Buying gold & silver from here

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Adam Taggart's picture
Adam Taggart
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Buying gold & silver from here

As I watch silver crossing $26/oz (feels strange just typing that...) and gold approaching $1,400/oz, I'm curious to know how other precious metals investors are reacting to these prices.

1) Do you see this as a major buy signal? Perhaps that we've entered a new phase where more & deeper pockets are entering the market, and pushing PMs up in the direction of the true value we know they represent?

2) Do you see this as "froth"? Is this a QE2-induced sugar-high - does it make sense to go slow with further purchases because odds of a correction (or at least, some profit taking after the prolonged run-up) are material?

3) Do you see this as a sell signal? Have things become so manic recently that new money coming into PMs are the lambs about to be fleeced?

I've seen arguments made for all three of these cases. And I'm certain there are others to be argued for. I'm curious to hear what the PM enthusiasts here are thinking. 

(Personally, I'm somewhere between 1 and 2. I've watched the past month's run in amazement, particularly in silver, as price corrections that used to persist for months shortened to days and now hours/minutes. I'm selfishly hoping for some sort of temporary pullback, only so I can load up at lower prices. Beginning to question whether I'll get the chance)

cheers,
Adam 

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Re: Buying gold & silver from here

My last Ag purchase was on Feb. 5.  I don't think I'll ever see that price again ($15.09 USD). 

Just regretting not loading up then!Yell"Dooh"

Peace & handstands folks! 

 

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Re: Buying gold & silver from here

2

My belief is that there will be a correction, but if I was buying now to save for the Dow/Gold ratio to approach 1:1 before selling, now is as good a time as any.

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Re: Buying gold & silver from here

This sounds like a question for someone that's investing in pm's for profit and not for the proper reason for owning PM's.  I guess "proper" isn't the right word but.....

PM's are insurance IMO.  PM's don't have a $ value, but a value of their own.  The idea and mind set that PM's are valued in $'s is exactly what tptb want to keep you thinking.  As long as you continue to look at PM's in the $ sense, nothing will change.

I own most PM's.  I Invest in Platinum and Palladium.  I also invest in Tin and Nickel.  I own Gold and Silver.  

I trade 70% of my $ intake every month for Ag and Au no matter what the price.  I invested in Platinum at $926oz (500oz) and Palladium at $256oz (2000oz).  I've sold approx. 200oz of Platinum at an avg. of $1449 and 500oz of Palladium at an avg. of $561.  I took all of those $'s and bought more Gold and Silver.

There will be a pullback to $1340 in gold and $24.  At least that's what I'm thinking.  

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Re: Buying gold & silver from here

I keep physical PM but think that it is easiest to trade the ETFs and miners so now I have call options on SLV and just bot SVM, up $900. on my 500 sh in 3 day!. Sounds like a bubble but why would they go down, except temporarily? There are no real fixes in sight except massive budget cuts or massive tax increases. They won't happen, IMHO, and the PM and other commodities will just keep rising.

I just can't get myself to go downtown and fork over $1400. for another Eagle, much less painful to click a button and send electronic cash (with no 16% RT premium!!) into GLD.  If GLD turns out to be a fraud, my guess is SHTF and the $ I lose there will be the least of my (our) worries.

 

SG

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Re: Buying gold & silver from here

Adam

LogansRun nailed it.

Think of it this way -- gold is not rising -- the value of your dollars is falling.  Gold is once again being seen as money as people around the world lose faith in currencies.
 
See the value of your dollars falling.  I expect the dollar to fall much further.  Owning gold is a hedge to preserve value.
http://futures.tradingcharts.com/chart/US/M
 
Why gold price is rising, read first 1/3.  As you know, all major countries are trying to lower the value of their currency to boost exports.  QEII just makes it obvious.
http://www.atimes.com/atimes/Global_Economy/LJ13Dj02.html

A pull-back is likely, but the trend is up.

Travlin 

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Re: Buying gold & silver from here

We spent 8k and bought $427 face value 90% silver dimes.  Everyone in the coin store was selling- very busy.  I had a moment of hesitation...is now the time to be buying?  Why is everyone selling?  But every time we buy, I sleep a little bit better. I think of Davos as I get rid of cash...I don't even like to look at it anymore!

