James Reilly https://www.jamesreilly.uk Hints and Tips for Newbies Online Mon, 19 Oct 2020 07:34:17 +0000 en-US hourly 1 https://wordpress.org/?v=5.5.1 $22M in Bitcoin moves from Huobi to OKEx despite withdrawal freeze https://www.jamesreilly.uk/22m-in-bitcoin-moves-from-huobi-to-okex-despite-withdrawal-freeze/ https://www.jamesreilly.uk/22m-in-bitcoin-moves-from-huobi-to-okex-despite-withdrawal-freeze/#respond Mon, 19 Oct 2020 18:55:00 +0000 https://www.jamesreilly.uk/?p=3933

Large Bitcoin (BTC) transactions from Huobi cryptocurrency exchange are moving to OKEx despite the latter having temporarily suspended crypto withdrawals.

According to data from crypto tracking service Whale Alert, a total of 1,995 BTC ($22.5 million) was sent from Huobi to OKEx shortly after OKEx officially announced it was suspending withdrawals on Oct. 16.

The funds were transferred in two separate BTC transactions worth 998 BTC ($11.3 million) and 997 BTC ($11.3 million) at 3:51 a.m. EST and 06:22 a.m. EST, respectively.

The transfers raise some questions as 1,995 BTC is now locked on the platform due to the platform temporarily blocking crypto withdrawals. “Dude go the opposite way,” someone from the crypto community commented on Twitter. Others suggested that the issue could be a result of delayed BTC transactions.

The transactions from Huobi bring a significant amount of Bitcoin to OKEx’s total BTC balance. According to data from BTC balance-based exchange ranking Chain.info, OKEx now holds a total of 276,184 BTC on its cold vault, hot wallets, and deposit wallets. At publishing time, a total of 6,269 BTC left OKEx over the past 24 hours.

Daily net inflow on OKEx. Source: Chain.info

Approximately five hours later, Whale Alert sounded the horn on another large BTC move, but this time the funds seemingly somehow left OKEx, amid closed withdrawals. Someone sent 3,500 Bitcoin, worth roughly $39,627,432 at the time of transfer, to Binance from OKEx, Whale alert tweeted, adding: “We suspect these are internal exchange transfers. We are investigating the matter right now.”

Referring to the 3,500 BTC OKEx withdrawal tweet from Whale Alert, a public statement from OKEx explained:

“OKEx’s wallet team has confirmed that the origin wallet addresses in said transactions do not belong to OKEx. The chief economist at major blockchain analytics firm Chainalysis also confirmed in a tweet today that the transactions in question had been ‘mislabelled’ and were not in fact from OKEx.” 

Earlier today, Chinese media reported that OKEx founder Star Xu was questioned by the police a week ago.

UPDATE Oct. 16, 18:43 UTC: This article has been updated with added information.

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‘Enormous wall of money’ will send Bitcoin to $1M in 2025 — Raoul Pal https://www.jamesreilly.uk/enormous-wall-of-money-will-send-bitcoin-to-1m-in-2025-raoul-pal/ https://www.jamesreilly.uk/enormous-wall-of-money-will-send-bitcoin-to-1m-in-2025-raoul-pal/#respond Mon, 19 Oct 2020 16:24:00 +0000 https://www.jamesreilly.uk/?p=3935

Bitcoin (BTC) hitting $1 million by 2025 is “about right,” Real Vision founder and CEO Raoul Pal has confirmed.

In an interview with Stansberry Research last week, Pal, famous for his bullish stance on Bitcoin, said an “enormous wall of money” would flow into the cryptocurrency over the next few years.

Pal: Bitcoin in line for “enormous” capital inflows

“I think that’s about right, whether it’s five years, six years,” he said when asked about the $1 million target. 

“We’re going to go through two of these halving cycles, and just from what I know from all of the institutions, all of the people I speak to, there is an enormous wall of money coming into this. It’s an enormous wall of money, just the pipes aren’t there to allow people to do it yet, and that’s coming, but it’s on everyone’s radar screen and there are a lot of smart people working on it[.]”

Bitcoin’s current halving cycle began in May 2020 and will last approximately four years. Beyond Pal, a whole sphere of analytics looks at the impact of halvings, which cut the supply of new Bitcoins available per block by 50% and make consistently bullish predictions.

Just this week, PlanB, creator of the stock-to-flow family of Bitcoin price models, confirmed that BTC/USD was on track to increase by an order of magnitude after May.

In terms of the “wall of money,” meanwhile, corporate Bitcoin buy-ins continue to surface this month, Cointelegraph reported.

