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Sunday, October 30, 2011

A speculation potential for ten times your money - Mobile Banking

 How do you deposit your money now? Not sure about you but for me, I either have to go to the bank to deposit checks or send them to my online bank. The process also requires to fill out a deposit slip and often than not I have to stay in a line to wait for my turn. Talk about inconvenient!

So how about a technology that enables consumers to deposit checks into their bank accounts by snapping and sending a picture of them with their mobile phone? Yes, it is not a fiction but a technology already available, which is called "remote deposit capture (RDC)". Think about it: everyone hates lining up and waiting and everyone hates filling out a form but almost everyone is using a mobile phone. I'm not sure who will not love this kind of convenience. No wonder over 200 financial institutions presently offer RDC services and one thousand more are expected to offer them within the next year. Someone even went as far as hailing mobile RDC as possibly "one of the most important retail-banking innovations of this decade."

I think this is a kind of company you want to own and get in early! It has the potential to bring you a huge profit, even 10 times your invested capital. Of course, at this stage, it is still a risky speculation. No guarantee!

The company I'm talking about and interested in is Mitek Systems (Nasdaq: MITK) based in San Diego. Mitek literally created the mobile RDC market with its patent-protected ImageNet Mobile Deposit software. It was the first product of its kind, and it has quickly become the industry standard. Investing in a company with products that are innovative, easy to use and convenient is a great way to potentially make big money. Yes, the MITK stock price has jumped 80% this year but I think it is not too late and much more is to come in the next few years. I have got in now.

Saturday, October 29, 2011

Keep Thailand on your radar screen

If you got in with the Germany ETF, EWG, when I talked about it last Tue, congratulations! As I predicted, the Eurozone leaders finally woke up and agreed upon to come up with a huge bailout plan (of course I did not get insider information from Sarkozy & Merkel in advance). While it is nothing more than printing money and won't end well in the long run, the short-sighted investors exhaled a deep relief sigh by pushing up the stocks prodigiously. An 8% jump for the stock market fund like EWG within 2 days is certainly not shabby. I think there is more to come with EWG.

You may want to keep Thailand on your radar screen now. It is the second largest economy in Southeast Asia. Thailand is a manufacturing hub for international companies in the car and electronics sectors. However, you must know that right now it is facing unprecedented flooding affecting the whole country.   Its worst flooding in half a century has closed seven huge industrial estates this month, disrupting international supply chains. Thailand's central bank slashed its 2011 economic growth forecast to 2.6 percent from 4.1 percent on Friday because of flooding and said it was ready to call a special meeting on interest rates, raising speculation about a rate cut. Thailand stock market has declined over 20% from its top in Aug and has since come back quite a bit. But there is a chance that ongoing flooding may add further downward pressure on its stocks. If so, I'd think it is a good opportunity to put some money in the Thailand stocks. After all, it is a temporary setback and it will come back strongly. The ETF funds for Thailand are TTF or THD.

Tuesday, October 25, 2011

Buy Germany

It has been a miserable summer for the Germany stock market. It reached its top in May and started to drift down after that. Around end of July it started a free fall. From its top to the bottom, it plummeted 30% within just a few weeks. Was it because Germany was much worse than the US in its economy? Not at all. On the contrary, Germany's economy is doing much much better. It is the best economy in the Europe. I guess you all know why its stock market was such a mess. Yes, it is because Greece and the other PIIGS countries. Their huge debt load is crashing everyone in the Eurozone. But I think the worst nightmare for Germany is likely over. Yes, there is no way that anyone can resolve the debt problems for PIIGS and I have said and will continue to say that I don't think the Euro can survive and it will be dissolved within 5 years. If this happens, it will be great for Germany actually since at the moment Germany is the only Euro country to hold the burden. It is almost like a cash cow for the Euro countries whenever they need money. Regardless, I do think in the very near term the Euro leaders will do anything they can to delay the death date. Likely in a few days they will come up with something which will not allow Greece to default immediately and will let Euro look like it has some life. The market and the whole world will like it, although it is nothing but printing money and it is just a delayed death penalty. Nevertheless, I believe the markets, especially the European markets will bounce back strongly due to this gimmick, in the near term. Don't forget, regardless of the long-term economic prospects, the stock market is often short-sighted and can be very irrational for longer than you are solvent. They are very much driven by short-lived sentiments.