There is a gas station in Dearborn that accepts 2 silver dimes for 1 gallon gas!  I never thought I'd see that in my lifetime.

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Re: Buying gold & silver from here
Romans12.2 wrote:

There is a gas station in Dearborn that accepts 2 silver dimes for 1 gallon gas!  I never thought I'd see that in my lifetime.

<surfer dude>  Whoa...  </surfer dude>

When we start seeing this sort of thing on a wide basis, I'll know we're at a major tipping point...

Viva -- Sager

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Re: Buying gold & silver from here

Buy or Sell? .............................. I'll Hold Thanks.

If I just had the epiphany that everything is not as rosy as we are told in the mainstream media everyday and that we are facing a future with less I'd buy.

If I was unemployed and my kids needed new shoes and my heating bill was due I'd sell.

Faber recently called for a correction in precious metals, I just dont see it. With the insolvency of the United States and Western Economies becoming more understood by citizens and countries worldwide the value of real things in terms of fiat currencies has one general direction to go.....up. Sure we could have a short term dip but with all the dollars floating around out there as folks figure out 1% in the bank isnt going to retain wealth Silver and Palladium look good. I think silver is going to surprise big time in the next year. At $19 an ounce I noticed the band it short term traded in got much larger, I'm no pro but after seeing the drops on the evening of 11/2 I think attempts to lower the price substantially are met with buying. Has the big slingshot in Silver been a byproduct of market interference coming to light? Probably.

There is a reason Chris likes PM's, they are insurance against governments who make promises they cant keep. History and the current story of exponential growth vs. finite planet almost ensure that tangible assets are in a secular bull market and have much further to run. How much will an ounce of Gold be worth in dollars if Bernanke makes good on his promise of dropping money from helicopters? How much will an ounce of Silver cost if a few billionaires pick up a History book and learn a little about hard money? The answers to these questions are unknowable but likely very large numbers.

TJ

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Re: Buying gold & silver from here
Romans12.2 wrote:

We spent 8k and bought $427 face value 90% silver dimes.  Everyone in the coin store was selling- very busy.  I had a moment of hesitation...is now the time to be buying?  Why is everyone selling?  But every time we buy, I sleep a little bit better. I think of Davos as I get rid of cash...I don't even like to look at it anymore!

There is a gas station in Dearborn that accepts 2 silver dimes for 1 gallon gas!  I never thought I'd see that in my lifetime.

Romans 12:2

I hope you didn't buy today.  You never want to buy on a day like today.  The sellers are probably expecting a correction and then using that correction as a buying opportunity to re-establish their position.  Of course, I doubt if they were selling the bulk of their PMs (if they were holding any kind of sizeable position), just a portion used for trading.  

With regards to the gas station in Dearborn, 2 silver dimes are worth about $3.60 melt value so they're not only getting silver with no record of purchase but they're also making a sizeable profit (since I doubt gas is $3.60/gallon there). 

Adam,

I wouldn't be an aggressive buyer right now, certainly not on a day like today.  I'm somewhat in LR's camp in terms of philosophy but not as aggressive a buyer.  The sentiment for a while has been that a 10-15% correction is due.  That being said, that sentiment is so widespread that perhaps, that degree of correction won't occur.  If I was looking to add to my position (which I'm not), I'd buy gold on a 3% or greater pull back.  I'd also hedge in some palladium and platinum against the possible confiscation issue. 

Tycer,

When the Dow/Gold approaches 1:1, it may be difficult to unload.  I wouldn't call it that close.  As the saying goes, bulls make money, bears make money, but pigs get slaughtered (no disrespect meant, just don't want to see you caught holding the bag). 

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Re: Buying gold & silver from here

Team,  I bought 20K worth of PSLV today.. Sprott Silver... to add to my load of Gold, Silver, PHYS, and miners.  This is no time to stop buying in my opinion.. .just the very start of the parabolic phase.  Of course, nothing moves in a straight line... Gold/Silver can go down on days if the dollar goes up.  But the planets are really aligning NOW for Gold and Silver .. even more so for Silver I think.  There will be no correction of serious note because there is no backing out of QE... the endgame is approaching.  It is not too late to buy in my opinion.  It will only be harder (psychologically) to buy in the future as the price rises more.   