“I think it’s going to be not because the world’s collapsing; it’s because there’s going to be adoption by the real large pools of capital,” Pal summarized.

“Why would I have a gold allocation?”

Pal also revealed that he would be looking to sell his gold investments and convert them to Bitcoin due to the latter’s superior performance.

Despite not “disliking” gold and remaining invested in both assets for the time being, the future was unequivocally skewed in Bitcoin’s favor, he said.

“…When you get to the macro opportunity, when it’s all happening — Bitcoin starts breaking out of these patterns that it’s been forming, it is going to massively outperform gold, I’m 100% sure of that. In which case why would I have a gold allocation?”

Bitcoin vs. gold 6-month chart

Bitcoin vs. gold 6-month chart. Source: Skew

Here, too, Pal is not alone. As Cointelegraph noted, analysts including statistician Willy Woo have forecast Bitcoin breaking away from traditional asset correlation to forge its own path. The timeframe is unclear, Woo last month nonetheless anticipating it happening “soon.”

According to a new report from crypto index fund provider Stack Funds this week, meanwhile, support is in place for BTC/USD to run to $15,000 after November’s U.S. elections.

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Why Bitcoin price abruptly dropped 3% in 30 minutes on OKEx freeze https://www.jamesreilly.uk/why-bitcoin-price-abruptly-dropped-3-in-30-minutes-on-okex-freeze/ https://www.jamesreilly.uk/why-bitcoin-price-abruptly-dropped-3-in-30-minutes-on-okex-freeze/#respond Sun, 18 Oct 2020 10:41:00 +0000 https://www.jamesreilly.uk/?p=3937

OKEx, one of the world’s biggest cryptocurrency exchanges, announced a temporary suspension of withdrawals on Oct. 16. Upon the news, the price of Bitcoin (BTC) abruptly plunged 3% in 30 minutes across major exchanges.

The nervousness in the market comes from the reason behind the withdrawal suspension and the potential implications it carries.

The 15-minute price chart of Bitcoin

The 15-minute price chart of Bitcoin. Source: TradingView.com

OKEx says a private key holder is cooperating with investigators, Bitcoin swiftly drops

The OKEx team said one of the private key holders of the exchange is cooperating with a public security bureau in investigations. The team said:

“One of our private key holders is currently cooperating with a public security bureau in investigations where required.   We have been out of touch with the concerned private key holder.  As such, the associated authorization could not be completed.  Pursuant to 8.1 Service Change and Interruption of the Terms of Service, OKEx may change the Service and/or may also interrupt, suspend or terminate the service at any time with or without prior notice.”

Immediately after the OKEx statement was released, the price of Bitcoin dropped from $11,514 to $11,190. The 3% drop occurred within a 30-minute span, causing a market-wide pullback.

Bitcoin exchanges typically implement a multi-signature system to process withdrawals from cold storage, i.e. a wallet that is not connected to the internet.

To transfer funds from the cold wallet, the exchange often distributes several private keys to the owners and executives. In a multi-signature system, all or the majority of key holders must be present to sign off transactions.

In the case of OKEx, the exchange said that one of the private key holders isn’t able to approve withdrawals. Jay Hao, the CEO of OKEx, said:

“All operations @OKEx except digital asset/cryptocurrency withdrawals remain unaffected. All your funds and assets are safe. The investigation concerns a certain private key holder’s personal issue only. Further announcements will be made.”

The price of Bitcoin fell sharply on the OKEx news for two main reasons. First, OKEx is a major exchange that processes substantial amounts of both spot and futures volume.

Second, when it concerns an exchange with ties to China, there is usually heightened market speculation. Red Li, the co-founder of 8BTC, said:

“OKEx first stated withdrawal will be suspended 15PM but quickly changed to 11AM. Rumor has it that over 800 accs in ‘certain’ exchange are involved with cross-border money laundering.”

Industry executives surprised by the news

Leo Weese, the president at The Bitcoin Association of Hong Kong, said he was surprised by the fact that one person could affect an exchange’s entire cold storage multi-sig system. He wrote:

“That one person sits in China holding the keys to an entire offshore cryptocurrency exchange is probably the most surprising thing about this industry I learned this year. That customers don’t demand transparency about key management comes in at a close second, though.”

In the case of BitMEX, as an example, when the firm’s CTO Samuel Reed was arrested earlier this month, the majority of private key holders were able to sign off on transactions.

