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Forex and Gold/Silver bullion Trading

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I am interested in forex exchange but unsure how to play it safe from islamic perpective. Could anyone summarize in practical terms how would I know if I am trading forex without violating Islamic law?
 
It is not allowed. I have checked several Islamic sites. They all say its not allowed.
 
Spot FX trading is considered 'shariah-compliant' under various circumstances (check AAOIFI standards), usually that possession of counter values (which must be equal) is taken immediately etc.

Futures FX trading though is considered impermissable (mainly due to the excessively speculative nature of it); only under extreme cases is it permitted (although the rules then are very rigid).
 
Any traders here

how many people here are involved with financial trading, stock market, commodities, cfds, futures, forex, eft, options etc.

i have been trading for a few months now and have been making a sheet load of money trading cfds and forex.

anyone here doing it or any fund mangers.
 
Forex and Gold/Silver bullion Trading .......

Lets talk forex and bullion .....
 
Good idea EE to keep the two threads seperate. Don't know too much about this so just here for information :)
 
NH - I am still confused as to how the hedging works.... is it just notional hedge for the gold you already have or do you buy gold and set the trades at the same time?
 
fireworks11 said:
Do you trade FX?
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Not currently. A while back, I did open a demo account but never actually went through with actively doing anything.

Nonetheless I am always keen to learn something new.

Friend of mine worked in the city and before he headed off to Qatar for pastures new, he said to me... Buy Gold and forget everything else!!
 
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You can earn a lot in FX with Options. You need to invest large amounts though in FX, despite it being the most liquid market.
 
fireworks11 said:
No. Seen others trade.
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And were they any good at it?

What puts me off mostly is the amount of time needed to monitor the trades and the associated stress. But NH suggested hedging against gold which kind of offsets any losses. Thats why I am keen to know what the actual process is.
 
NH, you seem really knowledgeable have you studied this at uni etc or just got to know it yourself?
 
Yes, he only traded FX, quite experienced and yes, you need to follow the world events/disasters and be able to make a judgment as to how it will affect the markets. It does require a thorough thought process as to which trading positions one should take with such large amounts at stake.

Try to speak to people that trade or open a demo account to try it out.
 
Eagle_Eye said:
NH - I am still confused as to how the hedging works.... is it just notional hedge for the gold you already have or do you buy gold and set the trades at the same time?
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It's an actual hedge. I hedge 1000g of Gold Bullion at a time.

The principle is very simple. For every 1000g of Gold you will need to open a £5/pip position (g/200 ratio) going long on GBP/USD. Reason why it must be GBP is a] I buy Gold in GBP, and b] Gold price is settled via Comex (priced in USD). You can change the £/pip value, but £5 per kilo works pretty well.

When GBP strengthens, the Bullion price drops, but your FX position is in profit. When GBP/USD drops your position is in a loss but your Bullion price moves up.

Now, more than often the net effect is close to zero, (this is the hedge), but, you can rake in profit when the spread between Gold Comex USD and GBP/USD widens, meaning, when Gold Comex moves up and GBP/USD moves down - it's clear cut profit. That's when you close your position and lock your profits. (I then use my profit to buy more Bullion.)

The only problem with this method is a] you need at least £10000 to open a stable hedge (too small and you will get stopped out), b] A kilo of Gold, and c] profit can take time because generally markets move in the same direction but not at the same velocity therefore the spread between Gold and GBP doesn't occur too often.

You are essentially looking for opposite movement if you want to lock profit, otherwise, it's open and hold as a hedge.

I forgot, you need balls of steel too. FX movement working against you will challenge your emotions in ways you've never thought of.
 
NH how did you get started in FX? What kind of money were you starting with if you don't mind me asking.
 
PS: Always - ALWAYS - set short triggers on Gold Comex. Comex Gold (or known as Crimex) doesn't have enough Gold to honour each contract. Meaning there's not enough Gold in the world if every one with a Comex contract demanded their Gold and this will cause Comex to plunge into oblivion. (this is why you MUST buy Gold Bullion and not funny money Mickey Mouse paper Gold contracts).

Comex will collapse some time in the future.
 
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Namak_Halaal said:
It's an actual hedge. I hedge 1000g of Gold Bullion at a time.

The principle is very simple. For every 1000g of Gold you will need to open a £5/pip position (g/200 ratio) going long on GBP/USD. Reason why it must be GBP is a] I buy Gold in GBP, and b] Gold price is settled via Comex (priced in USD). You can change the £/pip value, but £5 per kilo works pretty well.