If you believe me, you may consider EWG, an ETF for the Germany stock market index. I like it especially due to its technical indicators. Since it bottomed at $18 a month ago, it has climbed up 15% to around $21 nowadays, a clear sign of uptrend. With a P/E ratio of 9, it is cheaper compared with S&P500 that has a P/E of 12. The major companies in the fund include world class bellwether companies in Germany such as Siemens, Bayer, Daimler (Mercedes-Benz), BMW, SAP, Deutsche Telekom etc. Finally it also pays a good dividend at a 3.6% yield. 

EWG may decline these days prior to the final deal announced for the Euro crisis. I think it will be a great opportunity to get in.

Monday, October 24, 2011

Oil is showing a bullish sign

I was bearish about oil in the past few months. Over a week ago when I talked to my friend about my opinion on oil, I said I was not convinced that oil had recovered from this correction. I thought it could go down to low $70s before it was over. It appears I was wrong.

Today, China has reported a much better than estimated PMI, an index reflecting manufacturing activities. In the past months, the overall sentiment about China has been very downbeat. People were really worried about a hard landing or a crash about the China's economy, which would obviously terrible for the whole world. Today's PMI data gave a big relief for the whole world and this has translated into a big push for the oil market. There was a strong resistance at around $90.96 for crude oil. Today oil has jumped almost $4 to break through this resistance, finishing with over $91. This is a very bullish sign and if maintained it will mean a renewed uptrend for crude oil. When the facts change, I change my mind. With this new important data from China, together with the bullish season for a year-end rally for the general market, I also think now there is a good chance that the crude oil may continue to appreciate over the next few months, probably to over $100.

If this is indeed the trend, oil companies will certainly benefit. I like well managed oil companies such as Exxon Mobil (XOM), Chevron (CVX) and BP. All the three also paid good dividends. But  be aware that all of them have climbed up over 15% in the past month. Not necessarily cheap enough at these levels, especially for XOM and CVX. You may also consider to directly trade via US Oil Fund (USO), an ETF to track crude oil prices. It is the most actively traded oil ETF. But I think it will be taxed as a limited partnership, for which you will need to report K-1 form. I don't like this as it is cumbersome and maybe complicated for non- accountants. Actually many ETFs are subject to K-1. So be aware of this and it is always better to check their Prospectus to see their tax reporting requirements. This is one main reason that I always try to use options as far as possible for ETFs to avoid this kind of headache.

Saturday, October 22, 2011

Short Baidu

If you want to make a quick speculation, I think there is a good target right now: short Baidu (BIDU). Since about 2 years ago when Google started to get significant conflicts with the Chinese government and eventually was de facto kicked out, Baidu has taken a huge competitive advantage and occupied the vast majority share of the online search market in China. Investors has pushed BIDU share prices to an unbelievable level. Its current P/E ratio is over 55, which is extremely expensive. Think about it: Google has only a P/E ratio of 22. Now more and more signs indicate that China's economy is slowing down quickly. This won't bode well for Baidu. So there is a fundamental reason to doubt whether Baidu's extreme expensive stock price can continue.

The more troubling sign is from its price action. BIDU has recently broken its long term uptrend line (the green line on the chart). Technically speaking, when a stock breaches its long term uptrend, it will usually bounce back to test the trend line, a kiss from below. This is very bearish since it often fails to break through and will then plummet quickly from that level. There is a catalyst to push it down further: BIDU will report its earnings on Oct 27. I bet it will disappoint investors, which will certainly be a disaster for its share price. That's why I want to short BIDU early next week before Oct 27. You can simply short its shocks, or buy its put options, or even better use put spreads to increase your chance of success.

Again, it is purely a speculation with a high risk. Only bet with the money you can afford to lose.

Friday, October 21, 2011

Make money in either direction

Since I called the market bottom early this month, it has been really a crazy roller-coaster experience for a couple of weeks now: the DOW was up 200+ one day, and down 100+ the next day. You need a very strong heart to go through this if you want to dance with the market real time. But my gut feeling is that the market wants to go up. I’m still convinced that we are currently in the trend towards a year end rally. While the overall market is schizophrenic these days, it did create some good trading opportunities both up and down directions. Today is the option expiration date and I got two winners, one for the up and other for the down trend. Both profits came within a month time.