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Get Started NOW With Bitcoin https://www.jamesreilly.uk/get-started-now-with-bitcoin/ https://www.jamesreilly.uk/get-started-now-with-bitcoin/#respond Sun, 18 Oct 2020 07:24:00 +0000 https://www.jamesreilly.uk/?p=3967 Watch The Video Below


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3 years after the ICO, Filecoin (FIL) rallies 118% upon listing https://www.jamesreilly.uk/3-years-after-the-ico-filecoin-fil-rallies-118-upon-listing/ https://www.jamesreilly.uk/3-years-after-the-ico-filecoin-fil-rallies-118-upon-listing/#respond Sun, 18 Oct 2020 05:03:00 +0000 https://www.jamesreilly.uk/?p=3939

On Thursday Filecoin (FIL) began trading across major exchanges over three years after its initial coin offering.

Upon listing, the token traded at wildly different prices across multiple exchanges and while the premium shows there is still an appetite for altcoins, investors interpreting the rallies from FIL and Polkadot (DOT) as the beginning of an altseason may be disappointed.

Hours after trading began, top cryptocurrency exchanges including FTX, Binance, and Gemini announced that they would swiftly list the altcoin. Consequently, the token saw significantly different prices across platforms due to a combination of limited liquidity and supply.

The 15-minute chart of Filecoin (FIL) after the FTX listing

The 15-minute chart of Filecoin (FIL) after the FTX listing. Source: TradingView.com

Hours after the FTX integration, the FIL futures contract processed $150 million in trading volume. FTX CEO Sam Bankman-Fried said:

“$FIL has traded about $150m so far. Roughly 60% of the volume has been on FTX! Started around $30, went up to $80 on FTX and $200 on other exchanges, now around $40-$80 on various exchanges.”

Traders expect a boring fourth quarter

Historically, the fourth quarter has been relatively slow for the entire crypto market and in 2018 and 2019 BTC saw losses against the U.S. dollar during Q4.

Based on historical trends and what appears to be the end of an explosive multi-month rally, traders expect a drawn out consolidation phase as the next step for the crypto market.

Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, suggested that an altseason in early 2021 is most likely. He wrote:

“I do believe we’ll be seeing a relatively boring and corrective quarter on the cryptomarkets. In history; $ETH frequently bottoms out in December, to start running the quarter after. $BTC dominance to run up, to have an altseason in Q1 2021. Continuing the patience.”

Bitcoin dominance is rising

According to the data from CoinMarketCap, the Bitcoin’s dominance against the rest of the cryptocurrency market has been climbing.

Since Sept. 21, the Bitcoin dominance index increased from 58.28% to 58.6%. Although this is not a major increase, it shows a clear recovery from an extended downturn throughout the past year.

The Bitcoin dominance index

The Bitcoin dominance index. Source: CoinMarketCap.com

The dominance index is typically an accurate measurement to assess the trend of the altcoin market and many traders believe that a decline in Bitcoin dominance if followed by increasing bullish momentum in the altcoin market.

DeFi tokens are still struggling to rebound

In early October, researchers at Santiment said the key to evaluating the prospect of an altseason is the volume of decentralized exchanges. They said:

“Are we anywhere close to #altseason yet? The key may very well be in #DEX trading volumes. Taking a look at #Uniswap’s trading volume, this trendline breaking may very well be the leading indicator to foreshadow the next #alt boom.”

Uniswap daily volume since July

Uniswap daily volume since July. Source: Uniswap

As shown above, Uniswap volume has been in a steady decline. At the same time, altcoins remain flat and the altcoin total market cap index shows a similar decrease in volume.

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Bitcoin Explanation for Dummies https://www.jamesreilly.uk/bitcoin-explanation-for-dummies/ https://www.jamesreilly.uk/bitcoin-explanation-for-dummies/#respond Fri, 16 Oct 2020 13:38:00 +0000 https://www.jamesreilly.uk/?p=3881 To most people, Bitcoin can seem like a financial concept made in a parallel universe. Yes, it’s a very complex and complicated concept, but it doesn’t mean it’s impossible to learn it. When you think about it, many people started off with no idea about bitcoins and how it worked. But look at them now, they’re probably investing left and right in various cryptocurrencies like pros and possibly profiting very nicely as well! So, in this article, we’ll try to simplify how Bitcoin works using a betting game analogy:

Imagine playing a betting game with your friends, but none of you have any money on hand, so you decide to use a ledger to record the transactions, like your winnings and losses. But you don’t want to put your trust on one friend to record everything, so a lot of you decide to make a ledger simultaneously.

