Friday, December 30, 2011

Q&A With The Doc: Should I Use the Leverage of Miners, or Run to PHYZZ?

Anthony writes:

Hi Doc,
I'm doing pretty good with physical silver. I have over 1,500 ounces. My question is: Should I trust that there won't be a total collapse of the financial system for at least 2-3 more years and buy SVM, SLW, TRX and others at hugely discounted prices or not risk the advantage of leveraging/multiplying my money via stocks and stick with the physical? At this junction in the game, I want to be safe, yet, wise.
Your thoughts?

The safe bet is PHYZZ.  At this point in the game, only invest what you can afford to lose in mining shares.  If you do own mining shares, work to get them directly registered in your name.  In the event of the bankruptcy of your brokerage, you will have a somewhat higher level of protection. Jim Sinclair recently gave an excellent overview of this process here.
Like a fireworks show, we all know the grand finale is coming, we just don't know when it will start. It could be next week, it could be 2014.  The point is, once the grand finale begins with that first loud bang, it will be too late to convert to PHYZZ.  You will need to be already properly positioned prior to the event.   It sounds like you have a nice stack built already, only you can determine whether you want and are able to take a short term risk on paper with the hopes of getting out and into phyzz prior to the grand finale.  In the aftermath of MF Global, we are simply too far down the timeline for me to recommend trading paper in good conscience.

Best of luck.