Print that post off and give it to your broker so that he will know exactly what you want to do. DON'T let him talk you into ANYTHING ELSE.

I will let you know if the entire investment picture changes (very unlikely) over the next year. But, if the gold and silver trends end for some VERY UNLIKELY reason, I'll let you know and you will be able to cut your losses so that you won't have to lose all of your $6,000 original investment.

How much can you make? Let's say you buy a silver option call at the money when silver drops to $9.00. For every $1.00 silver moves up in price, your call will increase in value by $5,000. If it moves up to, say, $12.00 on this first bounce up, your call will be worth $15,000. Your profit will be $15,000 minus your original investment of $6,000 = +$9,000. On the BIG MOVE, if silver gets up to, say, $30.00, you will make about $100,000 on a $6,000 investment.

So this is a very significant opportunity coming up.

I'd do it if I wasn't $40K in debt...

Not 5 minutes ago, after about a month of avoiding gold and silver, I entered a limit buy on gold at $578 with an automatic take profit at $600, and a expiration on the order of 1 week. This is on a spot market -- not futures or options. After a week, July 5th, if the order has not struck, the order is automatically canceled, at no cost to me.

The way this works is this: If, say tonight, the ask price of gold on my trading platform drops to $578/oz, my order will strike. Following that, it will be as if I actually owned the gold. Since I trade with a 50 to 1 leverage, for as long as the trade is open I have to pay interest on the part of the trade I did not actually pay for. If the price reaches $600 before I close the trade, Mikey is a happy boy. If I am in the money, but the price stagnates, I can close the trade on my own volition and take a smaller profit. If the price is out of the money, I can hold the trade as long as I pay the interest or the price does not drop my account to a margin call. I could also close the trade and accept the loss -- big or small.

I am not anxious to disclose the platform at which I trade, but they are located in Switzerland.

Watch the price of gold. If it drops to $578 then rises to $600 in the next week or so, I will earn about 1 years living expenses.

Enkidu

I had to edit to change the word, "bid" to "ask". The ask price is the price I pay on a long trade, the bid price is the price I get closing a long trade. These are switched on a short trade.

What about if I take my money directly to a gold dealer? what is your advice?

I'd do it if I wasn't $40K in debt...

If you've got nothing, you've got nothing to lose.

You can start small. There are ways to do that. Of course, it does take money to make big money. But you can gradually build up your account. If you're careful, one day you'll be able to pay off your entire debt.

What about if I take my money directly to a gold dealer? what is your advice?

That is the safest way to play the huge move probably coming up over the next few years. You will not get rich doing it that way, because buying gold and silver coins or bars is completely unleveraged. But lack of leverage has the advantage of there being virtually no risk on your investment. Buy gold Krugerrands or Canadian Maple Leafs -- these are a better deal than Gold Eagles (which have a high premium) -- and buy silver rounds (pure silver pieces). If you have a lot of money buy gold and silver bars -- or, if you don't want to fuss with storing the metal, buy stocks in the gold or silver exchange traded funds -- ask your broker about these.

If you have a lot of money buy gold and silver bars -- or, if you don't want to fuss with storing the metal, buy stocks in the gold or silver exchange traded funds -- ask your broker about these.

I certainly appreciate your knowledge in the precious metals market, but if shit comes to shove, how much are those pieces of paper (stocks) going to be worth?
Personally, I feel better with a few quart Mason jars filled with .999 silver rounds and a few 50P Centenarios and 20P Aztecas than I do with a piece of paper signed by some jew saying that I "own" so much silver and gold. As I said, if shit comes to shove, do you really think that piece of paper will buy me a loaf of bread?

I certainly appreciate your knowledge in the precious metals market, but if shit comes to shove, how much are those pieces of paper (stocks) going to be worth?
Personally, I feel better with a few quart Mason jars filled with .999 silver rounds and a few 50P Centenarios and 20P Aztecas than I do with a piece of paper signed by some jew saying that I "own" so much silver and gold. As I said, if shit comes to shove, do you really think that piece of paper will buy me a loaf of bread?