This way, at the end of each game, those who kept ledgers can compare their records to see if it all evens out—which means that cheating the system would be virtually impossible unless everybody else is in cahoots with you, which ultimately defeats the purpose of cheating in the first place.

The ledger is not hidden or exclusive to the ledger keepers; you can view it anytime you want. To add your transactions to the ledger, all you have to do is broadcast your transactions to the ledger keepers, and you pay as little or as much as you want to make sure they put your name down on that ledger as soon as possible.

Your friends who keep the ledgers up to date get compensation for their hard work with a reward in the form of money. This money comes from an external source—say, a vault with a limited amount of money. The money in the vault wasn’t part of the money circulating in the betting pool, but it became so once it was acquired by your ledger-keeper friends.

This simple analogy is exactly how Bitcoin operates, albeit on a much more complicated level. Bitcoin runs on a global computer network, and each transaction is compiled into new blocks which are then connected to the last block on the blockchain. And the bitcoin miners are the ledger-keepers who work hard to record transactions and mine those precious bitcoins.

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Recommended Resources https://www.jamesreilly.uk/recommended-resources/ https://www.jamesreilly.uk/recommended-resources/#respond Tue, 13 Oct 2020 11:55:00 +0000 https://www.jamesreilly.uk/?p=3793 What I have for you here is a list of Recommended Resources that you can use for free, these are the ones I personally recommend and are in my arsenal of marketing software

7 Zip: https://www.7-zip.org (free download) An open source, free alternative to WinZip.

Audacity: https://www.audacity.sourceforge.net (free download) An open source software used for recording & editing audio files.

AVG: https://www.free.avg.com (free download) Anti-virus and anti-spyware protection.

CamStudio: https://www.camstudio.org (free download) Lets you record all screen & audio activity on your computer and create video files.

CCleaner: https://www.ccleaner.com (free download) Removes unused files from your pc allowing Windows to run faster and freeing up space.

Color Cop: https://www.colorcop.net (free online tool) A multi-purpose color picker – great for web designers and programmers.

Down For Everyone: https://www.downforeveryoneorjustme.com (free online tool) Is your site down? Use this tool to see if your website is down for other people.

DupeFree: https://www.dupefreepro.com (free download) Quickly check for duplicate content & LSI keywords.

Evernote: https://www.evernote.com (free download) Scan your notes, receipts, etc … it will OCR the content, space it, and make it searchable)

FileZilla: https://www.filezilla-project.org (free download) Open source FTP program for uploading files to your host.

Firefox: https://www.mozilla.com/firefox (free download) Alternate web browser.

GIMP: https://www.gimp.org/ (free download) An open source program used to create & edit – free alternative to Photoshop.

Give Away Of The Day: https://www.giveawayoftheday.com (free download) Unique site that offers you a free license digital product daily.

Kompozer: https://www.kompozer.net (free download) An easy to use WYSIWYG HTML editor.

Open Office: https://www.openoffice.org/ (free download) Open source office software – word processing, spreadsheets, databases, presentations …

OSWD: https://www.oswd.org/ (free downloads) Open Source Web Design offers free web design templates.

PDF995: https://www.pdf995.com (free download) Use this tool to easily convert files to PSD format.

PDF to Word Converter: https://www.pdftoword.com (free online tool) Easily create editable Word Doc files from PDF content

Pixie: https://www.nattyware.com/pixie.php (free download) Great for web designers – just point to a colour and discover the code value for that colour.

Lastpass: https://lastpass.com/create-account.php  (free download) Easily & safely manage your passwords.

Screen Hunter: https://www.wisdom-soft.com/products/screenhunter.htm (free download) Software that allows you to “capture” any part of your desktop, a window or full screen.

Notepad ++:  https://notepad-plus-plus.org/downloads/ (free download) A powerful text editor. I personally like Notepad++ for editing HTML code.

VLC Media Player: https://www.videolan.org/vlc (free download) Media player capable of reading most audio and video formats.

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Should You Invest in Platinum or Palladium? https://www.jamesreilly.uk/should-you-invest-in-platinum-or-palladium/ https://www.jamesreilly.uk/should-you-invest-in-platinum-or-palladium/#respond Mon, 05 Oct 2020 23:00:35 +0000 https://www.jamesreilly.uk/should-you-invest-in-platinum-or-palladium/ Platinum and Palladium recently made a break into the precious metals industry. They are precious metals because like gold, they hold a lot of value in a very small amount of space. These metals are also industrial metals used in various applications in dentistry, automobile production, jewellery, and in electronics. If you are looking to invest in these metals, then take a look at these facts. Hopefully, you shall be able to make an informed decision on whether you should invest in Platinum or Palladium.

