Investing vs Protecting Wealth

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FAlley's picture
FAlley
Status: Bronze Member (Offline)
Joined: Nov 2 2010
Posts: 90
Investing vs Protecting Wealth

I've read plenty that silver is a great investment, very undervalued because of market manipulation. However, I've also read that precious metals are more for 'protecting' wealth, rather than growing it in an inflationary environment. I have very little capital (being a poor college student) and have 'aggressively' bought physical silver on the dips (which has now, just weeks later, turned a profit!). However, I have little wealth to protect; I'm more interested in profiting from the world's events than insulating myself from them.

That said, what are your thoughts on protecting wealth versus making investments to grow wealth?

JAG's picture
JAG
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
Investing for Survivalists

Disclaimer: This is not investment advice, it's survival advice

  1. Sell the "sure thing".
  2. Invest in the asset that makes you want to puke.
  3. Go away for a couple years.
  4. When everybody thinks your puke asset is a "sure thing", rinse and repeat.

The only way to grow purchasing power is to buy what nobody wants. The only way to protect purchasing power is to sell what everybody wants. Mr. Market rewards cajones and patience.

 

h2oBoy's picture
h2oBoy
Status: Bronze Member (Offline)
Joined: Jun 18 2009
Posts: 52
Investing vs survival

Tin Man, I own silver coins and bars, yet also own SLW -- Silver Wheaton Corporation. It is a silver handler, not a mining company which have their own risks. In a rising silver market this has way outperformed silver on a percentage basis. If silver goes up 1-2% SLW will generally rise 4-5% or more. (of course the same applies if silver is dropping). Silver has roughly gone up 100% this past year while SLW has gone up 200%. If silver does go up then you can periodically peel of some profits from SLW and purchase more silver, and have the ability to take cash from sales and purchase other goods for your needs.

 

Good luck to us all, David 

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
frothy
Waterboy wrote:

Tin Man, I own silver coins and bars, yet also own SLW -- Silver Wheaton Corporation. It is a silver handler, not a mining company which have their own risks. In a rising silver market this has way outperformed silver on a percentage basis. If silver goes up 1-2% SLW will generally rise 4-5% or more. (of course the same applies if silver is dropping). Silver has roughly gone up 100% this past year while SLW has gone up 200%. If silver does go up then you can periodically peel of some profits from SLW and purchase more silver, and have the ability to take cash from sales and purchase other goods for your needs.

 

Tin Man,

While I've owned SLW in the past, it's quite frothy now and likely has hit a technical top.  I would not consider the present time a good entry point.  Keep in mind that a key to accumulating wealth is minimizing downside risk.   

SteveW's picture
SteveW
Status: Gold Member (Offline)
Joined: Jan 21 2010
Posts: 490
SLW
ao wrote:

While I've owned SLW in the past, it's quite frothy now and likely has hit a technical top.  I would not consider the present time a good entry point.  Keep in mind that a key to accumulating wealth is minimizing downside risk.   

SLW was around $41 at the December peak and I bought more on the way down in January at $38, $34 and mostly at $29. Friday it closed at $40.63 NYSE and $39.86 TSE. Silver has not gained as much in $CAN.

SLW has not recovered its former high in spite of higher silver prices because the SLW:silver ratio is not as high, currently 1.22 compared with 1.375 in December. If (as) silver approaches $40 I expect the ratio to increase to its former high.

I don't know about any technical top but with a P/E ratio around 60 and a forward P/E ratio about 25 I expect this rather expensive stock to fall more in line with typical miners once the pent up silver demand has been taken out of the market by a price explosion. As I think you mentioned earlier the key is timing the exit. I think SLW still has a long way to run.

Phil Williams's picture
Phil Williams
Status: Gold Member (Offline)
Joined: Oct 14 2009
Posts: 345
SLW

I own SLW through my advisor's fund, Stephen Leeb, who has been pretty bullish on Silver for a long time. Having said that, I just got an automatic e-mail that they sold some of my SLW stock on Thursday. It may not mean much, but I guess they want to take some profits. They bought it for me at $12 a share. They are still holding about 70% of it. 

 

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