2.42 =7.48/3 =2.49
The main objective....is the price going in the direction according to the plan?
Trailing Stops - How I Track Them… And How You Should, Too
My two basic rules for consistent investment success are as follows: Buy something of extraordinary value when nobody else wants it. Don't lose money… use trailing stops By Dr. Steve Sjuggerud, Chairman, Investment U
My two basic rules for consistent investment success are as follows:
Buy something of extraordinary value when nobody else wants it.
Don't lose money… use trailing stops
Good investors concentrate their time looking for #1 above. But great investors concentrate on both #1 and #2.
"Don't lose money" sounds flippant. But it is tricky business. A good money manager can't just buy smart… he's got to sell smart too.
It is my opinion that most investors - even professionals - don't have a clue when to get out when they get into a position.
Today, I'll show you a simple "worst-case" rule for when to get out - using trailing stops. And then I'll show you the software that I use to track my trailing stops myself. It's inexpensive, easy to use, very good and free to try. You ought to give it a shot…
Why Use Trailing Stops…
People don't have a plan to get out of an investment. So they risk being stuck in a position where a stock they own is down 50%… and they need it to rise by 100% just to get back to break even.
Only the stock continues to fall…
They may even find themselves in a position where a stock has fallen by 90%. But by the time it's down 90%, it has to rise by 900% just to get back to break even. That's asking a lot.
What I mean when I say "don't lose money" is:
"Don't put yourself in a position for a catastrophic loss." You can generally avoid being down 50%, or 90%, with a simple strategy I recommend to Investment U readers.
The simple strategy is called a trailing stop. As a very rough rule of thumb, I recommend a 25% trailing stop strategy. Here's how trailing stops works:
Let's say you buy a stock at $10, and it rises to $20. If it falls by 25% down to $15, you sell, no matter what. It is a way to know when to sell your stocks and let your winners ride.
It is an excellent last-gasp "safety" to get you out of a loser that you don't recognize (or aren't yet willing to recognize) as a loser.
I make a point to always set my exit points right when I decide to buy something. Now it's easy to tell you this. But it's another thing to try and track it…
The Software I Use to Track My Trailing Stops
Let me tell you, I've tried everything. You can't imagine the investment services I've subscribed to. I've used services that can and do run upwards of $20,000 a year (including Bloomberg, and Ned Davis Research, for example)…
But what I use to keep track of my trailing stops is a tiny little program called XLQ Companion.
Here's a screen shot from my own computer that I use to track the trailing stops:
The right column above tells how far below the closing high the stock is.
That's how I track my trailing stops. Fortunately for me, nearly everything in the newsletter is near its highs.
(The lone exception is Anworth, where I use a different exit strategy than a 25% trailing stop.)
XLQ Companion comes with XLQ Plus, an exceptional software package that allows you to use Excel to do just about whatever you need to track your stocks and portfolios.
I think the creator of XLQ Companion envisioned it as a total portfolio management program.
You can use it for that. But I just use my brokerage account as my portfolio tracking page, and I use XLQ Companion just for my trailing stops.
Beyond the little XLQ Companion program, the actual XLQ program is phenomenal. XLQ is an amazing creation that allows you to manipulate stock data in Excel.
I use it for research and for tracking my stocks, their fundamentals, and whether they're above or below their moving averages right now.
Every time I open Excel, all the data and formulas are updated. Former Investment U Vice President Brian Hunt uses the Average True Range function of XLQ as part of his Microcap Moonshots research. It's really valuable.
Again, I've used services that cost tens of thousands of dollars a year.
And this little program for about $100 links better and faster to Excel than any of them.
As for tracking trailing stops, there really isn't any competition out there yet. Of course, I think it's great, in part because I helped develop it. (The genius behind XLQ was open to my ideas, and created XLQ Companion to serve readers like you.)
In short, XLQ could help you be a better investor. Right now it's free to try for 45 days.
If you've had a hard time in the past tracking your trailing stops, check it out at:
http://www.qmatix.com/XLQ.htm
Good investing,
Steve
My two basic rules for consistent investment success are as follows:
Buy something of extraordinary value when nobody else wants it.