I agree with you completely. However, I'm expecting that we will get quite a bit of warning before the economy goes into the sewer big time. There should be time to convert your paper into the real thing -- and not have to deal with storage in the interim. Of course, if I'm wrong in this -- and the economy collapses suddenly -- then you will be glad you had bought and stored the real thing.

Hi, Devere. I'm probably not the only one that knows very little about investing, so would you mind answering some questions about gold option calls (the only ones I remotely understand)? First off, are you talking about COMEX gold (GC)?

A 12 month option call at or near the money in gold or silver will cost you about $6,000.

What if the broker wants more? If they quote $7,000 or even $8,000, then are they pocketing the difference?

For every $1.00 silver moves up in price, your call will increase in value by $5,000.

For a gold call, if the option is purchased for $6,000, then the market price must go up by at least $60 to make back the original investment? If an option were to be purchased today at the money, $584, then the price of gold would have to go up to $694 for a profit of $5,000 to be made. Is that correct?

I now -- based on Saville's opinion that gold and silver are more likely to break up than down -- recommend that you buy a long term option HERE, rather than waiting another week or two for a downward spike. Prices are low here and even if it drops down a bit following the Fed's interest rate hike announcement, the drop should not be significant from a long term standpoint. Buy the long term gold and possibly silver call (12 months till expiration) at or as close to the money as you can afford: HERE -- TODAY OR TOMORROW (within the next few days anyway, before prices take off upward).

Hi, Devere. I'm probably not the only one that knows very little about investing, so would you mind answering some questions about gold option calls (the only ones I remotely understand)? First off, are you talking about COMEX gold (GC)?

Yes. COMEX gold.

What if the broker wants more? If they quote $7,000 or even $8,000, then are they pocketing the difference?

No, not if he is a licensed broker. The fee should be no more than $40 or so for one trade. If he quotes $7,000 for an "at the money" 12 month out option call, then that is the going price. If that is too expensive for you, buy a "near to the money" option call (try to get as close to the money as you can afford -- as close to the actual gold or silver futures price at the time you purchase).

For a gold call, if the option is purchased for $6,000, then the market price must go up by at least $60 to make back the original investment?

No. If next week gold goes up $10, your option call will increase in value by about $500 to $1,000. If it goes up $20 in a week, your option call will increase in value by $1,000 to $2,000 -- depending on whether you bought an at the money option call in the first place (which I recommend).

If an option were to be purchased today at the money, $584, then the price of gold would have to go up to $694 for a profit of $5,000 to be made. Is that correct?

No. You can make a profit on your option call tomorrow, if gold goes up, say, $10. If you buy an at the money option call (say an $585 July 2007 gold call), when it goes to $685 (up $100), its value will be $10,000 PLUS the time value left on your option. If it doesn't get to $685 until July 2007, there will be no time value left on your call, so your profit will be $10,000 LESS your $6,000 original purchase price or a profit of $4,000. If it gets there by December 2006, your option call will be worth $10,000 PLUS the remaining time value on your option -- say another $3,000 -- for a total of $13,000. Your net profit, should you sell then, would be $13,000 - $6,000 = $7,000 (a profit of 116% on your investment in six months -- not unlikely by the way).

The FOMC meeting that started yesterday will end at 2:15 ET today. They are expected to announce a quarter percent rise in the federal funds rate...or...they could surprise us. This may cause a spike (either way, but more likely down) in precious metals prices.

I just closed all (both) of my open gold trades, with small profits. Except for my order at $578 I am out of the market now. I'm thinking of trying a trick done by traders called sharks, that is, place an order at a very low price, hoping to catch some panicked sellers at the bottom of a spike. In fact, I will...just need to figure out the price...maybe an order at $560 and another at $570. If the price doesn't spike down it costs me nothing. If it does, I get one or two trades in at very good prices.

I also think I will change my name to Herman Roth, or maybe Bernie Stein.

Enkidu

Orders in, one at $570 another at $575. Odds are, neither will strike, but if they do, drinks on me.