They see growth as the primary concern, and income (such as dividends) is either a minor or unimportant consideration.
For those who prefer choices that have greater growth potential while tolerating more risk, the range of choices are
Major mining stocks (as a foundational choice; see Chapter 7)
Junior mining stocks
Junior mining stock ETFs (see Chapter 8)
Mining stock leveraged ETFs (but not a huge amount; see Chapter 11)
For the speculator
A speculator seeks rapid price appreciation in the near term (over weeks or months) and accepts the possibility that volatility and (hopefully) temporary price declines may occur on the path to high potential gains.
Speculators want to get set up for outsized gains, so they’ve done their homework and are aware of greater risks. Here are their range of choices:
Junior mining stocks (see Chapter 7)
Junior mining stocks leveraged ETFs (see Chapter 11)
Long-dated call and put options (see Chapter 13)
For the trader
Traders are looking for gains within days or weeks typically, so they want to play volatility and don’t mind seeking short-term profits, say, being bullish on an asset this week and cashing in quickly for a profit and playing the other side (bearish) if they feel the same asset is ready to decline in price the following weeks. My associate Charlie puts it nicely: “While I play the ‘tides,’ typical traders play the ‘ripples.’”
Traders gravitate to the following choices:
Stocks (some play stocks directly; see Chapter 7)
Futures (see Chapter 12)
Options on stocks/ETFs (see Chapter 13)
Options on futures
Of the choices, the most common are options because they’re lower-cost vehicles and offer plenty of upside and downside volatility in the short term.
Making Other Portfolio Considerations
Often, the choices in your portfolio aren’t always 100 percent “yes or no” when it comes to making the move to purchase (or sell) an asset or investment. As you find out in this section, there can be alternate, modified ways to proceed as every investor or speculator can have different circumstances, preferences, and so on.
Deciding on a percentage to put in metals
The percentage to invest in precious metals is actually a personal choice, and no hard and fast formula exists for choosing how much gold and/or silver you should buy or what percentage it should be. Plenty of expert folks have an opinion on the matter, and they’re included in Appendix A.
Part of the reason for this is that every situation is different. A senior citizen in her 80s will require much less exposure to gold and silver than someone in her 30s. Someone with positions that may get harmed by inflation will need some significant exposure to gold and silver. Check out the earlier section “Building Your Financial Profile” to see whether a particular approach appeals to you. You can also refer to the later sidebar “The Permanent Portfolio” for a technique from investment advisor Harry Browne.
Choosing gold, silver, or both
When knowledgeable people describe the difference between gold and silver, I like this comparison: Gold is like a jumbo airliner, while silver is like a jet fighter. Gold is that steady large vehicle, while silver can be quick and nimble. Either or both is fine. Many experts on the topic will give different answers like “have X percent in gold and Z percent in silver.” I think they both have different properties found in their related vehicles such as stocks, ETFs, and futures, but in the physical form, I am agnostic.
Investing for income
Although most investors do gold and silver for appreciation such as long-term or short-term capital gains, there are ways to gain steady income from gold and silver. The most obvious are
Dividend income from major mining stocks (see Chapter 7)
Writing covered calls on stocks/ETFs
Writing puts on stocks/ETFs
THE PERMANENT PORTFOLIO
In early 2006, Harry Browne died. I thought it was a great loss to the investment and political world. (He ran for president on the Libertarian platform