Don't lose money… use trailing stops
Good investors concentrate their time looking for #1 above. But great investors concentrate on both #1 and #2.
"Don't lose money" sounds flippant. But it is tricky business. A good money manager can't just buy smart… he's got to sell smart too.
It is my opinion that most investors - even professionals - don't have a clue when to get out when they get into a position.
Today, I'll show you a simple "worst-case" rule for when to get out - using trailing stops. And then I'll show you the software that I use to track my trailing stops myself. It's inexpensive, easy to use, very good and free to try. You ought to give it a shot…
Why Use Trailing Stops…
People don't have a plan to get out of an investment. So they risk being stuck in a position where a stock they own is down 50%… and they need it to rise by 100% just to get back to break even.
Only the stock continues to fall…
They may even find themselves in a position where a stock has fallen by 90%. But by the time it's down 90%, it has to rise by 900% just to get back to break even. That's asking a lot.
What I mean when I say "don't lose money" is:
"Don't put yourself in a position for a catastrophic loss." You can generally avoid being down 50%, or 90%, with a simple strategy I recommend to Investment U readers.
The simple strategy is called a trailing stop. As a very rough rule of thumb, I recommend a 25% trailing stop strategy. Here's how trailing stops works:
Let's say you buy a stock at $10, and it rises to $20. If it falls by 25% down to $15, you sell, no matter what. It is a way to know when to sell your stocks and let your winners ride.
It is an excellent last-gasp "safety" to get you out of a loser that you don't recognize (or aren't yet willing to recognize) as a loser.
I make a point to always set my exit points right when I decide to buy something. Now it's easy to tell you this. But it's another thing to try and track it…
The Software I Use to Track My Trailing Stops
Let me tell you, I've tried everything. You can't imagine the investment services I've subscribed to. I've used services that can and do run upwards of $20,000 a year (including Bloomberg, and Ned Davis Research, for example)…
But what I use to keep track of my trailing stops is a tiny little program called XLQ Companion.
Here's a screen shot from my own computer that I use to track the trailing stops:
The right column above tells how far below the closing high the stock is.
That's how I track my trailing stops. Fortunately for me, nearly everything in the newsletter is near its highs.
(The lone exception is Anworth, where I use a different exit strategy than a 25% trailing stop.)
XLQ Companion comes with XLQ Plus, an exceptional software package that allows you to use Excel to do just about whatever you need to track your stocks and portfolios.
I think the creator of XLQ Companion envisioned it as a total portfolio management program.
You can use it for that. But I just use my brokerage account as my portfolio tracking page, and I use XLQ Companion just for my trailing stops.
Beyond the little XLQ Companion program, the actual XLQ program is phenomenal. XLQ is an amazing creation that allows you to manipulate stock data in Excel.
I use it for research and for tracking my stocks, their fundamentals, and whether they're above or below their moving averages right now.
Every time I open Excel, all the data and formulas are updated. Former Investment U Vice President Brian Hunt uses the Average True Range function of XLQ as part of his Microcap Moonshots research. It's really valuable.
Again, I've used services that cost tens of thousands of dollars a year.
And this little program for about $100 links better and faster to Excel than any of them.
As for tracking trailing stops, there really isn't any competition out there yet. Of course, I think it's great, in part because I helped develop it. (The genius behind XLQ was open to my ideas, and created XLQ Companion to serve readers like you.)
In short, XLQ could help you be a better investor. Right now it's free to try for 45 days.
If you've had a hard time in the past tracking your trailing stops, check it out at:
http://www.qmatix.com/XLQ.htm
Good investing,
Steve
How to Buy Silver & Gold, and Where to Get It!
How to Buy Silver & Gold, and Where to Get It!
Beware! Don't trade in your dollars (which are defaulted promises to pay silver or gold) for more promises of precious metal! What I mean is, we are clearly heading into another situation where delivery default is imminent!
Beware! Don't trade in your dollars (which are defaulted promises to pay silver or gold) for more promises of precious metal! What I mean is, we are clearly heading into another situation where delivery default is imminent!
The safest place to start buying precious metal is from your local dealer, which you can find in your local phone book -- look up "COIN DEALER
Types and Kinds of Silver Available
1. Bars:A. 1000 oz. Bars. --These bars weigh about 68 pounds, and vary about 10% as to weight. You may get a 908.8 oz. bar or a 1099.6 oz. bar, and the price is settled on delivery. These are the NYMEX bars.