These two metals can be hard to differentiate to the untrained eye. They have similar traits, which deem confusing at times. These metals both react as catalysts to the same elements and chemicals and they both maintain a bright white colour that does not fade over time when used in jewellery. To better understand these metals, let us review their uses, density, and prices.


At 70%, South Africa has the largest production of platinum in the world. Platinum is much denser than palladium. This allows for more manipulation of the metal without breaking. The versatility of platinum rises its prices to nearly twice the price of palladium per ounce. Platinum’s uses are tangible with its main use being for diesel engines. Platinum is the main component of catalytic converters used to convert toxic by-products from the exhaust into being less-toxic. A powdered form of platinum is used as a catalyst in the ignition of hydrogen in the catalyst converter on cars. For gasoline or petrol engines, either platinum or palladium can be used – the main determinant of which metal gets used is the price. Platinum is also used in dentistry, in the production of strong, permanent magnets and in the form of surgical instruments and electrical contacts. Approximately 46% of platinum consumed annually is used in catalyst operations, 31% for jewellery, and the rest for minor industrial usage. All in all, around 250 tonnes of platinum is used annually.


Palladium is very similar to platinum, however, this metal is less denser and less expensive. Due to the similarities, palladium is also used as an industrial catalyst and is a common substitute to platinum in the jewellery industry. Palladium is a key element of white gold and it makes up some of the best workings of high-end watches. Also, palladium is believed to be more available than platinum and is frequently considered a lower-cost substitute for platinum. If you wish to buy one of these metals for industrial purposes, palladium is a greater bargain because it sells nearly half as much as platinum. Palladium is also used in automotive catalysts, electrodes in medical equipment’s, converter, and as mentioned earlier, in fine jewellery. About 4.4 million ounces in 2011’s total palladium production went to the automotive market!


If you consider the supply side, these two metals are very rare. There is a supply deficit in these metals due to the challenges faced when mining platinum and palladium. It is only logical that the prices of these metals will rise in the future. If you are a serious investor, you should find ways to benefit from this in the end. Considering the demand side, the metals have ample uses but the one unique industrial application that makes them to be in constant demand is from catalytic converters. There is also in demand from dentists, electronic manufacturers, and for use in jewellery.

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Beware the Fool’s Gold Rush https://www.jamesreilly.uk/beware-the-fools-gold-rush/ https://www.jamesreilly.uk/beware-the-fools-gold-rush/#respond Fri, 02 Oct 2020 18:00:43 +0000 https://www.jamesreilly.uk/beware-the-fools-gold-rush/ You have to Beware the Fool’s Gold Rush, it’s not always what you think. Years ago, I remember making my first precious-metal purchase.

Silver was an ounce, and gold was going for $350. I walked into a coin shop and asked the owner if he had any 10-ounce silver bars for sale.

I’ll always be grateful for his response. The owner gave me a little silver seminar – the fabricator’s brand stamp, the weight in troy ounces, the “three nines fine” (the mark showing the metal is 0.999% pure silver). Then he picked up a big hardware-store hammer from behind the counter…

“Hear that?” he said, as he tapped hammer and bar together. A distinctive ping rang out. “That’s the sound of real silver.”

These days, though, the real thing (silver or gold) is getting harder and harder to identify…

Take, for instance, the recent discovery in March of counterfeit gold bars bearing the PAMP Suisse mark – a highly respected private gold mint.

Fugazi Gold

It’s not the first time that someone has faked a gold bar, of course, but the sophistication of the fakery makes it more notable – and dangerous for unwary gold buyers.

As noted by the folks at CoinWeek.com:

These new fakes not only have a better strike quality than previous examples, but there are no obvious errors in the packaging which bears the certificate number and other authentic-looking details from the purported manufacturer.

Measure the fake by length and width, and it seems like the real deal, but the bars are noticeably thicker when compared to a genuine bar, so that these fake PAMP Suisse gold bars weigh the same as the real thing.

It’s not just gold bars, either. Take the British £2 coin. It contains both gold and silver. Experts at the Royal Mint figured its bimetallic content would make it harder to counterfeit.

Turns out they were wrong. In 2014, Italian customs agents seized a half-million euros’ worth of these coins at a port in Naples. According to reports in the British press, the coins were “near perfect” in quality to real £2 coins.