When GBP strengthens, the Bullion price drops, but your FX position is in profit. When GBP/USD drops your position is in a loss but your Bullion price moves up.

Now, more than often the net effect is close to zero, (this is the hedge), but, you can rake in profit when the spread between Gold Comex USD and GBP/USD widens, meaning, when Gold Comex moves up and GBP/USD moves down - it's clear cut profit. That's when you close your position and lock your profits. (I then use my profit to buy more Bullion.)

The only problem with this method is a] you need at least £10000 to open a stable hedge (too small and you will get stopped out), b] A kilo of Gold, and c] profit can take time because generally markets move in the same direction but not at the same velocity therefore the spread between Gold and GBP doesn't occur too often.

You are essentially looking for opposite movement if you want to lock profit, otherwise, it's open and hold as a hedge.

I forgot, you need balls of steel too. FX movement working against you will challenge your emotions in ways you've never thought of.
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so a kilo of gold is around 30 grand so will i need around 40 to start off?
 
Namak_Halaal said:
It's an actual hedge. I hedge 1000g of Gold Bullion at a time.

The principle is very simple. For every 1000g of Gold you will need to open a £5/pip position (g/200 ratio) going long on GBP/USD. Reason why it must be GBP is a] I buy Gold in GBP, and b] Gold price is settled via Comex (priced in USD). You can change the £/pip value, but £5 per kilo works pretty well.

When GBP strengthens, the Bullion price drops, but your FX position is in profit. When GBP/USD drops your position is in a loss but your Bullion price moves up.

Now, more than often the net effect is close to zero, (this is the hedge), but, you can rake in profit when the spread between Gold Comex USD and GBP/USD widens, meaning, when Gold Comex moves up and GBP/USD moves down - it's clear cut profit. That's when you close your position and lock your profits. (I then use my profit to buy more Bullion.)

The only problem with this method is a] you need at least £10000 to open a stable hedge (too small and you will get stopped out), b] A kilo of Gold, and c] profit can take time because generally markets move in the same direction but not at the same velocity therefore the spread between Gold and GBP doesn't occur too often.

You are essentially looking for opposite movement if you want to lock profit, otherwise, it's open and hold as a hedge.

I forgot, you need balls of steel too. FX movement working against you will challenge your emotions in ways you've never thought of.
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With this strategy you need £10K + 1 Kg of gold?


From what I understood, the features for profit are:

1) Strengthening of $ vs £

2) Gold price to move up

In this scenario, your forex trade is in a loss so that will offset against the gain via the bullion. The actual gain is from the large spread between comex and the GBP/USD. Can you please provide an example of successful hedging trade you have done recently?

What are the fees and commission like for buying and selling gold. How much does the actual price you pay differ from Comex?
 
DeadlyVenom said:
NH how did you get started in FX? What kind of money were you starting with if you don't mind me asking.
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You're not going to believe this but here goes - I was born and raised in a Muslim family when I lost my grip on Islam about 10 years ago due to personal reasons (sorry but religion did play a role as I will explain). My faith didn't make sense to me in particular when I was challenged by others who were Athiests. I realised that I was a Muslim becasue I was told to be one rather than wanting to be one. I realised that I could recite passages of the Quran in Arabic but couldn't understand the meaning; what was the point in reading the Quran?

Then about 9 years ago I stumbled across N. J. Dawoods translation on the Quran [ISBN 9780141917184] on Amazon.co.uk. So I bought a copy and read it (at the time I was desperate for answers in my life). To cut a long story short, my faith was restored but it was during this period where one simple fact dawned upon me.

Allah says to believe in the books, so I bought a copy of the Torah, and the Bible and read those books too - what I had discovered was that throughout God's guidance and wisdom to mankind, God had endorsed just two forms of investment that are littered within the scriptures - you guessed it - Gold and Silver.

I have an addictive personality, as a result I went on an internet research rampage where I discovered the process to buy Bullion. That I did, I was blown away. Holding a bar of Gold in my hand sent shivers down my spine, so I bought more, and more.

Through my internet research I read an article on Bloomberg, on the future of Gold. In this article there was a link to IGindex. I signed up amd sampled shares, indicies, commodities, never touched FX. It was only when Gold nose-dived in price that that I realised I needed a counter to value (the emotion of fear kicked in).

Since I bought Gold in GBP I figured by going long on GBP/USD I could ease the loss. That's when I used £10000 and started trading on FX. At first it was a nightmare, greed got the better of me, I was trading on Minor, Major, and Exotic currency pairs; I lost big time.

