Just seconds ago, I made two separate but related Llamafolio purchases.  In case you haven’t been watching, all the precious metals have been taking a beating over the last few days.  This is mainly due to the strength of the US dollar, at least on somebody’s fancy charts.  I believe this to a false flag, and a situation that will reverse itself in short order.  So, what did I purchase?

  • 15 shares of DGP @ 19.12 per share
  • 14 shares of SLV @ 15.30 per share

A little background is in order, no doubt.  SLV is the Silver ETF - electronically traded fund.  Barclays supposedly holds an ounce of silver for every share of SLV on the market.  So, the share price of SLV is usually very close to the spot price for an ounce of silver.  Since I believe Silver to be undervalued, I am comfortable paying $15.30 per share for this ETF.  I don’t intend to hold a long position here, but rather a short-medium term position for a short capital gain.  With any proceeds, I’ll likely buy some Silver Eagles or US Junk silver.  I won’t make a fortune here by any means, but it looks to be a solid investment.

DGP works a little differently

DGP is another beast entirely.  There is a gold ETF -GLD, that acts in much the same way as the silver ETF.  The only difference is that each GLD share is 1/10 ounce of gold.  DGP doesn’t work quite the same way.  Rather, it’s a derivative investment.  That’s something I’ve never dabbled in before, and wouldn’t commit any large sum of money to.  Here’s why:

For every percentage move that Gold makes, DGP doubles that move.  I.E. if gold rises by 3% one day, DGP goes up 6%.  By the same token, if Gold drops by 5%, DGP falls by 10%.  This ETF magnifies gold’s moves by a factor of 2.  That means twice the risk, with the potential for twice the reward.  Since I feel gold will make a march toward $1000 again very soon, I feel this is also a smart choice.  Riskier than GLD for sure, but I don’t have any reservations about making that bet.  Like my SLV purchase, I don’t intend to hold DGP long-term.  A few months at most is my timeframe here. 

Trading is new to me

I haven’t before ventured into the world of trading stocks / ETF’s / ETN’s.  This is a first for me, and an experiment.  I did commit $500 to this experiment, which isn’t a pittance, but it also won’t take me to the poorhouse if it fails.  Keep your eyes peeled for my results.

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