For the uptrend, I traded Intel (INTC) via call spreads. As you know I have always been very bullish for Intel. It is the superman in the PC chip industry with almost no competitors. Somehow the investor herd just didn’t see it. However, in the terrible summer of the market with a severe correction ongoing, Intel actually did very well compared with the majority of others. I figured its down side risk was very minimal but it could jump higher easily with little bit good news in an upward market. So I went in a month ago to trade it via call spreads when its share price was at about $21. Intel did surprise the market with a great quarter results and its stock price jumped to $24 these days. With some leverage, my profit was not trivial. 




Which sector was doing very poor in the past few weeks? Probably precious metals were one of the worst. Although nothing can change my long-term bullish view for the precious metals, I must admit that I have been bearish for them in the very short-term, which was also true for some mining stocks which had climbed too much too fast. Royal Gold (RGLD) is one of them. Actually RGLD is one of the best gold stocks in the long run and I like it very much, but it went up too fast in the past few months. Technically speaking, it is almost a no-brainer that it  must drop down first before going up again. I shorted it via put spreads when it reached $80, betting that it would plummet to below $70 in a short run. Fortunately I was right and it did crash about 20% in less than a month. Again it is a great short-term trade for me. I think RGLD is close to its bottom and it would be a great buy if it drops below $60.

Tuesday, October 18, 2011

Good sign for the start of the year end rally

As I said last week, the S&P was in the trading range between 1100 to 1220 and I expected it should drop significantly when it got close to 1220. It did yesterday. The market plummeted 2% yesterday with DOW dropping 247 points and S&P 24 points, respectively. This was severe but I had expected more decline before it truly starts with the year end rally. However, based on what happened today,  I'm not sure we would see more severe market declines before the year end. Let me explain.

You may have noticed that in the past several months, regardless how strongly the market was bouncing back, there was no participation of the financial sector. Actually the financial sector was doing very poor. For a persistent and long lasting market rally, it definitely needs the energy of the financial sector. We may have seen this energy today. Goldman Sachs (GS) reported a very poor quarter result today, missing the estimate in a wide margin, which only occurred twice in the past 10 years. Normally this would cause a stock to plummet. However,  GC jumped 5.5% today. When a stock is doing well with very negative news, it often means the stock has reached its bottom. This is especially an important sign from an industry bellwether like GS. Actually the whole financial sector, together with the whole market, was doing very well today in the negative news. This may signal that the severe correction for the stock market in the past 3 months has come to an end and we may see the start of the year-end rally.

While it is risky to make a call based on one day price actions, I'd like to bet on this. I'd start to accumulate more shares of the stocks I'm interested in. For those who would like to take more risks with speculation, a leverage ETF for 3 x the price performance of the Russell 2000 Index may be considered. It is called "Direxion Small Cap Bull 3X Shares", symbol TNA. If I'm right and the market truly rallies towards the year end, the small cap companies will usually lead the market rally. Russell 2000 is the index for small companies. Of course, I must warn you that this is purely a speculation with a lot of risks involved. If the market turns south, TNA will lose 3 times more accordingly. So only bet with the money you can afford to lose.

Monday, October 17, 2011

Great tips from the greatest living investment master

I just read an interview done with Jim Rogers, one of the living greatest investors in the world I very much admire. Full of the wisdom can be found in the interview but I'd like to pass the following great tips to you and hope you will also appreciate them. Here is what Rogers said:

I would say one lesson we all need to learn is that after you’ve had a great success, you really should be very worried. Let’s say you sell and say you’ve made 10 times on your money. You should be extremely worried. You should close the curtains, not read, look at the TV, or anything because that’s when you’re full of hubris, arrogance, confidence. You think, “God, this is something easy,” and you’re desperate to jump around to something new. You should do your very best to avoid making another play until you’ve calmed down a lot. Just wait. It’s a very dangerous time for any investor.
 

Likewise, if you take a huge loss and there’s a big panic and things are dumped on your head because you’re overextended or wrong for whatever reason, calm down, don’t say, “I’m never gonna invest in
stocks again or commodities or whatever.” That’s the time you really should be willing to invest again if you can gather together some capital money. The investments can be terribly emotional. You have to figure out a way to control your emotions and deal with your emotions if you’re going to survive in these markets.
 