But the lessons were valuable and educational. What kept me attracted towards FX was the sheer fact that I knew Gold and Silver Bullion could never hit zero in value, meaning all I had to do was smarten up my method through simplicity, discipline, and patience and I could earn while I hedge.

Fast forward 7 odd years and I know everything there is to know about FX markets and of course Gold and Silver Bullion, even till this day I'm still reading up on it past the hours of midnight.

As far as I'm concerned, if I hadn't read the Quran, the Torah, and the Bible, I would never have delved into the world of Bullion and FX.
 
Thats a very interesting and inspirational tale NH! I did a similar thing about a year or so ago and read the Torah, Bible and translation of the Quran. Was probably one of the best things I've ever did and really strengthened my faith.

To me FX markets seem very random and chaotic. I can't really see how they can be analysed and patterns spotted. How do you go about this?
 
Eagle_Eye said:
With this strategy you need £10K + 1 Kg of gold?
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That's what I use. You can divide by a factor of 4 and use 250g with £1.25/pip. As long as the ratio is the same, it doesn't matter.

Eagle_Eye said:
Can you please provide an example of successful hedging trade you have done recently?
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At the start of the year, I set a long position on GBP/USD @ 1.56 @ £5/pip. Gold was around £880/oz.

-Gold is now 897/oz

-GBP/USD is now 1.625

My long position on GBP/USD is up ((1.625 - 1.56) * 500) = £3250 profit.

Gold is up (897-880)*32 (number of TROY ounces in a kilo) = £544 profit

Total profit thus far this year = £3794 per hedged kilo of Gold.

Still hedging and will continue to do so till then end of the year.

Eagle_Eye said:
What are the fees and commission like for buying and selling gold.
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When you buy Gold, the sell price is minus the premium. On a Kilo bar the premium is about 3%. So when Gold moves up 3%, you break even. On 500g, it's about 4%, and on 250g about 5%, on an ounce, it's about 12%. Hence why you should buy bigger bars. (Sell and Buy prices are based on SPOT prices, meaning the prices are updated every minute.

Eagle_Eye said:
How much does the actual price you pay differ from Comex?
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Bullion is in GBP, Comex is in USD. As of this moment, in gold in GBP is 897, in USD it's 1458.
 
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DeadlyVenom said:
To me FX markets seem very random and chaotic. I can't really see how they can be analysed and patterns spotted. How do you go about this?
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That's the mistake. FX isn't about patterns, it's about a long term trend. Forget short term plays, look at the bigger picture, zoom out and look at a yearly chart. open positions with 1000 pip stop and you wouldn't have to worry about short term volatility.
 
NH . Thanks for the comprehensive response.

The first thing that came to me was that its quite a miserly return compared to what I have from just one share this year with similar upfront investment. Although you probably have much larger hedges and trades to give you a much more worthwhile return.

What forex companies you recommend?
 
some educational stuff here, i was seriously going to give trading a go a few months ago, but decided against it as i came to the conclusion i would need at least £15k to trade defensively and not be washed out by stops that are too short and excessive slippage.

maybe someday i will give this a go, but at the moment sticking to my defensive investments. but i like watching the price changes, trying to get a "feel" of the movements.
 
Eagle_Eye said:
The first thing that came to me was that its quite a miserly return compared to what I have from just one share this year with similar upfront investment. Although you probably have much larger hedges and trades to give you a much more worthwhile return.
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For sure, I don't deny the fact that shares can result in a much higher return, but for me it’s about peace of mind. I’m not worried whether the markets move up or down, I’m not looking for the next killer share opportunity, and most importantly, I preserve my purchasing power.

Eagle_Eye said:
What forex companies you recommend?
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I’d only recommend one, IGindex. The platform is slick, spreads are tight, and the HCI (Human Computer Interface) is simply the lick.

BTW, looks like the US debt ceiling will be raised, as a result the $ is getting creamed. The result thus far:

Comex Gold up 19.1 @ 1475
Comex Silver up 145 @ 4171
GBP/USD up 93.6 @ 16366

Hedge/Kilo up today @ £646

So total hedge value this year now stands at £4400/kilo
 
I never understood finance much. I grew to dislike money because of all the greediness around me, except now I'm interested as it's time for sunnah money; gold and silver.

Can someone please post some links of guidance? I always felt the need to invest in gold, but never had the time and most importantly, the money.
 
@ nh, do you have any other positions open too or do you focus on this one play alone?

p.s. im a bit confused, would you mind explaining to me the rationale behind hedging your gold by going long on gbp/usd, wouldnt a strong dollar weaken bullion demand, and hence make losses on both your positions?

this is very interesting too me as i was seriously considering taking a position is some silver or gold, and im very interested in your method, clearly you have a lot of knowledge.
 