Numismatic graders run across well-made fakes on a regular basis – Buffalo nickels, Mercury dimes, St. Gaudens double eagles, Morgan dollars – you name it.

Country of Counterfeits

Though coin counterfeiting has been with us for 2000 years, most fugazi numismatics today come from China. It’s a big business. (You can get a sense of just how big by taking a look at rare photos of a China-based coin counterfeiting operation obtained by numismatic expert Susan Headley.)

Until 2012, many fake coins entered the U.S. after being listed for sale on eBay as “replica coins” – but it doesn’t actually say “replica” on the coin itself. Since 2012, eBay no longer allows sales of replica coins. But that doesn’t stop many of the fakes from being bought by unwary fans of precious metal through alternative retail channels.

The problem is so big that the Industry Council for Tangible Assets, the numismatic watchdog group, appealed to Congress. The result is the Collectible Coin Protection Act. The law stiffens penalties and makes it illegal to make or import imitation numismatic coins that are not plainly marked as such. Congress approved the bill, and it was signed into law by the White House in 2014.

The law was a step in the right direction. But it can’t stop the bigger problem of counterfeit gold and silver already in circulation. So what can you do to protect yourself?

The most important step is to make sure you’re buying from a reputable, licensed dealer. Some people buy from established local sellers they’ve dealt with for years.

Others only purchase from big well-known precious-metal dealers on the Internet.

The main point is to make sure you know with absolute certainty who you’re buying from. Does the firm have a vested interest in carefully screening what it buys and sells? Will you have recourse if it turns out what you bought isn’t the real deal?

The counterfeiters are getting better and better at what they do. The only way to combat them is to be a smarter buyer of authentic gold coins and bars.

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Gold and Silver Buying Mistakes https://www.jamesreilly.uk/gold-and-silver-buying-mistakes/ https://www.jamesreilly.uk/gold-and-silver-buying-mistakes/#respond Fri, 02 Oct 2020 14:00:22 +0000 https://www.jamesreilly.uk/gold-and-silver-buying-mistakes/ Detailed below are the most common Gold and Silver Buying Mistakes that precious metals investors often encounter.

Common Mistake #1 – Unrealistic Expectations

One of the biggest pitfalls faced by precious metal investors of all experience levels is impatience and the temptation to chase the price with the hopes of “hitting it big”. Many new investors believe that the metals prices can only go up and that investing success is a given in the short term.

The key to success is the full understanding that investing in gold or silver is a long-term proposition. You can only measure your success over many YEARS, not weeks or even months. If you are looking to “get rich quick” we would recommend you not venture in to precious metals with this expectation.

    • Take the time to assess the following:
    • What are your investment goals?
    • Why are you considering gold and silver?
    • Will the factors that are moving you to consider precious metals change in the near future?

Most likely you are considering precious metals due to a myriad of global economic conditions – most of which will not change quickly, if at all. This only reinforces a long-term position and mentality when it comes to investing in metals. If you get in the game, do so for the long haul.

Keep in mind the flip side as well. Investors will often jump from investment vehicle to vehicle if their investment strategy doesn’t yield immediate results. We have see many of our clients sell off their metals to go and invest in the “next big thing”, have it fail and then find themselves buying metals back at significantly higher prices.

Common Mistake #2 – Chasing the Price

Some people will spend years chasing after the next big thing, often believing that this strategy is “the one.” When that particular strategy doesn’t yield the results they were looking for, the common response by investors is to blame the strategy and to quickly adopt another. They don’t realize that the problem most often lies within themselves and not with a given strategy or tactic.

Again, step back…

Give the strategy some time. We can’t stress enough that precious metals investments should be long-term holdings. Success in this game is not something that can be accurately measured in weeks or months. This is a long-term commitment. Budget your time, energy and capital wisely.

Common Mistake #3 – ETF’s and Physical Metals are the Same

Many investors, especially those new to precious metals, make the critical error of thinking that owning an Exchange Traded Fund (ETF) that invests in gold, such as GLD, is the same as owning the physical gold itself. It is critical to understand the key differences between owning shares of an ETF and owning physical gold or silver.

For thousands of years, physical gold and silver have been highly desirable and recognizable commodities that are easily bought, sold and exchanged for goods on local and world markets. You can take physical gold from New York to Zimbabwe and everyone will immediately recognize the inherent value in the metal itself. In essence, you can use physical gold or silver in lieu of, or for exchange of cash all over the world.

