quote:

Originally posted by 220-9er:
I wouldn't use the term "invest" in the equation.
This sounds more like storing a commodity, like toilet paper, clean water or ammunition, for a rainy day in case the world goes to hell.
Precious metals is just a financial version of those items of necessity, a substitute for paper money. That eliminates all but the metals themselves.

Kinda, sorta, not really. Gold/silver isn't just for "if the world goes to hell". I mentioned that scenario in my initial post purely as a tongue-in-cheek Mad Max reference. That doesn't factor into why I own physical gold and silver. (But I recognize that there are certainly people out there stacking gold and silver for The End Of The World, or because they're convinced that the Illuminati are on the verge of introducing a bimetal gold/silver-based currency for the One World Government, or whatever. There are also folks with bunkers slap full of dozens of 5 gallon buckets of pennies, because they contain slightly more than 1 cent worth of metal, and they think that when society eventually collapses this penny hoard will allow them to become the Supreme Warlord of the Greater Topeka Wasteland, sitting on a throne made of melted pennies. So to each their own.)

I like to think of it more like a savings account that generates at least enough "interest" to counteract inflation in the long run (as opposed to a bank savings account offering something like 0.1% interest while inflation is generally ~2%). Plus you hold it under your control instead of it being held at the bank. Better than simply shoving all your spare cash into your mattress and watching it devalue from inflation, though you certainly also want to have a cash emergency fund available too.

And y'know what, if it happens to go on a big run and jump greatly in value, so much the better.


But yeah, it's not really a standard "investment" in the usual financial planning sense, and it's not a substitute for traditional investments when it comes to stuff like retirement planning or seriously growing your wealth. It's not going to get you the steady 6%-10% or more gains and compounding that you'd expect from standard stock market investment strategies. However, it also doesn't carry the same risks as a standard stock market investment. Low risk/low reward.

Buying gold/silver is better viewed as purchasing an appreciating asset. A little like buying real estate, but a lot cheaper, more accessible, and you can accumulate it a little at a time.


I wouldn't necessarily equate it to canned food or toilet paper, because those don't really appreciate in value, nor can they be easily turned into cash if needed for a big planned expense or a financial emergency. But it's a bit like owning collectible guns that grow in value over the years, and that due to their collectible value you could sell for more than you paid if needed. And in the meantime, you can gain some enjoyment from simply owning them and admiring how pretty they area.

(I happen to hold gold/silver and collectible milsurp guns. "Gun Safe Diversification" )


And as I mentioned earlier, "paper" gold/silver on the stock market has its place, if you're wanting to treat it as a day trader views any other speculative investment, to buy low and sell high for shorter term profits as the value fluctuates. Or if you want to allocate a percentage of your retirement account into precious metals or metals-related stuff on the stock market, as a safe hedge to help lessen the blow of a dip or crash in your other more traditional stock investments.


But again, I'm not a financial advisor, so talk to your advisor before investing in gold/silver, either paper or physical.

This message has been edited. Last edited by: RogueJSK,

I just want it to be easy for whoever has to bury me and deal with my stuff.

Putting a handful of gold coins in your pocket and saying "OK, that's it let's go." would have been great instead of what I had to do with my folks' stuff.

My point of view on this stuff is tarnished because I'm old enough to remember the Hunt brothers.

quote:

Originally posted by 220-9er:
My point of view on this stuff is tarnished because I'm old enough to remember the Hunt brothers.

Yep. Like any asset or investment, there are ups and down in value.

But even with the crazy 1980 spike and crash in silver/gold thanks to the Hunt's machinations, the value has still matched or outpaced inflation, over the long-term view. (Especially gold, by a much bigger margin... Silver has been flatter when adjusting for inflation, and tends to be a bit more volatile than gold too.)

And stuff like the Hunt debacle is why you don't just go all-in at one time when buying precious metals to hold for the long term. You don't say "Y'know what, I want to add some gold/silver" and then go drop $20k at once on physical gold/silver right then, and then say "Good, I'm now set for gold/silver". Rather, you accumulate in smaller quantities over a longer period of time, so you can dollar-cost average. This helps smooth out those volatile short term spikes and dips.

If someone went all-in on silver in 1980 at its peak, they'd have a negative return on their investment today. But if they had bought some silver periodically in smaller amounts across, say, 1978-1982, they'd be in better shape. And even more so if they had spread it out over an even wider period.

And even if they had only bought silver across that 5 year period around the massive Hunt spike, that silver's value would have at least kept up with inflation, if not done a little better. More ideal than simply sitting on a stack of cash from 1978 until now, or having it sit in a savings account earning a fraction of a percent in interest. (Though nowhere near as good as many stock investments, which is why buying precious metals isn't a replacement for "real" investing when it comes to growing your wealth, but instead is a supplement with some different pros/cons.)

This message has been edited. Last edited by: RogueJSK,

thank you all for the inciteful and well thought out ideas on this.

So does anyone have a recommendation for an internet vendor of small amounts of gold and silver bullion?

APMEX
JM Bullion
SD Bullion

That are the big three.

But if you have a local coin shop nearby, you might check there first. Local shops will sometimes (not always) sell gold/silver bullion at a lower premium (closer to spot) than the online vendors.

quote:

Originally posted by 220-9er:
My point of view on this stuff is tarnished because I'm old enough to remember the Hunt brothers.

Yup, lost their asses trying to corner the market on silver.

I have some physical gold that I'm averaged in at $300 a share. I likely have more of it than 90% of folks out there but wish I'd bought more. Realistically, real estate performed better during that time period.

Anyway, recently I switched some of my IRA into a gold stock mutual fund. I'm pretty overweighed in gold, but I don't trust the Cyber currencys and the market makes me suspicious. Ditto the recommendation on SD Bullion.

quote:

Originally posted by jimb888:
I have some physical gold that I'm averaged in at $300 a share.

Good for you!

quote:

Realistically, real estate performed better during that time period.

Yep. Gold isn't a replacement for "real" investments. But it can potentially be a good supplement, and physical gold/silver is certainly easier to get into and out of than physical real estate.

quote:

Anyway, recently I switched some of my IRA into a gold stock mutual fund. I'm pretty overweighed in gold, but I don't trust the Cyber currencys and the market makes me suspicious.

Not a bad idea. Cybercurrencies seem to be forming quite the bubble. And the market itself seems ripe for a correction, with some noted investors calling for a crash in the near future.

The flip side is that gold has been slowing a bit, as some people turn to cybercurrencies as their inflation hedge. A bit too risky for me, but an interesting development. I'll be interested to see how it all shakes out. I think digital blockchain currencies are probably going to become some sort of standardized in the future. I'm just not convinced that Bitcoin itself will be it, especially in its current very young and massively overvalued state.

Personally, I don't hold any "paper" gold/silver. I have a bit under 10% of my net worth (not counting home equity or nontraditional assets like my gun collection) in physical gold and silver that I've acquired over the years, split roughly 60/40 gold/silver. But the rest is in traditional investments and cash reserves.

I'm not a "stacker", as the cool kids are calling it these days, dumping all my extra funds into bullion. I'm more of a "hedger who enjoys having a small amount of pretty shiny things as part of his diversification".

Currently, I'm mostly sitting out acquiring more physical gold/silver. The current physical supply/demand is all screwed up lately, and I'm not willing to pay 20-50% premiums over spot from the dealers, considering 1/10th of that was the norm for premiums not all that long ago. I'll let it run its course as the supply eventually normalizes, while keeping an eye out for any secondary market opportunities to get something close to spot in the meantime.

In that regard (jacked up premiums), I certainly understand the attraction to "paper" gold/silver these days.