ElRaja said:
@ nh, do you have any other positions open too or do you focus on this one play alone?
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I have other positions, just on FX and Commodities (Gold, Silver, Oil, and Cotton)


ElRaja said:
p.s. im a bit confused, would you mind explaining to me the rationale behind hedging your gold by going long on gbp/usd, wouldnt a strong dollar weaken bullion demand, and hence make losses on both your positions?
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There's no rationale, it's a simple mathimatical relationship.

If x cost $1000 and the exchange rate between GBP/USD is 2.0000, x will cost me £500

If x cost $1000 and the exchange rate between GBP/USD is 2.5000 [GBP is stronger, $ is weaker], x will cost me £400

If x cost $1000 and the exchange rate between GBP/USD is 1.5000 [GBP is weaker, $ is stronger], x will cost me £666


When £ moves up on GBP/USD, Bullion will cost me less, thus I will lose value on any Bullion on hold. (This is why I go long on GBP/USD)

When £ moves down GBP/USD, Bullion will cost me more, thus I will profit on Bullion I on hold. (This is why I do not care if markets tank)
 
DXY (Dollar Index) is now at a 16th month low. DXY is the $ measured against a basket of major currencies)

$ is toast, and as a result, Gold and Silver have just set new all time highs.
 
Namak_Halaal said:
I have other positions, just on FX and Commodities (Gold, Silver, Oil, and Cotton)




There's no rationale, it's a simple mathimatical relationship.

If x cost $1000 and the exchange rate between GBP/USD is 2.0000, x will cost me £500

If x cost $1000 and the exchange rate between GBP/USD is 2.5000 [GBP is stronger, $ is weaker], x will cost me £400

If x cost $1000 and the exchange rate between GBP/USD is 1.5000 [GBP is weaker, $ is stronger], x will cost me £666


When £ moves up on GBP/USD, Bullion will cost me less, thus I will lose value on any Bullion on hold. (This is why I go long on GBP/USD)

When £ moves down GBP/USD, Bullion will cost me more, thus I will profit on Bullion I on hold. (This is why I do not care if markets tank)
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Am I right in thinking, that all you need to do is attempt to successfully forecast GDP, inflation, etc., to know when to place your chips?
 
Levity said:
Am I right in thinking, that all you need to do is attempt to successfully forecast GDP, inflation, etc., to know when to place your chips?
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If you are not hedging, then yes. You need to forcast GDP, Inflation, Job numbers, etc, not just for UK, but for USA too (assuming you are going to trade on GBP/USD)

Though it doesn't take a genius to figure out that between the $/£/E/Y, it's a race to the bottom. Paper currencies will tank, just a question of which one will collapse first.
 
DeadlyVenom said:
Why do you think they will tank?
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Economics 101.

The more of something, the less it is valued. Governments are printing their respective currencies inorder to devalue their debt (inflation makes debt cheaper whereas defaltion makes debt more expensive). Of course, printing currency to escape default is another reason.

Take a look at the Yen, since the crash of the 90s, the Yen has sunk becasue the Japanese government thought they could save themselves by printing their way through, and now, the Japanese cannot even raise interests rates becasue it will cripple their economy. Doesn't work. Remember the Lira? Italian currency? Finito.

In Pakistan when they say living has become more expensive, well that's not true, it's inflation that is rising through the ranks ala 'price' of something, not the 'value' of something. This is why preservation of purchasing power is vital.
 
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So what happens after all the currencies tank? How do I go to the shop and buy a bar of chocolate?
 
Example. If you have 100000 in the bank, at the current rate of inflation which is 5%, your saving will be worth 95000 by the end of the year. You will get less for your paper money, this is known as purchasing power.

To put into perspect, a bottle of Coke in the US cost 10c in the 1920s. Today it costs $1.50. The Coke, The bottle, the glass, the label are the same, so what's changed? The purchasing power of the $. You would get more for your $ back in the 20s compared today, that is becasue the FED have been printing the $ thus devaluing it by 91% over the past century!
 
DeadlyVenom said:
So what happens after all the currencies tank? How do I go to the shop and buy a bar of chocolate?
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Take a look at Zimbabwe, Weimar Germany - that's what'll happen.
Italians were lucky cos they joined the Euro, but the Euro is finished too.
 
You really think it'll happen soon? Is the reason why Amero was being considered in North America because of the decrease in Dollar purchasing power?

