What a nonsense, you may claim! Is it notorious that gold and silver do not pay anything if you hold them? I don't blame you and actually this is one of the important reasons for many people who don't like precious metals because they can at least get interest from paper money, although almost nothing as well. But still better than nothing, isn't it? Well, if you take into consideration your real purchasing power, i.e. the negative impact from inflation, you are actually losing money by holding your cash since what you get from your saving interest is not enough to offset the much higher inflation. From this perspective, holding gold and silver will actually "pay" you money since they will keep your purchasing power over time against inflation. This is one of the two key factors, based on which someone calls a $10,000 gold as its intrinsic value (see
the article in Forbes).
Of course I'm not predicting this much of gold value, at least not yet, although the rationale presented are very sound and reasonable. While I'm super bullish for gold and silver long term, I must say the technical damage has been done for them in the short term. In other words, it is not impossible that gold and silver may further decline in the next few weeks. If that happens, I will be more than happy to buy more.
What I mean here about income is the real money you may extract from your gold or silver positions, while you are waiting for the significant appreciation of them in the future. Of course you will need to work a bit to make it happen. For those who understand options, it is the technique so-called
covered call options. In principle, if you have positions for gold, silver or mining companies, you can sell cover calls against them. If you do it right, the chances are high that you will make money and continuously to do so to generate income from them. Keep in mind that over 70-80% of options will expire worthless. Therefore the statistic probability is in favor of you to make money. That is what has been happening during my working vacation in the past week. Just show you a few examples below. The green numbers are the net profit I made from them. I have talked all of them in the past, GDX is the ETF for mining companies, SLV is for silver and SLW is the best silver royalty company. You may notice that for SLV and SLW, the holding period was just one or 2 days. That's what I meant to get paid from the market volatility.
| Symbol | Quantity | Opening Transaction | Closing Transaction | Gain (Loss) |
| -5 | 11/30/2011 | 3.91 | 1951.78 | BC | 12/12/2011 | 0.86 | 436.31 | 1515 |
| -10 | 12/09/2011 | 1.58 | 1567.35 | BC | 12/13/2011 | 0.49 | 502.61 | 1065 | |
| -15 | 12/13/2011 | 0.70 | 1033.56 | BC | 12/14/2011 | 0.10 | 166.42 | 867 |
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