The cartels that have controlled/manipulated the prices for so long are just getting broken now... in conjunction with QEII... there could not be a better set up for the coming rise in Gold and Silver.  The true scarcity of physical Gold and Silver is yet to be "discovered".   If you want some.. and you have greenbacks sitting around, don't let anyone talk you out of buying it.  My opinion.. and I live buy it (pun intended).  

 

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Re: Buying gold & silver from here

Adam,

FWIW, I work with a friend who has some extremely bright brothers (retired in their 30's).  They purchased gold a few years ago and are currently liquidating.   Another friend also sold 3/4 of his gold (but not silver) to reduce debt on his home.  Connecting additional dots, Jim Grant was recently speaking about $9000/acre Iowa farmland (all time high) and cash rents at a 40 year low.  To me this points to  "froth" and a sugar-induced high.

However, my own gut tells me we will have a correction soon enough and another chance to purchase some more before another lift-off.  Since I purchased gold for personal financial protection, I am an old fashioned buy and hold guy.

And to conclude my rambling- Thinking of selling? For dollars? Really??

Nate

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Re: Buying gold & silver from here

Great comments so far, folks. Many thanks & keep them coming.

A few quick clarifications:

LIke LR, Travlin and others, I  see the principal logic behind purchasing PMs as a means to preserve purchasing power against declining fiat currencies. It's certainly why I've been building my position over the past several years.

Rereading my original post, I can see how I could have come across as more of a speculator. That said, while I believe the long term trend driving PMs is the weakening of fiat currencies, they trade heavily based on sentiment and may have been (and still may be) subject to price manipulation. They get overbought, undervalued, and demonstrate a volatility higher than most other assets. If you're on a ongoing PM purchasing program as I am, it's nearly impossible not to constantly ask yourself what the near-term price direction will be.

That's why I started this thread: I'm very curious what other people are telling themselves right now. I don't expect anyone to have a crystal ball here, but the idea swapping will give me & hopefully others here additional points of consideration as we each make our own personal prognostications.

More likely than not, I'll continue my dollar-cost averaging program, fighting my instinctive urge to simply go 'all in' (which to-date would have been the best strategy return-wise) and yearning for a major pull-back in price so I can make some bigger buys. But who knows? Someone here may cause a new light bulb to go off in my head that changes all that.

I'm enjoying reading each of your individual viewpoints very much & am excited to hear more.

cheers,

A

 

 

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Re: Buying gold & silver from here
ao wrote:

Tycer,

When the Dow/Gold approaches 1:1, it may be difficult to unload.  I wouldn't call it that close.  As the saying goes, bulls make money, bears make money, but pigs get slaughtered (no disrespect meant, just don't want to see you caught holding the bag). 

I'll just have to see where the other asset classes are when the ratio gets near 2:1. If something better is calling for my money then some of the PMs go there. But in today's funky flows, whose to say the ratio can't go inverse? Diversify diversify diversify.

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Re: Buying gold & silver from here

Adam,

Anything can happen in the short term and I see gold and silver as substantially different animals - gold is largely hoarded and its physical quantity doesn't change much each year (the new amount mined adds a fraction to the amount mined over the past 5,000 years since little is used industrially) so in theory its store of value would be more consistent.  Silver is more volatile because, while physical stocks may be lower, its annual production is much higher and it is possible that some industrial demand (photography?) could be cut back with higher prices allowing for more silver to be hoarded (which would be a good thing in Peak Everything) which could have some mid-term moderating impact on the near term potentially exploding fireworks in silver I mention below. 

If you think that precious metals' true value is far greater than the current price then why wouldn't you allocate to the maximum exposure you feel comfortable with?  Just sayin'.  Personally I'd rather mistime a party and overpay in the short term and be right in the long run...than wait all night for the champagne with an empty glass (or a glass less full than you would like in your case).  It all depends on what you believe 0% or 100% exposure vs other preparation investment options like better home insulation, food storage, etc., etc.

I wrote the following a month ago [Oct 6 2010] in the enrolled member space in response to a subscriber question of what bear attacks were.  While this is tangential to your PM question I believe that a fundamental understanding helps to make better decisions.  Should we make good decisions I hope that people will remember that Chris has mentioned from time to time [paraphrasing] that his hope is that people will remember his assistance by recognizing the responsibility to help others.  I am inspired by his leadership.