I find it quite hard to believe that all currencies and therefore all countries will find themselves going the way of Zimbabwe.
 
Namak_Halaal said:
If you are not hedging, then yes. You need to forcast GDP, Inflation, Job numbers, etc, not just for UK, but for USA too (assuming you are going to trade on GBP/USD)

Though it doesn't take a genius to figure out that between the $/£/E/Y, it's a race to the bottom. Paper currencies will tank, just a question of which one will collapse first.
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It's quite obvious they will collapse as they have done before. One story, as apocryphal it may be, has it that after the collapse of the Weimar Republic, an elderly woman was pushing a wheelbarrow full of marks to the store to buy a loaf of bread. When she turned back, someone nicked off with the wheelbarrow and left the money behind, i.e., paper money is only as strong as the government printing it.
 
DeadlyVenom said:
You really think it'll happen soon? Is the reason why Amero was being considered in North America because of the decrease in Dollar purchasing power?
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Yes.

DeadlyVenom said:
I find it quite hard to believe that all currencies and therefore all countries will find themselves going the way of Zimbabwe.
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Name me a paper currency that has survived for over 100 years? Every paper currency has died a painful death.

$ and £ survived this long because up to 1974 they were backed by - you guessed it - Gold and Silver. This meant that there was a limit on how much could be printed. if the government didn't hold enough Gold/Silver, they couldn't print currency. Then Nixon, in order to fund the Vietnam war, abolished the Gold standard. This allowed the US government to print the $ at whim, with no control.

The proper name of the British currency is not Pound, but Sterling (as in Sterling Silver)

You know what a 'Dollar' is? It's a unit of Silver.

Take a look a Sterling note, it says at the top, 'I promise to pay the bearer the sum of'. This meant back in the day you could take your currency and exchange it Silver, not anymore, now paper currencies are just worthless promises.

Since 1970s, both $ and £ have decreased in value since they were detatched from the Gold/Silver standard.
 
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Levity said:
It's quite obvious they will collapse as they have done before. One story, as apocryphal it may be, has it that after the collapse of the Weimar Republic, an elderly woman was pushing a wheelbarrow full of marks to the store to buy a loaf of bread. When she turned back, someone nicked off with the wheelbarrow and left the money behind, i.e., paper money is only as strong as the government printing it.
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Hyper-inflation! Currency is not worth the paper it's printed on.

Price of Gold during Weimer Germany as an illustration:

July 1914 1.0
Jan 1919 2.6
July 1919 3.4
Jan 1920 12.6
Jan 1921 14.4
July 1921 14.3
Jan 1922 36.7
July 1922 100.6
Jan 1923 2,785.0
July 1923 194,000.0
Nov 1923 726,000,000,000.0

In the recent decade, Gold in US$ has increased 6 fold - prepare for Gold $5000/oz in 2012! :)
 
Namak_Halaal said:
Yes.



Name me a paper currency that has survived for over 100 years? Every paper currency has died a painful death.

$ and £ survived this long because up to 1974 they were backed by - you guessed it - Gold and Silver. This meant that there was a limit on how much could be printed. if the government didn't hold enough Gold/Silver, they couldn't print currency. Then Nixon, in order to fund the Vietnam war, abolished the Gold standard. This allowed the US government to print the $ at whim, with no control.

The proper name of the British currency is not Pound, but Sterling (as in Sterling Silver)

You know what a 'Dollar' is? It's a unit of Silver.

Take a look a Sterling note, it says at the top, 'I promise to pay the bearer the sum of'. This meant back in the day you could take your currency and exchange it Silver, not anymore, now paper currencies are just worthless promises.

Since 1970s, both $ and £ have decreased in value since they were detatched from the Gold/Silver standard.
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Very informative post. Coincidentally, this can also explain the Caucasian governments' lust for oil. They see it as a get-out clause from this mess they have got themselves into.

A glance at the balance sheets reveals the true nature of this sick fascination with Iraq, Iran and Libya. "Operation Iraqi Freedom", my ****!
 
Levity said:
Very informative post. Coincidentally, this can also explain the Caucasian governments' lust for oil. They see it as a get-out clause from this mess they have got themselves into.

A glance at the balance sheets reveals the true nature of this sick fascination with Iraq, Iran and Libya. "Operation Iraqi Freedom", my ****!
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Exactly, it's all about preservation of purchasing power - to protect the $ from devaluing into oblivion.

You might want to read up on The Petro-Dollar Cycle.

Buy Gold and Silver, if it worked for Prophets of God, Messengers of God, Kings, Queens, Civilisations, and Governments - you can bet your life it will work for you too.
 