My advice is that, most of the time, most investors should do nothing. They should look out the window or go to the beach. You should wait until you see money lying in the corner and all you have to do is go over and pick it up. That’s how most investors should invest. The problem is we all think we need to jump around all the time and be jumping in and out and that’s not good.
 

We think we have to have investments. No, we don’t. If I said you could only have 25 investments in your whole lifetime or if there was some way to limit you to 25, you would be extremely careful. You wouldn’t be jumping around doing all sorts of strange things. Patience is what most investors need to learn. You don’t have to be doing things all the time. Most of the time the best thing is to do nothing. You just sit with what you have as an investment and let it ride or sit and wait until you see someone sitting in the corner.
 

Most of the time – unless you’re a short-term trader and great at it. I’ve known some spectacular short-term traders. But for most investors, unless you’re one of those guys, then you should just do nothing. Do nothing. If you’re an investor, do nothing except re-examine what you have, and if you’re not investing, just continue to look until you find something.

Sunday, October 16, 2011

Hyperinflation: A real experience in Germany

I have often heard the story about Germany's historical hyperinflation and inflation aversion is super high and deeply rooted in the German society. But I have never thought I would be so much shocked when I really understood the reality from the actual numbers. I'm pretty sure you will be shocked as well. I wish the US would not follow this path but unfortunately this country is indeed slipping into this path. Everything this government and the politicians are doing is just kicking the can down the road, wishing a miracle will happen later to have the debt problem resolved without disaster. It won't. The more the can is kicked down the road, the less a chance it will be to turn it around. It is fine to print more and more money for now, but some day, the reality will kick in and the market force will exercise its power to let the whole system crash. Just like what happened in Germany in 1920s! I have my fingers crossed and for sure I will buy more gold and silver down the road.

The following is what Art Cashin told CNBC about a woeful history lesson on Weimar hyperinflation, which is also the root causes of today's huge crisis. Cashin is a UBS floor guy in the NY stock market, who is often interviewed by CNBC. I just extracted a few things but you can read the whole story here.

Originally in 1922, the German Central Bank and the German Treasury took an inevitable step in a process which had begun with their previous effort to "jump start" a stagnant economy. Many months earlier they had decided that what was needed was easier money. Their initial efforts brought little response. So, using the governmental "more is better" theory they simply created more and more money.
But economic stagnation continued and so did the money growth. They kept making money more available. No reaction. Then, suddenly prices (but not business activity) began to explode unbelievably. (Sounds similar, if you think about QE's done by the Fed today?) 

So, on this day government officials decided to bring figures in line with market realities. They devalued the mark. The new value would be 2 billion marks to a dollar. At the start of World War I the exchange rate had been a mere 4.2 marks to the dollar. In simple terms you needed 4.2 marks in order to get one dollar. Now it was 2 billion marks to get one dollar. And thirteen months from this date (late November 1923) you would need 4.2 trillion marks to get one dollar. In ten years the amount of money had increased a trillion fold.

Numbers like billions and trillions tend to numb the mind. They are too large to grasp in any “real” sense. Thirty years ago an older member of the NYSE (there were some then) gave me a graphic and memorable (at least for me) example. “Young man,” he said, “would you like a million dollars?” “I sure would, sir!”, I replied anxiously. “Then just put aside $500 every week for the next 40 years.” I have never forgotten that a million dollars is enough to pay you $500 per week for 40 years (and that’s without benefit of interest). To get a billion dollars you would have to set aside $500,000 dollars per week for 40 years. And a…..trillion that would require $500 million every week for 40 years. Even with these examples, the enormity is difficult to grasp.

Let’s take a different tack. To understand the incomprehensible scope of the German inflation maybe it’s best to start with something basic….like a loaf of bread. (To keep things simple we’ll substitute dollars and cents in place of marks and pfennigs. You’ll get the picture.) In the middle of 1914, just before the war, a one pound loaf of bread cost 13 cents. Two years later it was 19 cents. Two years more and it sold for 22 cents. By 1919 it was 26 cents. Now the fun begins.

In 1920, a loaf of bread soared to $1.20, and then in 1921 it hit $1.35. By the middle of 1922 it was $3.50. At the start of 1923 it rocketed to $700 a loaf. Five months later a loaf went for $1200. By September it was $2 million. A month later it was $670 million (wide spread rioting broke out). The next month it hit $3 billion. By mid month it was $100 billion. Then it all collapsed.