Benefit: Good for NYMEX delivery to the major exchange for delivery into a 5000 oz. futures contract, and thus, the most liquid for large buyers or sellers.
Also, it is quicker to physically move them in large quantities, rather than moving hundreds of 100 oz. bars.
Drawback: They are not suitable for smaller transactions, but they are always liquid if they are sold to a wise bullion dealer who knows what they are.
The other drawback may be shipping, if you are on the west coast, since the exchange is in New York.
B. 100 oz. Bars. --These bars weigh 6.8 pounds, and are among the most popular with retail investors.
They stack well, and make it easier to inventory than 1 oz. rounds or silver bags. Popular brands are Englehard and Johnson-Matthey.
Those two brands cost a bit more than other brands, usually about 40-50 cents per ounce above the spot price, but that price may vary with market conditions.
C. Odd weight retail bars. --Stamped as 101.46 oz. or 51.23 oz., these bars cost less, and generally have a wider spread, due to the extra work it takes to calculate their value, and extra risk due to the lack of good brand name.
To test that they are silver, try a simple ring test.
Bang them with a wooden spoon, and if you hear a faint, quick, "riiiinnnngggg", they are silver.
Lead filled bars thud or thunk, and do not ring.
But you may be able to buy these as spot, and sell them at spot, depending on the dealer.
These are true "bullion" bars, and not found in quantity. Also, there is the 1 kilo bar, which is 32.151 ounces.
D. 10 oz. bars are also very popular, often harder to get, with a slightly higher cost, as they seem more "affordable" and are very neat to hold, and can act as "change" between the 100 oz. bars, and 1 oz. rounds.
2. Coins: A. U.S. minted Silver-Eagle. --This coin is .999 pure silver, and weighs one ounce. It generally sells for about $2.00 over the spot price, and is thus quite expensive. I don't recommend these.
B. One-ounce "rounds". --They are .999 pure silver, and weigh one ounce. These coins are like the Silver-Eagle, but they cost much less. They are minted by a private mint.
They generally cost about 40-50 cents above the commonly quoted price of silver--also called the "spot" price. These are often very popular, and a very good choice.
C. U.S. minted coins, dated 1964 or earlier. --These are half dollars, quarters, or dimes that commonly circulated in the U.S. Called "Junk silver", they generally contain no rare or special coins.
Sold by the "bag", each full bag contains $1000 face value of coins, such as 2000 half dollars, 4000 quarters, or 10,000 dimes.
A "bag" weighs about 55 pounds. This is typically the cheapest silver you can buy, because there is a cost to melt it down to get the kind of silver that is needed by industry.
But this kind of silver also can become very much in demand, such as prior to the year 2000, when people wanted "tradable" silver, and bags cost up to 25% more than other silver bullion.
D. Commemorative Coins. Often times, the public will buy silver at a rate of 10 times higher than the bullion content if it is made into "Elvis" coins or "Space Shuttle" coins, or "Princess Diana" coins. Often made by the Franklin mint and sold on late night TV, these are generally a rip off.
People pay so much, and sell them to the bullion dealers only for the melt value.
And you can sometimes buy these kinds of so-called collectables at the coin shops very cheap at just over the spot price, or ten times cheaper than found on TV.
So, what kind of silver is best? It depends on your situation. I own and like the 100 oz. bars, and the 1000 oz. bars the best.
But that's because I have a lot of silver. My friends and family typically like the 100 oz bars, 10 oz. bars, and 1 oz. rounds the best.
For storing large amounts, the 1000 oz. bars are most convenient. The 100 oz. bars are troublesome in very large quantities--it takes much more work to move 200 of them than it takes to move 20 big ones.
I also like the bags, but they may require counting with a coin counter which I have purchased, which takes more time. My kids like the one-ounce rounds the best.