Hope this helps.

*******

Right now, more or less, the price of physical silver matches the spot price that trades on the COMEX futures market for silver.  On that market there are four large banks, JPMorgan in particular, who have large short positions on silver - ostensibly that means that they are betting the price of silver will go down and, in effect, they are promising to deliver physical silver if a long investor on the other side of their trade decides that they want physical silver rather than settle in cash as is normally done in, say, 97% of the trades.  When these trades are settled in cash then the commercial bank owes the other party the difference between the strike price that the original trade was entered into and the current spot price of silver at the time that the futures contract expires - which is the third last business day of the month - times the number of ounces of silver in the contract (each contract is 5,000 ounces but there can obviously be multiple contracts entered into).

Some 47% of the net short position of the entire silver futures market is held by these four commercial banks.  There are many irate long investors on the futures market that have written to COMEX, and recent indications that COMEX may respond, to enforce position limits against these commercial banks since they have disproportionate power to influence the price - bear attacks to lower the price - because supposedly they are hedging large quantities of silver and can enter into many more short contract than long investors can buy who are subject to position limits.

Recently JPMorgan have reduced some of their net short contracts but the overall commercial net short positions haven't changed very much.  These large banks are losing millions as the price of silver rises.  However so much funny money floats around in the financial sphere they may be able to handle paper (money) losses.  Many believe that the price of silver has been manipulated to keep its price down - such as the accumulation of large short positions by the commercial banks in the later part of 2008 when the price of silver crashed - and bear attacks add to the volatility of price which keep people scared that aren't invested due to fundamentals or perhaps messing up computer trading algorithms.

What a lot of people have been watching for many many months is a situation when long investors on the COMEX demand physical silver rather than cash settlement.  At that point there may not be the physical silver to deliver and the COMEX futures market will stop trading and figure out how to unwind these positions to satisfy all parties.  At that point the price of physical silver will snap sharply upwards.

It is very interesting to watch the developing fireworks in the silver market but I'd never want to be a long investor in the COMEX - should the market freeze up a long investor might get settled in cash and watch as the physical price of silver pulled away.  Much better would be to be a physical silver holder for the long term and then get out when everybody else is piling into silver as it develops into the third stage of the bull market (we may have just entered phase two).  Another reason not to be a long investor on the COMEX is that it is subject to leverage and so you could be wiped out of your entire net worth in a matter of hours if you don't know what you are doing.  Physical silver requires cash on the barrel head and takes a certain amount of the speculation out of the investment.

I listen to Eric King on www.kingworldnews.com to keep tabs on precious metals.  I just downplay the hype and look for the nuggets of information such as his Weekly Metals Wrap.

Having said this I do disagree with Ben Davies who is a recent regular guest on King World News.  He will talk about how governments are printing fiat currency like Zimbabwe did and criticize government for becoming insolvent.  This really isn't the case - yes the central banks are printing money and flooding the world system but central banks are kept separate from governments - governments only get the fiat money when they borrow.  I suppose since central banks and governments are coordinating their affairs it kind of amounts to the same thing - but it would be much better if governments actually printed their own money to spend rather than borrow debt dollars from central banks which come with interest payments attached.  Obviously what government spends its money on becomes the most crucial matter of all - wouldn't it be great if sustainable agriculture and renewable energy systems became the new Manhattan project?

I also disagree with a gold standard which Ben Davies will talk about as "honest money".  While I see gold as a store of wealth I also see that gold is a terrible way to base your monetary system.  Imagine that your town had no gold but the federal government required that you now need to pay your taxes in gold, or if your bank required it to settle your mortgage.  What could you do?  Why you might just lose your property.  Gold as a monetary system is a great way to enslave people.  If we must have a monetary system backed by a precious metal silver would be much better - it is much less scarce so it is easier to come by. 

One day I hope that we'll begin to forge our way down the trail to new monetary systems with debt free fiat money issued by governments - but watched by the people so that inflation is kept in check - combined with a variety of complementary currencies to achieve social and economic objectives at the community level.

