I’ll admit it. I have gone into Las Vegas casinos, and inserted a hundred-dollar bill into a slot machine. One time I did it, and the first pull got me $1,000. I took the dough and walked away. Having lost more than I have won, I, long ago have kept away from Las Vegas gambling machines and games.
As an aside, Mississippi’s largest income, comes from off-shore gambling barges, which have been destroyed. Indian casinos dot the landscape across America, and Las Vegas and Atlantic City are huge gambling meccas. I know that gambling can be a disease, but did you ever stop and think of the huge amount of capital, which goes into gambling? Capital, which will never build a business, building, or be saved for retirement. Capital, which will never put a kid through college, buy new furniture, a car, or vacation. I know that a lot of people think it’s ’fun’ to sit in a casino all day long, inserting dollars into machines which have flashing lights, and electronic sounds, with the continual promise of instant riches. It ain’t so, and I suspect that’s why there is an organization named “Gamblers Anonymous.” When I lived in Philly, I used to cringe at the sight of oldsters waiting for a free bus to Atlantic City, so they could spend their retirement or kid’s inheritance.
So why do so many people of means, and no means, love to gamble in the futures market? For the same reason that people flock to Vegas or other gambling hot spots. It is an addiction, and one which the participant believes will make him rich or richer. It is estimated that 95% of futures players lose. I learned my lesson a few years ago, when I held silver contracts at $5.12 I just knew that silver would never go below $5.12! It eventually went to $4.21! I bailed out before that, and closed my account, but my loses were substantial. For me, anyway. I have never done it again, nor have I ever inserted another hundred dollar bill into a slot machine.
Take the recent silver plunge. I never thought silver would test $7, and I know of a lot of futures gamblers who agreed. They thought their contracts were a sure road to wealth. Sudden, unearned wealth. It’s not true, love consummated, which makes the human heart beat fastest, but rather riches and wealth, preferably gotten quickly, and with no effort, which makes man’s heart pound, and the imagination blossom. The prediction of what commodity prices will be in the future, is what this form of gambling is all about, and it is that guess or gamble, which has cost gamblers billions of dollars. Do I have examples? Certainly, and not just my own.
I have clients who regularly buy metals futures, and they often tell me of their good fortunes and bad luck. I know people who have lost hundreds of thousands of dollars in the last week, gambling in silver futures. I know people who have gotten themselves into such a negative position, that their marriages and net worth were at serious risk. I have heard of people who have done exactly the same thing at casinos. Why do you think that Las Vegas feeds players free drinks, and provides the heavy hitters with luxurious hotel suites at no charge? Does anyone really believe they are being generous? All gamblers lose, eventually, I honestly believe. Las Vegas has a lot of pawn shops, where people regularly sell their valuables, just to get home.
So why play the futures markets? Supposedly, it is because of leverage, which one cannot get with physical ownership. Actually, it is that, plus the idea of sudden, unearned wealth being accumulated, just by making a phone call to a broker of futures contracts. Silver is the hottest futures contract being played now, in my field. Silver is at virtually give-away prices, and anyone with extra dollars, who doesn’t snap it up now, is nuts as far as I am concerned. There is far more gold above ground than silver, and I consider silver a huge bargain. An ounce of silver for two gallons of gasoline next week? The gas will be burned, but the silver will be your savings for your lifetime, and at little expense.
Those who lost probably many millions in the last couple of weeks in the silver futures markets, would be ever so much richer, if they had bought physical. It would be right there, in their hot little hands, instead of blowing away with futures contracts. No one can predict what will happen tomorrow. Did anyone actually believe that New Orleans would be under water, a week ago? And further, no one can predict what the big guys have in store for us little guys in the futures markets. Manipulated? Of course! Think of the millions the shorts made, when silver slumped. Did they know something in advance? Probably, and that’s why they shorted the market. Reminds me of the anonymous parties who shorted the airlines prior to 9/11. Did they know in advance, what was going to happen? Of course.
If those hundreds of millions lost, had been placed into physical, or extant contracts ordered to be delivered, the leverage would have been pretty good too! Speaking of delivery of contracts, I know of several parties who have been waiting for over two months for physical delivery of contracts, and still no delivery. It is said that the COMEX vaults now have but a bit over a hundred million ounces, and the contracts are still for 350 million. “I have a car for sale, and I am going to sell it twice,” is what a client of mine in Nebraska likened it to, and thanks Karen!
If you can meet the margin calls for a futures contract, you have then bought it at a much lower price for future delivery, and I know that, and don’t deny it. But how many gamblers get wrung out, and have to scrape up big bucks for margin calls? Money they don’t have. Who knows how low a futures contract can go? Corn? Beef? Pork bellies? Copper? It is all gambling, pure and simple, and far more gamblers lose at futures, than lose in Las Vegas. It’s far more fun to pull a slot machine lever, or bet on Black Jack, than it is to sit and fume over coffee prices in December. If you have extra money, buy physical stuff, when you see it as a bargain.
Last week at the local super market, they had big boxes of Wheaties at $1.88, which was literally half the normal price. I bought four. I have eaten Wheaties since I was a kid, thanks to “Jack Armstrong, the All American Boy,” which to you youngsters, was a radio show. Wheaties was their sponsor. Tuesday, knowing what would happen to gas prices Wednesday, I went and filled up all the vehicles, and a few gas cans too. Today, gas is a quarter higher, and I saved a few bucks. Was this a gamble? Not in my opinion, because if gas didn’t go up, my physical store was adequate. Same with Wheaties. Both are tangible items, whereas a futures contract is a piece of paper with a promise on it, and in the case of silver, might be difficult to collect on, even if you win. All paper promises can be defaulted, as history has proven, and especially if the paper represents a non-extant item.
I bought physical silver on Monday. On Tuesday, it was lower, and I wish I had waited, but I didn’t. Now it is Thursday, and it is higher than it was on Monday, so I am OK. If it weren’t higher, would I be out thousands of dollars? Of course not, because my silver is all bought and paid for, and sits in my safe. If it goes to the Moon, it is still bought and paid for, and DELIVERED. I am not waiting for the COMEX to deliver what it might not have or want to get rid of, due to their lack of physical on hand. I don’t have to wait for ten weeks for my silver to be delivered, and still not have it. It is mine, and in my safe.
The more physical you buy and take delivery of, the higher its price will go, because there isn’t nearly enough to go around, and I can’t for the life of me, understand why the prices are at give-away levels. I don’t think they will stay there for long, but my ’gamble’ is in taking delivery of that beautiful stuff, and locking it away in a safe place, not betting on its price in December or next April. If my physical, which is bought and paid for, goes down in dollar price, due to the manipulators, I could care less, and I am not up late at night, worrying. No one is going to give me a margin call, because I long ago learned that gambling is one of the most futile, time wasting, studies in exasperation, ever invented by man. I want no parts of futures gambling. Nuf said? Protect yourself.