Most people find the 100 oz. bars fascinating to hold in one's hand, and the 1000 oz. bars are typically considered too heavy to lift.
http://silverstockreport.com/buybullion.htm
Types and Kinds of Silver Available
1. Bars:A. 1000 oz. Bars. --These bars weigh about 68 pounds, and vary about 10% as to weight. You may get a 908.8 oz. bar or a 1099.6 oz. bar, and the price is settled on delivery. These are the NYMEX bars.
Benefit: Good for NYMEX delivery to the major exchange for delivery into a 5000 oz. futures contract, and thus, the most liquid for large buyers or sellers.
Also, it is quicker to physically move them in large quantities, rather than moving hundreds of 100 oz. bars.
Drawback: They are not suitable for smaller transactions, but they are always liquid if they are sold to a wise bullion dealer who knows what they are.
The other drawback may be shipping, if you are on the west coast, since the exchange is in New York.
B. 100 oz. Bars. --These bars weigh 6.8 pounds, and are among the most popular with retail investors.
They stack well, and make it easier to inventory than 1 oz. rounds or silver bags. Popular brands are Englehard and Johnson-Matthey.
Those two brands cost a bit more than other brands, usually about 40-50 cents per ounce above the spot price, but that price may vary with market conditions.
C. Odd weight retail bars. --Stamped as 101.46 oz. or 51.23 oz., these bars cost less, and generally have a wider spread, due to the extra work it takes to calculate their value, and extra risk due to the lack of good brand name.
To test that they are silver, try a simple ring test.
Bang them with a wooden spoon, and if you hear a faint, quick, "riiiinnnngggg", they are silver.
Lead filled bars thud or thunk, and do not ring.
But you may be able to buy these as spot, and sell them at spot, depending on the dealer.
These are true "bullion" bars, and not found in quantity. Also, there is the 1 kilo bar, which is 32.151 ounces.
D. 10 oz. bars are also very popular, often harder to get, with a slightly higher cost, as they seem more "affordable" and are very neat to hold, and can act as "change" between the 100 oz. bars, and 1 oz. rounds.
2. Coins: A. U.S. minted Silver-Eagle. --This coin is .999 pure silver, and weighs one ounce. It generally sells for about $2.00 over the spot price, and is thus quite expensive. I don't recommend these.
B. One-ounce "rounds". --They are .999 pure silver, and weigh one ounce. These coins are like the Silver-Eagle, but they cost much less. They are minted by a private mint.
They generally cost about 40-50 cents above the commonly quoted price of silver--also called the "spot" price. These are often very popular, and a very good choice.
C. U.S. minted coins, dated 1964 or earlier. --These are half dollars, quarters, or dimes that commonly circulated in the U.S. Called "Junk silver", they generally contain no rare or special coins.
Sold by the "bag", each full bag contains $1000 face value of coins, such as 2000 half dollars, 4000 quarters, or 10,000 dimes.
A "bag" weighs about 55 pounds. This is typically the cheapest silver you can buy, because there is a cost to melt it down to get the kind of silver that is needed by industry.
But this kind of silver also can become very much in demand, such as prior to the year 2000, when people wanted "tradable" silver, and bags cost up to 25% more than other silver bullion.
D. Commemorative Coins. Often times, the public will buy silver at a rate of 10 times higher than the bullion content if it is made into "Elvis" coins or "Space Shuttle" coins, or "Princess Diana" coins. Often made by the Franklin mint and sold on late night TV, these are generally a rip off.
People pay so much, and sell them to the bullion dealers only for the melt value.
And you can sometimes buy these kinds of so-called collectables at the coin shops very cheap at just over the spot price, or ten times cheaper than found on TV.
So, what kind of silver is best? It depends on your situation. I own and like the 100 oz. bars, and the 1000 oz. bars the best.
But that's because I have a lot of silver. My friends and family typically like the 100 oz bars, 10 oz. bars, and 1 oz. rounds the best.
For storing large amounts, the 1000 oz. bars are most convenient. The 100 oz. bars are troublesome in very large quantities--it takes much more work to move 200 of them than it takes to move 20 big ones.
I also like the bags, but they may require counting with a coin counter which I have purchased, which takes more time. My kids like the one-ounce rounds the best.
Most people find the 100 oz. bars fascinating to hold in one's hand, and the 1000 oz. bars are typically considered too heavy to lift.
http://silverstockreport.com/buybullion.htm
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