As the owner of a gold ETF, you ultimately only own a piece of paper, a promissory note, showing how many shares of the fund you own; however you do not own any actual physical gold. The ETF owns the gold and you own a promise from the fund managers to pay back the value of the shares you have purchased in the ETF. The ETF certificate that you own is something that is not universally traded on the world markets, nor is it widely recognized or easily exchangeable for currency. You would have a very difficult time trying to trade paper certificates for goods or services the same way you would physical gold.

Let’s take a closer look at one of the most popular gold investments, GLD. The primary disadvantage of paper gold is lack-of-ease in converting to physical gold. While investors may own a claim on physical gold, in many cases they will find that actually getting their hands on the metal is much more difficult than they had expected.

Investors may not realize that when they invest in GLD, they do not own physical gold. Yes, in theory GLD is a physical gold-backed ETF, and one share of GLD is supposed to be equivalent to 1/10th ounce of gold. But the actual story is much more complicated, with major restrictions on redemption.

First, to qualify to redeem GLD shares for physical gold, special permission is required from the trustee of GLD. This permission is typically reserved for brokers and major institutional players. Second, shares can only be redeemed in batches of 100,000, which equates to roughly $13 million at today’s prices. Third, according to GLD’s prospectus, the fund retains the right to settle gold requests in cash rather than in the physical metal. So even if you owned 100,000 shares and had permission to redeem them, you still might not receive your physical bullion.

Another nuance to investing in GLD has to do with how its price moves in relation to the spot price of gold on the futures market. While the initial price of GLD was set to represent the price of 1/10th ounce of gold, this relationship has not been maintained, because GLD is subject to its own market forces, as well as reduction in value through management fees. Without getting into too much detail, the price of GLD is highly correlated with the spot price movements of gold, but does not follow those movements exactly. For example, a large purchase or sale of shares in GLD can drive the price up or down, without the spot price of gold changing.

Finally, if you read the language of an ETF prospectus carefully, you will see that your investment in the ETF could possibly drop to $0 in value. This highlights two critical factors to consider about ETFs: 1) you are trusting someone else to establish the value of the gold possessed by the ETF, and 2) you are trusting that the fund managers actually have enough physical gold to cover your investment and all of the other shares invested as well.

These two concerns are negated when you consider physically possessing gold. First, the value of your investment is determined by the market, not by a fund manager or by the popularity of the shares of a given ETF. Second, since you physically possess the gold, you know exactly what it is worth at any moment in time and are not dependent on another person or entity to tell you what you have.

The chance of physical gold becoming worthless is virtually impossible, given that gold and silver have always had, and should always have value. While the value of gold may fluctuate depending on a given currency or during any given day, there will always be some value associated with these precious metals due to the fact that precious metals are rare elements, cannot be “manufactured” and have a myriad of industrial uses.

Common Mistake #4 – Falling for Confiscation Scare Tactics

Countless investors have been presented with the “Confiscation Myth” and unknowingly found themselves being upsold into unnecessary, expensive numismatic coins. Many unscrupulous precious metals firms will bait investors in to buying numismatic coins that have a margin that is 28 to 70% higher than standard bullion coins and bars.

The most frequently used technique to promote high-priced coins is to raise the issue of confiscation. Many telemarketers tell investors that old U.S. gold coins are not “subject to confiscation,” leaving the impression that modern gold bullion coins are. Consequently, many investors buy old, rare, and antique gold coins at prices significantly higher than the value of their gold content. The idea of buying “non-confiscatable” gold sounds like a powerful argument but when scrutinized fails to stand the test of truth.

Many precious metals firms maintain that old U.S. gold coins, proof sets, and commemorative gold coins are “collectibles” and would not be subject to another gold recall. Some firms say that premiums of at least 15% automatically make coins collectibles. Another notion holds that coins one hundred years or older are antiques and therefore not subject to confiscation.

The bottom line is that NO federal law or Treasury department regulation supports these contentions. ONLY if you are a collector or speculator should you buy numismatic coins.

Common Mistake #5 – Minimal Research

When faced with something new, it’s easy to simply take the advice of a few friends or scan a couple of websites before you make the jump. In the precious metals market, superficial research is just looking at general information such as spot prices and trying to “pick a price point” or choosing the most popular forms to buy. There is significant information to be learned about buying gold and silver, and that requires sifting through the misinformation as well.

There are sound forums and blogs to review such as zerohedge.com, seekingalpha.com, cointalk.com and goldismoney.com. They are great places to read other investors’ opinions, strategies and the experiences they’ve had with specific dealers. Ask specific questions on the forums and mine the resources and experience of seasoned investors.

