Financial Blogging
I have recently jumped into the exciting world of investing. This month I opened an account with the online discount brokerage Etrade, and wired the bulk of my net worth ($49,123,457) into said account. I've decided to blog any trades I make. This is boring for you the reader, I know, but it forces me to express my investment ideas and think through my reasoning before I do anything rash.
At the end of the day when my finances are in shambles and I sit at a bar spending my last $20 on shots of Jack Daniels tearfully mumbling "How could this have happened?" I will at least have a well-documented record to answer my own rhetorical question.
First trade was executed earlier this month:
I bought 1.25 units of Silver Wheaton (SLW) at $9.00. SLW is a silver miner that buys the silver stream production of other mining companies and sells it on the open market. Apparently gold miners like to do this because there is pressure by investors for them to remain unhedged to gold. By selling their silver production via long-term fixed price contracts they can use this revenue to hedge (i.e. to protect themselves against fluctuations in metal prices) while maintaining the appearance of being unhedged to gold investors.
Why I bought:
I believe we are in an environment that is favourable for precious metals. Inflation seems to be a real concern and since interest rates seem to be staying fairly constant, that means real interest rates are at risk of declining. The economy also seems to be at risk of entering recession which, from what I gather, is historically associated with falling real interest rates. Precious metal stocks are reasonably priced relative to the price of the metals themselves. Furthermore, silver is a metal with many, many industrial applications and demand currently exceeds supply. SLW is a bet that this year silver prices will increase.
What scares me:
SLW doesn't really seem to have a competitive advantage other than a close relationship with Goldcorp. I mean, what's to stop somebody else from coming in and buying up contracts and eating SLW's market share? What makes them so special? On the other hand, they only have about 4 employees and several long term contracts, so I assume they can stay profitable as long as silver prices are reasonable....so I think there is a limited potential for catastrophe.
At the end of the day when my finances are in shambles and I sit at a bar spending my last $20 on shots of Jack Daniels tearfully mumbling "How could this have happened?" I will at least have a well-documented record to answer my own rhetorical question.
First trade was executed earlier this month:
I bought 1.25 units of Silver Wheaton (SLW) at $9.00. SLW is a silver miner that buys the silver stream production of other mining companies and sells it on the open market. Apparently gold miners like to do this because there is pressure by investors for them to remain unhedged to gold. By selling their silver production via long-term fixed price contracts they can use this revenue to hedge (i.e. to protect themselves against fluctuations in metal prices) while maintaining the appearance of being unhedged to gold investors.
Why I bought:
I believe we are in an environment that is favourable for precious metals. Inflation seems to be a real concern and since interest rates seem to be staying fairly constant, that means real interest rates are at risk of declining. The economy also seems to be at risk of entering recession which, from what I gather, is historically associated with falling real interest rates. Precious metal stocks are reasonably priced relative to the price of the metals themselves. Furthermore, silver is a metal with many, many industrial applications and demand currently exceeds supply. SLW is a bet that this year silver prices will increase.
What scares me:
SLW doesn't really seem to have a competitive advantage other than a close relationship with Goldcorp. I mean, what's to stop somebody else from coming in and buying up contracts and eating SLW's market share? What makes them so special? On the other hand, they only have about 4 employees and several long term contracts, so I assume they can stay profitable as long as silver prices are reasonable....so I think there is a limited potential for catastrophe.
Labels: investing
posted by Mr. Apple at 9:42 PM
2 Comments:
Hello,
Can you invest some of my money for me? In return, I will give you a female mate. Angus
Dear Angus,
If I were you, I would stick with the professionals when it comes to investing. I am a rank amateur and not to be trusted.
I met a wonderful Uzbekistani female last night online. She said she wants to come visit me! I just have to wire her some money for the flight. I am saving up, and hopefully she can come see me in March.
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