Cheers,

James

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Re: Buying gold & silver from here

Classic bubble signs are visible now around investing in Gold. That means I expect the price to really take off while the greedy and niaive dive in to take advantage. Here in NZ we now have regular advertising encouraging people to invest in gold. It quotes the returns and the comparisons against alternative investments. Huge fees for facilitating said investments. We don't even have a de-valuing currency problem.
So guys, congratulations - you're ahead of the curve - ride the wave - pick your moment and take the profits. But be aware if you are buying in from this point forwards ... you are playing the "bubble game". People will get burnt.

For me - I'm going for the stock market and huge loans because hyper-inflation is the debtors friend and the savers enemy.

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Re: Buying gold & silver from here

COMEX gold was available briefly for $1325 on November 3rd. I view this similarly to the February 5th price of $1045 in that both seemed to be produced by bear raids and represent lows that are never retraced. Gold closed at $1065 on Friday, February 5th and put me off buying that weekend with the result that I spent more the next month. If you plan to buy PMs go ahead and don't try to time the market.

At the end of 2009, beginning of 2010, I increased the PM component of my retirement fund (I'm retired) to about 30%. Half is physical and the rest is gold miners, silver royalty. I'm in the same camp as LR and look upon this as insurance. If I lose here then the economy will have improved so much that my small holding in bonds will have value. I also buy PMs with any spare cash I have rather than letting it sit around as paper.

To answer the original question, no doubt the action on November 4th, post QE2, was froth much like the froth in the equity markets. However I firmly believe PMs are in an upward trend moving from one range to a higher range (or more correctly the $ is collapsing).

As others have noted silver is quite different from gold due to its industrial use. Gold is used in electronics when it is needed for its non corrosive properties. Silver also differs in that the vast majority of its production is as a by product, mostly from lead/zinc silver mining but also (copper)/gold/silver. Consequently its production cannot readily be increased. I'm also of the opinion, suggested by many knowledgeable commentators, that a monstrous short squeeze in silver could well be developing.

 P.S. When I saw the headline "Buying gold and silver from here" I thought maybe the Harry troll was right and CM was selling PMs.Surprised

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Re: Buying gold & silver from here

If you buy PMs continuously like Adam, it is certainly a valid point to at least consider buying during pullbacks. In case of gold, the most typical pullback is in the area of $50, which is about 3-4%. That's a decent discount (if you can time it, but I doubt most people can). On the other hand, the average yearly gain over the past 3 years was around $200, that is 15-20%. It is quite likely that the annual gains will accelerate given the current monetary policies in the West. In that light, the question is whether it's worth it to try to time your purchases against the dominant trend, which in itself is changing its dynamics. If you are buying PMs as an insurance against a major crash, then that discount will be peanuts in case the dollar spirals downwards.

Also, should the Dow vs. gold ratio of 3 and less materialize (which I think is completely realistic, we've been there many times before), then these discounts are insignificant and you are wasting your energy.

As for the general sentiment in the investment world, it seems that the majority of fund strategists expect a long term upwards trend now. This well has the potential for a self fulfilling prophecy. I've been collecting gold price forecasts for some time now and there have never been so many notable analysts (currently 100+) speaking of $5,000+ gold. The other significant players are the Asian and Middle Eastern central banks and they have been buying gold continuously since 2007, most of them have doubled their gold reserves since. Given their need to diversify away from the dollar and the still low share of gold as of the total reserves, there are no signs that this buying should stop any time soon.

So personally, I wouldn't worry about the pullbacks too much and just keep the big picture in mind. The essential question really is whether PMs are going to keep up with agricultural commodities. In other words, are they going to preserve your purchasing power in terms of real goods. This year some commodities have accelerated faster. It's a new trend, something one needs to watch closely in the near future.

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Re: Buying gold & silver from here

6-7 years ago, when the Dow was right in the same neighborhood as today, I closed my "good growth stock mutal fund" IRA, took the tax hit, and bought these for under4k a bag......which seemed like a ridiculous price to pay for 4,000 quarters.

 

Today, they are 19,300 per bag, and the Dow is right in the same point range as then.

As the Mogambo Guru says "Wheeeee....this investing stuff is easy".....

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Re: Buying gold & silver from here

Great post here.