Wednesday, October 12, 2011

Short term overbought

While I'm feeling very good to have a perfect bullish call, the market is actually very overbought at the moment. If you haven't got in and are thinking to catch it up by buying stocks now, think twice and be cautious. The market is very much subject to severe pull back in the near term. Technically speaking, S&P is still trading within a band between 1100 and 1220. Today it is 1207, at its range top. In the past few months, S&P is bouncing back and forth within this range. I think there is a good chance that it may plummet sharply in the next few days. It may drop all the way down towards 1100 level and then strongly bounce back to try to breach its upper band. If successful, it will be on its way to really set up a new upper trend. Overall I feel the next 2-3 months towards the year end will be bullish for the stock market but in the very short term, be prepared for a sharp decline.

Stay tuned. If the market plays out more or less consistent with what I'm expecting, I will recommend a new ETF to catch up the bullish trend.

Sunday, October 9, 2011

What happens to Annaly (NLY)?

Whenever the government touches something, it always destroys the value of it. This administration is even more notorious for that. I don't know how this administration can ever expect to generate real job creation and economic growth with the current policies and regulatory environment. Everything they do is just against that. 

In the past 3 years or so, I have always been a fan for NLY because it is truly like a bank without actual counters but with high dividend yields. A few weeks ago, I said NLY would guarantee to make money till mid 2013. It will still be so as long as the current government does not touch it. But I'm not so sure now because the government indeed tries to intervene in their business. Of course, this is something a total surprise for anyone. I had no way to predict this was coming.

In the 1960s, Congress granted the REITs an exemption from the Investment Company Act of 1940, permitting them greater leeway than mutual funds in the employment of leverage and hedging strategies, as long as they were primarily engaged in "purchasing or otherwise acquiring mortgages and other liens on and interests in real estate." On Aug. 31, the SEC announced a "concept release." The agency said that it wanted to hear from professionals and investors by Nov. 7 on the rapidly changing nature of mortgage investments and whether or not the SEC's regulation of the mortgage-REIT sector has been effective. In other words, they are considering to revoke their legal right to be exempted from the Investment Company Act of 1940, if they can. If this really happens, NLY and such companies will be forced to scale down on their leverage, which is their normal and healthy business model,  and their dividend yields could be substantially reduced as a result. This has caused investors worried and panic. They sold off NLY badly.  

I think this is an overreaction, AGAIN!  NLY trades at 5.8x P/E, .95x P/B, has almost 2.5% return on assets and over 17% return on equity, and a 15.5% dividend yield. I highly doubt that SEC can do what they are thinking regardless how much they wanted to. It will really kill the real estate market, which is already extremely fragile. Regardless how stupid the government is, other forces will make their dull mind cleared. Even if they truly want to push it through, the more likely scenario is the grandfather rule: whatever has been established based on previous rules will be maintained but all newcomers will have to follow the new rules.

As I said, I have got quite a large position for NLY and I intend to keep them for now. Of course, my way of investing in it is such that I won't really lose money until it drops another 15% or so from the current price level. If you have bought NLY at higher prices and you are worried about it, you should have an exit plan: if you cannot sleep at night, you should sell it immediately; or at least you should have a stop loss by which you must exit regardless in order to preserve your capital. After all, no one knows for sure what will be the final actual outcome of this saga.

I have my fingers crossed!

Saturday, October 8, 2011

Why I think now is the right time to buy stocks?

Four days ago on Oct 4, I made a bold statement that I thought it was the time to get into the stock market. Literally I also switched my 401k money parked in the money market funds to stock funds the next day. While the market jumped back significantly in the last few day, it does not prove yet that I have made a right call. It is just too soon to be sure but I’m confident that I’m right. Why?

One thing to gauge the market direction is the market volatility. The most famous one is the S&P500 volatility index, VIX (see below the VIX chart for the last 5 years). When there is panic, VIX jumps high and the stock market crashes. When investors are complacent, it drops and the stock market  ascends.  As simple as that! One year ago, I said VIX was too low with too much complacence. But now I think it is too high with too much panic. If you examine the VIX chart carefully, you may find the pattern: if it drops below 20, it usually means the market is too complacent and too high. However, it rarely goes beyond 40, which means the market is in extreme panic. But notice what happens thereafter? In the last 5 years, only 3 times VIX jumped beyond 40: 2008 (financial meltdown), 2010 (Flash Crash), and now 2011 (US & Europe debt crisis). But high and extreme panic is not sustainable for long time. It is just the nature of human beings. Soon after the volatility reach its climax, it always comes down and retail investors will very quickly forget what has happened and very soon everything will be fine for them, which will translate into a higher stock market. This is the psychology of herd investors, reflected by the technical analysis via charting. Volatility is one key part of such analysis.

