Hi,

I know this is definetely an odd strategy, but it has worked for me so far. I currently use Oanda (my broker) to trade Forex. I like them for a few reasons (low spread), but I don't know if they are the best. Regardless, I use them. When I first started using them I noticed you can buy XAU/USD (gold) and XAG/USD (silver). This was news to me!!! Everyone knows what direction gold and silver go during extreme times (U.S. gov't printing so much money, wars, oil, inflation, etc, etc).

So I created a strategy to use the gold and silver investing to my benefit. Normally you can only invest 1:1. With Oanda, I could invest 50:1 in gold or silver!

I attempted to try this with just a few hundred dollars at first (I'm poor, I just graduated from college and have student loans to pay off). Within 20 days I earned 65% due to gold and silver going up. Until the recent meltdown in the markets, I was actually up 100%! Now its back down to the 50 to 65% range but I expect it to start gaining again. I'm a long term forex investor, (I don't daytrade forex, I hold it for long periods to avoid the huge cost in frequent trading that can eat away profits quickly, forex trading long term suits my personality.

We have all heard experts saying silver could double within the next few years and gold could hit $750+. Well for a fraction of the cost, you can rent an ounce of gold or silver.

As I write this right now, gold trades for 653.95 and I can buy an ounce on leverage for $13.06. Silver trades for 13.17 and I can buy an ounce for $0.26. I guess its not buying, but its sort of like renting or buying an option. The main downside, besides volatility, is that you pay interest. Even with interest counted, I think this strategy may work very well. I invite you to read more details about the Forex Trading Strategy for Gold and Silver.

I guess the main part of my strategy is the long term part and the amount of money I keep in the account to back it up against any short term dips in the price... For every $100 in my account I only use around 10-15 dollars to purchase gold or silver... the rest is there to give some safety room.

Does anyone else here use a similiar strategy in forex for investing in gold and silver?

ulchie, welcome to the forum. This seems an interesting diversion to forex, futures, or options trading to consider. How long does it take to learn the system and how much money do you need to invest to make it worthwhile?

zen

__________________

It doesn't take long to learn the system. The goal is to buy low, hold for quite a while, and sell high. The main issue to contend with is that the longer you hold the trade open the more the interest starts to eat away at the account. That is why I raise the stop loss each week to more than account for the interest while still leaving room for the small dips that occur regularily.

How much money to do this system with? Well doing it with a few hundred or a couple of thousand would be nice. I would only use the system for money I wouldn't be afraid to lose. I will not be surprised if during the next two years the system gives me amazing results in the neighborhood of several hundred percent. I could also lose it all and wouldn't be overly surprised.

I think I can barely call it a strategy because its just sooo simple. It's really just buying gold or silver on margin (and keeping a ton of cash on hand to back up any small downward swings) and holding it for months, possible a year or two... as long as gold and silver are trending higher. I am thinking it might be possible for me to turn my measely $300 US into about $2,000 if gold hits ~$1,000 and silver hits ~$30 (I know a bit optimistic but I'm showing my best guess at the best case scenario... worst case is I lose $300 dollars). I could lose it all. The upside potential is higher than the downside potential in my assessment and that will remain so as long as the US is printing money like it grows on trees (though, it sort of does if it was made of actual paper... it's not but... you understand).

You can make money intraday when trading currencies. The spread isn't that bad on them to be a huge problem.
Spot Gold/Silver are another story though and I think you have the right idea by Swing or Position trading them.

__________________
RebateFX - Introducing Broker - Get PAID up to 1/2 pip rebate on every trade
from 2-3 pip spread on Majors! - Min deposit starts from $25
Fixed spread! No lockups! Trade News!
*NEW*Get a $5 bonus micro account for 50 posts in the RebateFX Forum!*NEW*

I want to clarify: the name of the site is Nabloid.com, http://www.nabloid.com/
Ulchie, I modified the link in your first post as it directed to site information controlled by you. I don't know if there is a referral program associated with this, but imo, I needed to make this change.
I am looking the site over in more detail. Are you the admin?

zen

__________________

Umm, there is no referral to anything... it was just a strategy I posted on the site. I've removed it since then because I'm focusing the site on the TSX-Venture instead of the Forex Market.

It wasn't selling anything... it was merely just a long term forex strategy that uses a forex broker to invest in gold and silver on margin. The actual address that the links went to were just the full article explaining the strategy. It was completely free... seriously... it was just a simple little strategy I've been employing to make some really good returns on small sums of money. I would never risk a lot with that strategy. It was not selling anything nor was it asking for ANY money. It was 100% free... there was no signup process or anything. It was literally one page with text explaining my strategy. THe site has a few adsense ads on it... but that is just ads like what you have on this site.