8a826_Liquidity-Pyramid.jpg


A great summation of paper vs power money.
 
NH - thanks. Your idiots guide to forex and hedging is very useful.

In an economic collapse of such proportions that is being talked about here, the minorities always cop it first and that would most probably mean we be targeted first. If someone knows NH has a stash of gold in house... well then you can imagine what will happen. How will we trade that gold in such scenarios?
 
Eagle_Eye said:
NH - thanks. Your idiots guide to forex and hedging is very useful.

In an economic collapse of such proportions that is being talked about here, the minorities always cop it first and that would most probably mean we be targeted first. If someone knows NH has a stash of gold in house... well then you can imagine what will happen. How will we trade that gold in such scenarios?
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Floorboards seem a good place to hide the loot, unless, of course, you have laminate flooring.
 
china is buying huge amounts of precious metals, i woudnt be surprised if they try to issue a gold back reserve currency to rival and eventually replace the dollar, no one could estimate how expensive gold will become then, it wouldnt be surprsing to have a dowjones at 50,000 with that too.

from my own judgement i have always seen the paper money system to have one main objective. since you cannot keep increasing your wealth, to become richer (in terms of paying people to work for you) you must make the masses poorer.

paper money allows a minority group of people who know the rules of the game to get richer relative to the poor masses without creating anything real and in the process essentially indenturing the masses.

maybe im exaggerating a bit for effect, but that is the crux of the situation in my opinion.
 
ElRaja said:
china is buying huge amounts of precious metals, i woudnt be surprised if they try to issue a gold back reserve currency to rival and eventually replace the dollar, no one could estimate how expensive gold will become then, it wouldnt be surprsing to have a dowjones at 50,000 with that too.

from my own judgement i have always seen the paper money system to have one main objective. since you cannot keep increasing your wealth, to become richer (in terms of paying people to work for you) you must make the masses poorer.

paper money allows a minority group of people who know the rules of the game to get richer relative to the poor masses without creating anything real and in the process essentially indenturing the masses.

maybe im exaggerating a bit for effect, but that is the crux of the situation in my opinion.
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You can call the system Economic Enslavement
 
Levity said:
You can call the system Economic Enslavement
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enslavement is a strong word, you have no choice of freedom if you are enslaved. in this situation you have two choice, first to grow your own capital to maintain your purchasing power as nh said, and second is to seperate the printing of money from politicians who abuse this right.

i dont want it to sound like doom and gloom, because this system has been evolving for 300, 400 years since the dawn of the debt based economy. purchasing power has no doubt decreased but mature management of debt is an indispensible part of finance.

the problem starts when you create a link between the people who have the right to create debt, and the people who directly benefit from its creation. what i mean is politicians and the rich. i am sure nh will correct me if im wrong, but i think this is what is known as a moral hazard.

politicians will always overspend to get elected if they are allowed to and they abuse this right consistantly.
 
Super thread guys, keep on posting! Would be fun for a newbie like me if you guys can post links to articles which you have read/reading recently. I can recommand one, on FT.com, a new issue on the future of oil, will be looking at it tonight.
 
ElRaja said:
enslavement is a strong word, you have no choice of freedom if you are enslaved. in this situation you have two choice, first to grow your own capital to maintain your purchasing power as nh said, and second is to seperate the printing of money from politicians who abuse this right.
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I agree with Levity, we live in economic enslavement. Without debt, Governments and banks cannot control us, without debt, government and banks cannot profit. Without debt the USA and UK wouldn’t be at the helm of global supremacy.

The best example I can provide in this case is a Mortgage. The word Mortgage is a French word which comes from 'Mort' (Death), and 'Gage' (Pledge) - in short - Death Pledge – you pay off debt till you die.(Some living ey?)

Once you sign up to a mortgage you pay off debt for at least 25 years of your life. You have no option to otherwise the property is ceased and in the process the banks rake it in. What’s more when you sign up to a mortgage the property is not yours, it's owned by the bank, the deeds are kept with the bank, up to the point you pay off your mortgage. By the time you do pay it off you have paid at least 3 times the value of your house. Then it gets worse, if you want to release equity from your property you have to pay interest on it too not to mention the loan is secured against the property.

Death Pledge is the reason why Western economies have flourished, because it’s an illusion based on debt. You think you own something but you do not. Western economies simply lend you money and you service the debt for the rest of your life, banks profit and in the process civilians are mislead into believing their lifestyles are better then those compared to the rest of the world – it’s not. Debt is not wealth. You are borrowing a living.