I"ve been waiting for a pullback and look to be now buy silver in addition to increasing my gold position. Which silver coin, etc. should I consider?

thanks!

 

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Re: Buying gold & silver from here

Any silver coin  you can get your hands on......

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Re: Buying gold & silver from here

I prefer junk silver (US dimes, quarters, and halves dated 1964 and older).  They have the lowest premium and will be the most recognized after any crash.  There are many 1 ounce rounds that I personally do not trust.  The down side of junk silver is that if we have a huge run up in silver prices, you won't get full melt value (at least that is what happened in 1980).  I was told this was because dealers sold coins to individuals that melted / purified them, and the time lag between melt and sell represented a large risk during this bubble.

Nate

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Re: Buying gold & silver from here
bcc87 wrote:

Great post here.

I"ve been waiting for a pullback and look to be now buy silver in addition to increasing my gold position. Which silver coin, etc. should I consider?

thanks!

bcc87,

That depends on what you are purchasing for.  Read and do a lot of research.  Understand why you are buying.  Having said that, here is my advice:

  1. Don't buy Silver Eagles!  They are way overpriced and if TSHTF, no-one is going to care if your Silver is Pretty Eagles.
  2. Buy "junk" (pre 1965) coins for emergency.  Purchase Silver Rounds or Bars for investment. 
  3. I purchase 70% Silver, 30% Gold.  Once the Gold/Silver ratio gets around 45, then I may reevaluate my split.  Mostly I purchase Silver because it is more in my price range.
  4. ALWAYS buy what you can get your grubby fingers onto.  In other words, no ETF's!  If it jingles, it's money. Money mouth

Richard

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Re: Buying gold & silver from here
rmurfster wrote:
  1. Don't buy Silver Eagles!  They are way overpriced and if TSHTF, no-one is going to care if your Silver is Pretty Eagles.
  2. Buy "junk" (pre 1965) coins for emergency.  Purchase Silver Rounds or Bars for investment. 
  3. I purchase 70% Silver, 30% Gold.  Once the Gold/Silver ratio gets around 45, then I may reevaluate my split.  Mostly I purchase Silver because it is more in my price range.
  4. ALWAYS buy what you can get your grubby fingers onto.  In other words, no ETF's!  If it jingles, it's money. Money mouth

I agree with the use of junk silver for potential barter situations in an emergency and also to get silver at the lowest spot price.  It has been available below spot price in the past.  Other the other hand, historical evidence shows that other items are likely to be even more valuable for barter (such as food, alcoholic beverages, cigarettes, scarce personal items, etc.).

I don't particularly like rounds or bars because of the potential difficulty with certifying their authenticity unless dealing with a commercial buyer who is so equipped.  That specificity, however, narrows your potential market and impedes liquidity.

I agree that eagles have an overly high premium.  However, they also have very high liquidity and my personal experience is that they move much more quickly than rounds or bars in most situations.  Ditto for maple leaves in areas near or across the border.  Everyone assumes a SHTF scenario but as I've stated before, I anticipate the higher probability of a long term crumble rather than a short term crash.  In a partial but not necessarily full-blown crisis situation (the more probable scenario according to my reasoning), I think you'd be surprised how well eagles will move.

I'd hedge and have both bullion and junk coins and pass on the rounds and bars. 

I also agree with physical rather than paper but that position has already been very well established on this forum. 

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Re: Buying gold & silver from here

I have some pm and am thinking about buying more.  I have little experience so I have a key question:

If the government confiscated all the privately held gold in the 1930's, what is to stop that from happening again?

 

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Please click the 'Ignore User' button now.

Adam,

I'll throw my hat into this ring, and I'm sure everyone will be overjoyed to read my contribution.Sealed

If you already have PM's, you should think about raising (more) physical cash. With the marketing of QE2 currently raging through the blogosphere, market sentiment couldn't be more perfect. The safest asset is always the most hated. While gold certainly qualified as the 'most hated' asset nearly a decade ago, I think it's safe to conclude that the USD is now the champ in this regard. And given the unprecedented debt-load of our society, the demand for cash can only rise in the foreseeable future. 

