Precious Metal Investments and Collecting

Mr. Cheese

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Just was looking into purchasing some precious metals like silver or gold. Silver is more volatile but in my budget vs gold.

Wondered if anyone else here has purchased any gold or silver as an investment, collecting purposes, or doomsday prepping?

If so what kinds do you have and what are your thoughts on them?
 

gopherblue

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Just was looking into purchasing some precious metals like silver or gold. Silver is more volatile but in my budget vs gold.

Wondered if anyone else here has purchased any gold or silver as an investment, collecting purposes, or doomsday prepping?

If so what kinds do you have and what are your thoughts on them?

Warning...rant mode on...

Unless you have a well-diversified portfolio already and you're talking about maybe 3-5% of your portfolio (at most), or you're only talking about a little bit of playing around, funsies money, I'd strongly urge you to NOT buy precious metals. Gold/silver are commodities and the price fluctuates all over the place. You might as well buy pork bellies or frozen concentrated orange juice futures. It isn't an investment asset but a speculation asset. Yes, I said speculation asset--since it is a commodity, IMO the price of gold/silver is too heavily influenced by the commercial use commodities market, and to a lesser extent, Koolaid-drinking winger's fear, so to me it's not an investment. FYI, silver is no more in your budget than gold. The only difference is the size of the piece in your hand, but $100 of silver and $100 of gold are both worth the same amount (at least at the moment you purchase them...see above about the volatility of the prices).

But if you really want exposure to precious metals as part of a well-diversified portfolio, I would strongly urge you to look at ETFs. They are the easiest way to gain exposure to gold/silver if you just want to speculate on the future price of the stuff. And because they are market-traded ETFs, they are liquid as hell and easy to sell when you need to raise cash. Also, there is little to no buying/selling cost other than a discount brokerage commission.

Physical gold/silver, on the other hand, serve no real purpose for an investor. Physical gold is pretty much only bought by individuals as a hedge against some cataclysmic event such as a total failure of the money supply, which is such an unlikely event that it doesn't merit consideration. People who buy it want to hold it physically despite the storage hassles involved. Buying physical precious metals usually has an obscenely high "load" because unless you are a reserve bank, you can only buy it from dealers at waaaaay more than the current real price, so you're in the hole right off the bat. I haven't looked recently but if you're buying it in significant quantities (five figures or more) it seems you can expect to pay at least a 5% premium over the actual value...you're basically getting killed on fair value. And when it comes time to sell? You'll pay another 5% premium. So just to break even you have to hope (read: pray) that the price appreciates enough JUST to cover your transaction costs. And in between you'll have all the risk. And all the expense of storing it in a safe deposit box (which if you're a Prepper you wont do because the banks will all be ass-over-teakettle in your doomsday scenario), so you'll have to buy a safe. And if you want to sell the stuff, you'll have to transport/ship it to a dealer. And if your house is burglarized? You're most likely SOL for most of it since your homeowners insurance doesn't cover much of it, if any at all.

Frankly, there is a reason you see so much of the stuff at estate sales--it is wealth that ends up getting locked up in a totally illiquid asset, pretty much useless for anything but looking at. Which is the best idea of this whole rant: if you want to invest or acquire physical gold/silver, get yourself a small digital scale, arm yourself with the spot price of gold/silver, and bid on the stuff at an estate auction. Just never pay more than 65% of the spot rate, and that's including the buyer's premium.

Sorry...I don't mean to slag precious metals. (See what I did there?) But it does get my dander up when I see Fox News and others shilling for precious metal dealers. Their target demographic is getting hosed on information and hosed in the pocketbook.

If you're really worried about the apocalypse, invest in a storm cellar and canned foods.
 

dennis63

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I bought gold at $400 an ounce long ago. Despite it being worth much more, I would not recommend getting in right now. (I haven't bought any in several years.) I honestly wish I sold it at $1,800 a couple of years ago, and wouldn't even have to worry about it. I don't keep it physically at my house.

Gold tends to track with oil, which has been all over the place. Over time, as investments in alternative clean energy technologies increase, oil will continue on a long-term downward trend, especially when people realize we really do have a 400-year supply of oil at current rates of consumption.

So I'm thinking gold has seen it's high point for some time. Silver has some different dynamics, as it's used in industrial production.

In the end, you should decide whether to buy (and how much) based on your whole portfolio. Don't go overboard.
 

Mr. Cheese

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Good advice everyone. I don't really plan on this being a big investment for me personally, I just think it would be cool to have a few bars of silver or gold (As Manamongkids posted... I LOVE GOLD!!!). If I bought a couple thousand worth that would still be less then 1% of my retirement portfolio (which I do have very well diversified already).

Mainly just curiuos if others dabble with that sort of thing and what their experiences are with it.
 

atomiktoaster

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I have some coins, mostly Christmas gifts from a family friend who was a coin collector. A Morgan silver dollar makes a cool card guard. I prefer the history and aesthetics of coins to bars. It's not that different from chips, IMO.
 

Mr. Cheese

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If you're interested in silver, I have my dad's old coin collection which I'm supposed to sell. A fair number of silver halves.

I certainly could take a look. If you get a chance send over some pictures and details and I'll see if anything sparks my interest :)
 
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