You are saying the Nabloid site is gone then? What is TSX-Venture. Please post a thread if it is a program for investors.

Thanks.

__________________

Sorry for the confusion.

No, Nabloid.com is not gone. I've changed it a lot and decided to get rid of the article of which this entire thread is summarizing. This entire thread is just about an article that was posted on Nabloid.com which described one way to invest in silver/gold using a forex broker. Why use a forex broker? It allows you to purchase gold and silver on margin. Right now an ounce of gold costs ~$650, but with forex you can "buy" an ounce on credit and put only 2% down, so you would own an ounce of gold for $13.00. The downside is you do pay interest on what you owe so you wouldn't want to keep the trade open forever.

I've changed Nabloid.com and now the only topics discussed on Nabloid are Toronto Stock Venture Exchange listed companies and anything relating to them. TSX-Venture is the short form for Toronto Stock Exchange Venture. The Venture lists all the very small and risky companies that can often either break you or make you very rich. It has nothing to do with this topic, but it just happens to be what the website is now focused on.

As for the article in question... the article for which this entire thread is based on... Here it is, I'll publish it here since it is no longer listed on the Nabloid website. You can modify my very first post on this thread and take out both links to Nabloid as the article is no longer there anyways, it's here!

Article

Forex Strategy: Gold and Leverage

If you are one of the believers of gold hitting $1,000 USD an ounce, this strategy may be of interest. True forex investing doesn’t typically include gold or silver. The only way in which gold or silver can be purchased using lots of leverage (50:1) is by going through a forex broker, like Oanda.

Forex strategies are very risky. If you have traded forex you already know that. This strategy is risky too. If gold does go to $1,000 an ounce within the next twelve months, how will most people make money? Some will buy gold certificates or ETF’s, while others buy stocks in gold companies. These strategies are effective and useful. We are proposing a higher risk/higher reward strategy… The Forex Gold Strategy.

The Forex Gold Strategy

• Use 50:1 margin (or less if you want less risk)
• For every $100 USD, buy 1 gold ounce on margin. At current market value of $610 USD an ounce, your margin used is around $12.20 USD.
• The remaining $87.80 will remain in the account to pay the carry interest and protect against any downward price action that will occur.
• The trade is a long term trade, perhaps 12 months or more. The trade may be liquidated before that if it hits the target of $1,000 or the trader wishes to close the position.
• Only money that the trader doesn’t mind losing should be used in this trade. Yes, it’s a risky one. Don’t use too much money.

Now, why would anyone on earth want to try this strategy? The possible reward! For every $100 invested, you have purchased one ounce of gold. If you are able to purchase gold at the current price ($610) and it climbs to $1,000, you will have made $390.

A $2,500 investment will have turned into $12,250. Subtract ~$1,000 for interest expenses means that your total profit on a $2,500 portfolio could be $8,750!!! Take $11,250 - $2,500 initial investment = $8,750. $8,750 / $2,500 x 100 = 350% return in one year. Not a bad return for one year. Just don’t try this with very much of your portfolio or you risk losing it all.

That's all it is. A neat little trade that allows you to own gold or silver and only put 2% down.

Here is another old article I no longer have on Nabloid.com so I will publish it here. Enjoy!

Forex Trading: A Long Term Approach

Most people are introduced and 'taught' how to trade in the forex market by forex brokerage firms. The common brokerage fee is a 3 pip spread. This equates to approximately $30 USD when trading 1 lot at 100:1 margin on the EUR/USD. That means every trade done will cost 3%. Most of the traders are taught to do many trades and never stay in a position for a long period of time. Even doing 2 trades a week for an entire year can hinder the rate of return. Over the course of a year this would mean 104 trades were done. At 3% per trade, this will cost more than 312%!

We recommend if you are going to get into Forex, please keep your trades to a minimum. Pick a currency pair, study it. Find out what the outlook is for the interest rates. Find a currency pair where interest rates are expected to rise or drop. Take a position for the long term and wait. You must have plenty of money to back up the highly leveraged account.

Turning down the leverage to below 50:1 is also suggested. This will make it easier to absorb any negative price action that will inevitably occur against your position over a several month period. The long term strategy in Forex can work. But you don't want to get called out on a margin call. You must have lots of money to back up any position you take. Forex is very risky. It is similiar to buying real estate with just a few percent down. The main difference is that the 'bank' will keep track of your investment by the second. As soon as the investment has dropped too low, you will be instantly forced out of the position with a margin call. In real life a bank won't instantly foreclose on your property because the value has depreciated a bit. The amazingly good and bad returns that can occur in Forex are all because of the levarege. Most people fail when so highly leveraged.