Ok, I'll shut up now....Jeff

(Disclosure: I have liquidated all my personal PM holdings in the last few months)

 

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goes211
Status: Diamond Member (Offline)
Joined: Aug 18 2008
Posts: 1114
Re: Please click the 'Ignore User' button now.
JAG wrote:

Adam,

I'll throw my hat into this ring, and I'm sure everyone will be overjoyed to read my contribution.Sealed

If you already have PM's, you should think about raising (more) physical cash. With the marketing of QE2 currently raging through the blogosphere, market sentiment couldn't be more perfect. The safest asset is always the most hated. While gold certainly qualified as the 'most hated' asset nearly a decade ago, I think it's safe to conclude that the USD is now the champ in this regard. And given the unprecedented debt-load of our society, the demand for cash can only rise in the foreseeable future. 

Ok, I'll shut up now....Jeff

(Disclosure: I have liquidated all my personal PM holdings in the last few months)

Jeff,

Clearly the statement "the safest asset is always the most hated" is not always true.  However, even if that statement was true, certainly "the most hated asset is NOT always the safest".  Sometimes there is a legitimate reason to hate assets that is far from safe like Enron in 2001 and Lehman Brothers in 2008.

I hope what you really mean is that the potentially most undervalued asset is always the most hated.  I agree with that.  The odds are that the dollar is not yet dead and probably has a few more surprises between now and its day of reckoning.  However that is not a certainty and only time will tell.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
Re: Buying gold & silver from here
JAG wrote:

(Disclosure: I have liquidated all my personal PM holdings in the last few months)

Jeff,

I respect the courage you have to buck the trend.  But why take an all-or-none approach to the situation.  Why not keep 5-10% of your liquid assets in PMs as "currency insurance"?

FWIW, although I've been very bullish about PMs for close to a decade, I also agree with what you are saying about raising cash.  One has to stay flexible about their options and nimble in their positions.

I agree with what goes 211 says that the safest asset is not always the most hated.  "Undervalued" and "ignored" is a better way, in my opinion, of phrasing what you're trying to telling us than "hated".  Whenever I hear that term, I experience the Steve Sjuggerud shiver (someone, who in my opinion, seemed to think he was right far more often than he actually was).    

 

Montana Native's picture
Montana Native
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Posts: 162
Re: Please click the 'Ignore User' button now.

 Jeff,

I think your "faith" in cash will serve you poorly in the long run. Contrariian analysis of the current financial situation is noble, but as already mentioned the all in approach seems reckless. You are betting that Bernanke and the Government will have an epiphany and become responsible one day. Billioniares and millioniares seem to be realizing that getting out of the dollar and into "real" things is the place to be. You have a track record of not liking PM's and being a deflationist.......the data and history are working against you in ways you either dont understand or choose to ignore. Sometimes running with the herd is safer than being a lone wolf out there in the real world.

 

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ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
Re: Buying gold & silver from here
akamai mom wrote:

I have some pm and am thinking about buying more.  I have little experience so I have a key question:

If the government confiscated all the privately held gold in the 1930's, what is to stop that from happening again?

 

akamai mom,

In a word, nothing.  What is interesting though is that less than 20% of individuals actually turned in their gold in the 1930s.  And there were no house-to-house searches, no significant search-and-seizures of safe deposit boxes (although I would strongly recommend against considering that route), and only one significantly prosecution of an individual who was a nail sticking up just asking (by his actions) to be hammered down.  And even that prosecution ultimately failed. 

Obviously, putting money into silver affords a greater level of protection from confiscation than gold and putting money into palladium and platinum gives additional protection yet so some diversification is prudent.

In all likelihood, if there is confiscation (and there seems to be no indication of that action occurring in the near future), the lowest hanging fruit will be plucked first (i.e. paper gold such as in the ETFs).  Comex gold would probably be next in line.  Individually held gold coins, especially those with some numismatic value, would likely be the most difficult for the authorities to "harvest".

And even if confiscation occurs, failure to provide any remuneration is highly unlikely.  So the likelihood of gold holders getting nothing for their gold is extremely unlikely.  Conversely, as we well know, stocks, bonds, and currencies all can and have gone to essentially nothing in the past and can do so again.

As we also know, no material or earthly investment is without risk so, to some extent, we're just taking our chances.

BTW, akamai mom, I loved your site and video.  Your goodness as a human being shines through.  Thanks for the inspiration. 

    

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