Of course, technical analysis is an art, not science. There is nothing which is perfect, especially in terms of timing. I may be too early, but at least I can make some informed prediction what is the likely next move of the stock market. Guided with this ability, the odds for your success will be much higher in trading and investing, but no guarantee. Also importantly, I'm not talking about the trend in years; rather just the next few months to half a year or so. What will come after that? I don't know and we have to see at that time. The overall economic situation around the world is just too messy to make a reasonable long term prediction.


Tuesday, October 4, 2011

This is the time to consider to get back into the stock market

Call me crazy but believe or not, the time has come to consider to get back in now. I cannot say this is the exact bottom but at least it is very close. You do feel the panic now and it looks like a capitulation.  Everyone is running toward the exit and throws in the towel. The VIX reached as high as 46 today, which is very high, meaning high panic sentiment in the market. One year ago, I thought the VIX was too low at around 20. Now I think it is too high to be sustainable. Historically in the past 20 years, only 3% of time the VIX was beyond the 40 mark and each time, it was followed by a market rally.
More importantly, the August low at $1100 for S&P 500 has been breached and the market is touching a new low now.  The overall market is extremely oversold.  When it bounces back, it will be powerful. When there is blood in the street and no one wants to hold stocks, it is the time to shop for bargains. Remember what Warren Buffett said, "Be fearful when others are greedy, and greedy when others are fearful."
If you have a list of stocks you want to own, you should consider to put your money to work. Just be mindful of position size and stop loss, you should be fine and I’m confident you will be doing great in the next few months at least. I will be adjusting my 401k portfolio now towards overweight of stocks. The stocks may decline further but I don't believe it will go down too much further. Even if it is not the bottom, it is around the bottom.

Monday, October 3, 2011

Gold and silver look scary, does it?

"Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria.

The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell."

Sir John Templeman

It is definitely dismal and I’m pretty sure you don’t want to hear about gold and silver at the moment. It is indeed scary as if the world is coming to the end in terms of investing in precious metals.  If this is what you are feeling,  I understand but don’t be so.  Nothing fundamentally has changed with respect to the super bull of gold and silver.

You can better tolerate this kind of correction if you really understand the fundamental reason for the super trend of gold and silver: the bankruptcy of fiat currency and a race to the bottom among them.  The conditions for the fiat currency is not getting better at all; rather, it is getting worse each day as far as I can tell.  I think Templeman’s definition of bull markets cited above is the best I have seen and I think the precious metal bull market is only at the stage of “grown on skepticism”. There is a long long way to go before it dies.
In the very near term though, it is indeed going through a rather severe correction for gold and silver. I warned you back in early June that this could happen if the US$ was appreciating: "If this does occur, then a chain reactions will ensue: an appreciation of the US$ (although short-term), plummeting stocks and unfortunately also a correction of commodities including precious metals (potentially severe but fortunately also short-term)." This is exactly what is happening now. Of course,  gold and silver have gone a bit too fast ahead of themselves in the past few months. It is actually healthy to have this correction to get rid of weak hands, in order for the bull to launch ahead with more strength.

I have personally experienced a similar severe correction in 2008, when the gold price dropped from $1000 to about $700 within 3 months.  Historically in the 1970 to 1981 bull market in gold, the gold price went from $35 an ounce to $850 an ounce.  In the midst of that gold bull market, in 1975, the gold price fell by half from around $200 to $100. The correction for silver was even more severe and pronounced.
 
If you are brave enough and stick to the big trend, you will make a lot of money when everyone else is running away. Of course, the position size is the best tool to ensure you can stay with the trend. No one can tell you how much you need to put into gold and silver. The size should be big enough so that there is material impact on your financial future but small enough so that you can sleep well at night and won’t be scared to death and drop out prematurely. 

Don't be a chicken little!