You can also turn to Facebook and LinkedIn for various investor groups and interest groups. Please keep in mind that many of these groups are formed by dealers or individuals that have a hidden sales agenda. Consider their profile and background before considering any aspect of investment advice that is offered.

There are a number of industry respected company blogs that are hosted by dealers and wholesalers that are another solid source of information for a new or experienced investor. Many of the industry blogs provide new product information, Mint news and up to date market information.

The mainstream media will often provide timely, yet sometimes biased news. Use your discernment when reviewing precious metals news from The Wall Street Journal, TheStreet.com, Yahoo Finance or Reuters. Verify any news you read with multiple reliable sources.

In the end after your initial research, find a dealer that is willing to spend time answering any and all of your questions without trying to sell you something.

Common Mistake #6 – Going “All In”

Many first-time precious metal investors make the mistake of investing all or a significant portion of their savings in precious metals. That is a mistake! You should never invest all or a significant portion of your assets in any single investment vehicle. To determine how much you should invest, you must first determine how much you can actually afford to invest and what your financial goals are.

When you determine how much to invest in precious metals you should begin by following some long-standing investment principles. If you have significant debt, you should work first to pay down your debt and secure three to six months of living expenses in savings. If these principles are accomplished then take a look to see how much additional savings you have on hand for investing.

Follow this with a plan to add to your investments over time. You should plan to use a specified portion of your income to build your precious metal portfolio over time. This method is called “dollar-cost-averaging” and it is useful whether buying stocks, bonds, mutual funds, precious metals or any investment. Speak with a qualified financial advisor to set up a budget and determine how much of your future income you should invest.

For many types of investments, a minimum initial investment amount may be required. Different precious metals dealers require different minimum purchases. Your local dealer may let you buy just one or two ounces of silver, while some online dealers require upwards of $5,000 to purchase from them. We, for example, do not have a minimum purchase requirement.

Finally, never borrow money to invest, never buy precious metals on leverage and don’t use money set aside for other needs.

Common Mistake #7 – Obsession

Did you know that a Google search for the word “gold” produces over 700,000,000 results? “Silver” brings back about 480,000,000 results. That is some serious information overload and way too much for any one person to try to keep up with.

Many newcomers to precious metals investing may find that they become overwhelmed with information, especially when gold fever hits or when the price reaches a new all-time high. There is so much to learn and so many things happening all at once all over the world, it’s easy to catch the fever and want to keep constant vigil over the market. This gives new investors a misguided sense of control, thinking that as long as they are keeping an eye on the market, they’ll be on top of things. Right? In reality, the opposite is happening.

The Sun is always shining somewhere on the Earth, and there is a market somewhere that is almost always open – this is especially apparent with today’s Internet connected markets and global economies. Markets constantly change based on events all around the world – there’s just no way for any one person to keep up with the precious metals market 24/7.

The solution?

Relax. Don’t become obsessed with the ever-changing world of precious metals – give your mind a break from it all. When our brains are strained, we tend to make high-risk decisions with a lack of concern for the consequences. It’ll still be there when you return. If you have done your homework, work with a reputable company to place your orders and have a solid long-term strategy in place, you will hardly miss a beat.

One way to ensure you are using a great strategy is to pre-plan your moves – be less reactive and more proactive. This gives a real sense of control and allows you to calculate your strategy and wait for the best timing. The markets move as they will, so instead of reacting to everything, which requires you to watch the Hong Kong Market to guess what will happen in London, you can pre-plan your moves.


Investing in precious metals is serious business but it can be very rewarding. This type of endeavor requires both attention and respect. Master it and a world of financial opportunity is open to you. Fall victim to it and there are few things more frustrating. Hopefully, from this short report you have gained a better awareness of the rapidly changing and in-depth nature of precious metals and how to maximize your opportunity to succeed.

The pitfalls we have illustrated here are just some of the more common mistakes that new investors experience. You can avoid the headache of these blunders by keeping in mind some of the crucial information we have revealed in this report. Above all, remember that success will be measured in years, not weeks. Avoid the mindset of getting rich quick – keep your goals and expectations long term.

Also, remember that there is no substitute for knowledge and practice. Educate yourself. Find a system that makes sense to you. Don’t go along with something simply because you were told it works. Rather, determine what resonates with your own body of knowledge and experience, then stick with your strategy.

Finally, find a mentor – someone who is willing to impart the knowledge that made them successful. A solid understanding of precious metals investing is truly invaluable, offering you the opportunity for secure investments, financial strength and independence.

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