There’s a reason why mortgages are most common in UK and USA, anywhere else in the world renting is the best option and has been for 100s of years, whereas in the West, mortgages have kicked started Western supremacy on the back of debt. (For about 250 years).

The crash of 2008 was due to the lack of credit, people just couldn’t pay their debts off anymore, hence the system collapsed (and continues to do so)

You want to own something that has zero liability, something which the government cannot control, create, or manipulate – Gold and Silver. Power money does not owe anything to anyone, it’s finite, when you buy it; you own it outright (this is why you cannot buy Gold and Silver on credit).

To sum up, Gold is the money for Kings, Silver is the money for Gentlemen, Bartering is money for the poor, but debt, my friend debt is the money for slaves.

PS: Gold has worked for Kings and pirates alike - it'll work for you too.
 
ElRaja said:
enslavement is a strong word, you have no choice of freedom if you are enslaved. in this situation you have two choice, first to grow your own capital to maintain your purchasing power as nh said, and second is to seperate the printing of money from politicians who abuse this right.

The first point could be valid, but the lack of financial literacy in the British curriculum, as far as I know, is all too apparent.

When we first start work, we are duped into credit card schemes(scams), bad bank loans, etc; to encourage lavishness that would otherwise be beyond our means. This is normally the effect of peer pressure, which is collaborated with the indoctrination of 'social norms', perpetrated by the British entertainment industry and its main ally, Hollywood. It is just one ginormous capitalist-spun web, we are the flies and its spiders are the bankers. And before you begin to utter it, yes, it is a conspiracy, but not a theory.

i dont want it to sound like doom and gloom, because this system has been evolving for 300, 400 years since the dawn of the debt based economy. purchasing power has no doubt decreased but mature management of debt is an indispensible part of finance.

Depends on your definition of evolution. If you consider mutations a process within evolution, then the current debt crisis can be depicted as all of Magneto's baddies from the film, X-men. Although, how can you call it evolution, when there is no evolvable system there? The combination of Fiat Currency and interest is one of the biggest deceptions known to mankind.


the problem starts when you create a link between the people who have the right to create debt, and the people who directly benefit from its creation. what i mean is politicians and the rich. i am sure nh will correct me if im wrong, but i think this is what is known as a moral hazard.

politicians will always overspend to get elected if they are allowed to and they abuse this right consistantly.

As mentioned above, how do you cause mass awareness on these issues, in order to free them from their bond(no pun intended)?
Click to expand...

:arafat
 
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Namak_Halaal said:
Depends on which currency.

$ terms - Gold 5000/oz and Silver 100/oz without breaking a sweat.

£ terms - Gold 1500/oz and Silver 50/oz
Click to expand...

I am tempted to buy leveraged silver ETF again. Should have held mine from last year!!
 
Eagle_Eye said:
I am tempted to buy leveraged silver ETF again. Should have held mine from last year!!
Click to expand...

Will you buy on margin or a guarantee stop?

I expect Silver to trace back sharply to $35/oz towards the summer (potential US interest rate hike)
 
Namak_Halaal said:
Will you buy on margin or a guarantee stop?

I expect Silver to trace back sharply to $35/oz towards the summer (potential US interest rate hike)
Click to expand...

I thought about that and hence I sold early in the year around $30 and thats what keeps me from buying it.

With the leveraged ETF, your not trading on margin like you would in CFDs. Instead the fund is more like a tracker, but its leveraged so that every 1% movement in silver price (either direction) is equivalent to 2-3% with the leveraged fund. Just like shares, you can hold it for as long as you like without worrying about covering your margins if it goes against you. I do not normally trade with stops, although you can put in one if you so wish.

I went it to it late last year and then sold it after I got a profit of 20% or so.
 
Eagle_Eye said:
I thought about that and hence I sold early in the year around $30 and thats what keeps me from buying it.

With the leveraged ETF, your not trading on margin like you would in CFDs. Instead the fund is more like a tracker, but its leveraged so that every 1% movement in silver price (either direction) is equivalent to 2-3% with the leveraged fund. Just like shares, you can hold it for as long as you like without worrying about covering your margins if it goes against you. I do not normally trade with stops, although you can put in one if you so wish.

I went it to it late last year and then sold it after I got a profit of 20% or so.
Click to expand...

OK cool.

Do you ever average down?

I would advise Silver bullion but with Premium and VAT you're looking at 30% just to break even.
 
Namak_Halaal said:
OK cool.

Do you ever average down?

I would advise Silver bullion but with Premium and VAT you're looking at 30% just to break even.
Click to expand...

You can buy long or short leveraged ETF.... I normally go long because of my background in doing shares. But ofcourse, if you know the gold and silver market... like you do, you can most probably make a better call at these things or even devise a strategy.

The only thing I would say with ETFs and I did not make clear in my previous post is that they are just a piece of paper and promise some institution hand out to you ultimately. If they go belly up then so will your ETF. Hence I did not feel comfortable holding the ETF for too long. See the Reuters report on AIG linked ETFs below.

With shares you own the company and no one can take that away from you unless the company goes bust....

UPDATE 1-ETF Securities AIG-linked ETCs suspended on LSE
09.18.08

LONDON, Sept 18 (Reuters) - UK-based ETF Securities said more than 100 of its AIG-linked exchange traded commodity funds listed on the London Stock Exchange were suspended on Wednesday, September 17.

'It is our understanding that the London Stock Exchange has suspended electronic execution ... But off-book trading will continue,' the company said in a note on its website on Wednesday.

A spokesman for the LSE confirmed the suspension.

The listed ETCs were suspended because of problems with liquidity because many market makers have cut exposure to troubled insurer American International Group Inc (nyse: AIG - news - people ), ETF Securities told Reuters.

The company's exchange traded commodities (ETCs) listed on other exchanges -- Deutsche Borse (other-otc: DBOEF.PK - news - people ), Borsa Italiana and Euronext -- will continue trading, it added.

Earlier this week ETF Securities said some banks and brokerages ceased making markets in commodity securities (ETCs) backed by matching contracts from AIG.

'AIG has continued to honour all its obligations under our agreements with them ... in the usual manner and paying all redemptions due on time,' the company said.
Click to expand...


ETFs are a quick and more profitable route.

To buy £10k worth of silver - You pay 10K + 2K VAT + commission (~3-4%)

To buy £10K worth of leveraged silver ETF = £10k + £21

By the time you are even on buying physical silver, you get around 90% return with the leveraged ETF. You can see why ETF are more attractive.
 
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Eagle_Eye said:
ETFs are a quick and more profitable route.

To buy £10k worth of silver - You pay 10K + 2K VAT + commission (~3-4%)

To buy £10K worth of leveraged silver ETF = £10k + £21

By the time you are even on buying physical silver, you get around 90% return with the leveraged ETF. You can see why ETF are more attractive.
Click to expand...

Sorry dude, I don't understand the 90% return element?

1 Kilo of Bullion Silver will cost me £1000 + 20% VAT (Silver @ $42.50/oz).

Assuming Silver moves to $50.00/oz - could you explain how this would translate to Silver ETFs please?
 
Namak_Halaal said:
Sorry dude, I don't understand the 90% return element?

1 Kilo of Bullion Silver will cost me £1000 + 20% VAT (Silver @ $42.50/oz).

Assuming Silver moves to $50.00/oz - could you explain how this would translate to Silver ETFs please?
Click to expand...


If silver moves up 1 %, the leveraged ETF moves up ~ 2-3%. I am not sure the exact mechanics behind this tracking.

When I sold the Leveraged Silver ETF (LSIL) was around $54 and Silver was around $29. Today, silver is around $42.50 and Leveraged Silver ETF is around $112. so whilst the silver prices has moved up $13.5 (46.5%), the leveraged ETF has gone up $58(107.4%).

Now if I had bought physical silver and sold it today, I would only have around 26.5% (minus the 20% VAT) whereas ETF would give me ~107.4%. The total cost of buying and selling the ETF is around £50.
 
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Track the LSIL ticker and the silver price (which I am sure you do religiously). Maybe you can come up with a strategy we can all use ...... :)

As I said before, I have only traded ETF once so by no means I know everything about them.
 
Eagle_Eye said:
Track the LSIL ticker and the silver price (which I am sure you do religiously). Maybe you can come up with a strategy we can all use ...... :)

As I said before, I have only traded ETF once so by no means I know everything about them.
Click to expand...

thats the one i track too, unfortunately my lack of knowledge consistantly holds me back from commiting, i just feel to ignorant of the silver and gold markets to make informed decisions and have just stayed away. some substantial returns from lsil tho tho.
 
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Levity said:
Can you sort of put us in the right direction in getting started? Where do you begin in learning about these markets?
Click to expand...

There's loads of information that can be provided, but from experience I can tell you the best way to learn is to actually trade.

Is it just one market you want to trade on or various markets?

If you do not mind me asking, how much money (oops currency! :) ) will you start off with?
 
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