Taking Profits?
KUCH
Posts: 1,186
When is the time right to take metal profits? Example: if one has invested in PM's and now that investment has grown to 5X, anything wrong with selling some to recover the initial cost and holding that in cash?
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Many will argue that there is nothing wrong with taking profit. I would argue that it could cost you in further gains. Take profits when a better profit opportunity elsewhere presents itself.
If taking profits is a priority, try to do it at the peaks. I think we are currently in a sideways dip.
If you are asking if metals will go up or down, I would say both.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>If you are asking if metals will go up or down, I would say both. >>
I agree.....
In God We Trust.... all others pay in Gold and Silver!
I take profits when I can...because I am NOT made of money and cannot just sit on what is in reality, dead (or tied up) money, and I need to keep the cash flow going. Guess I'm not a "stacker", just a profit taker
Ultimately, one has to do what is best for their unqiue situation and what they know is (not might) working for them.
you can always buy another something down the road, not necessarily PM's, but something!!
Liberty: Parent of Science & Industry
<< <i>Which is the stronger emotion: Fear or Greed? >>
Fear.
Knowledge is the enemy of fear
Box of 20
Like in 1979 and 2011, for example?
Liberty: Parent of Science & Industry
<< <i>Which is the stronger emotion: Fear or Greed? >>
anticipation
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Faith
In the last year I've sold enough to get a new car, a painting, and several collector-grade coins.
Three years ago I would NEVER have done that.
Now I feel like I've got my bases (basis, huh huh) covered. I've seen very strong gains in PMs. And I believe the economy has turned a corner--for me at least.
The first of those three items (bases covered) is the central issue. If I felt I was under protected, I wouldn't sell--regardless of the "gains".
But I went deep into PMs when I committed. And since then, I've paid down more debt and my other investments have appreciated.
I'm not selling enough to expose myself and feel vulnerable. But I've got a little extra, so I'm enjoying some fruits.
--Severian the Lame
<< <i>Which is the stronger emotion: Fear or Greed? >>
Both are equally destructive.
However, try to sell an offsetting loss position when you take those profits. That way, you will have to liquidate less of your winning asset, you will get rid of the non-performers, and still come up with the required amount of money - with no tax gain and no tax liability. This is a BIG deal. Think of it as cultivating your "investment box of 20".
If you are taking profits with no offsetting losses, it is simply harder and harder to stay ahead of the game. This link was posted in another thread, but it is exactly correct - and it is absolutely crazy not to manage your tax liabilities in a winning gold position.
The hidden inflation tax on gold.
If you don't need the money (and if you don't have a better alternative investment that is really hot to trot), then don't touch it until you do.
Just my opinion.
I knew it would happen.
Deductions or loses against profits would include:
1) Milage and travel expenses to buy PM's.
2) Bank Safety Deposit box charges.
3) Security System Charges
4) All printed newspape/magazine, and related PM/economic dues/subscriptions
5) CPA charges
6) Equipment expenses
7) Office expense
I think I need more deductions..... but it's a start.
I was refering to any other collectible coins or items that can be sold, need to be sold, that you want to sell, and can be sold off for a loss. For me, that included some non-performing clad rolls bought at a premium, some First Day of Issue Prez Dollars, an assortment of commemoratives, mint set, proof sets, some non-performing rolls of cents, sac dollars bought from the Mint, bags of clad halves bought from the Mint, all of my odds & ends, some medals, some extra DCarr stuff, anything that no longer holds speculative value.
The only criterion is that you keep pretty good documentation of your cost basis.
I knew it would happen.
So, if I can sell $4,000 worth of junk for $2,500 (and lose about $1,500 in the process), that's $1,500 of loss against the $5,000 in gains. At least it's something, and it's still real money. I get the $2,500 out of the junk sale, plus a $1,500 offset against my pm gain of $5,000.
So, I have $10,000 from the precious metals sale plus $2,500 from the junk. And on the tax side, I only have a gain of $3,500 instead of a gain of $5,000 to pay taxes on. At 28%, that's a tax savings of $420.
If I hadn't sold the junk, my gain would be $5,000 and my tax at 28% would be $1,400, so my proceeds would be $8,600.
If I did sell the junk along with the pms, my gain is $3,500 and my tax at 28% would be $980, so my proceeds would be $11,520.
Voila - I got rid of some junk, sold less pm than I had to, and took home more proceeds with less tax.
I knew it would happen.
In other words, why buy "junk" in the first place?
Liberty: Parent of Science & Industry
<< <i>If I have various precious metal holdings, I will only sell them piecemeal and only when I need some cash. So, if I sell $10,000 worth of gold and have a $5,000 profit in that particular sale I will need to sell enough other "stuff" to result in an offsetting loss of $5,000. That may be hard to do, but something is better than nothing. (rest clipped....) >>
Sometimes, you don't know it's junk until you get tired of it.
Don't try to tell me that you've never made a poor purchase.
I knew it would happen.
Typical American attitude. Spend spend spend.
Knowledge is the enemy of fear
<< <i>If you have something to spend it on, there's no reason not to take profits.
Typical American attitude. Spend spend spend.
Big difference in spending money in hand and spending someone else's via credit. Why save if not for future purchases?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>If you have something to spend it on, there's no reason not to take profits.
Typical American attitude. Spend spend spend.
Big difference in spending money in hand and spending someone else's via credit. Why save if not for future purchases? >>
My reference is to the thought of only selling gold to purchase something else. Whats wrong with just selling and sitting on the liquidity?
Knowledge is the enemy of fear
I knew it would happen.
<< <i>I said, "if" you have something to spend it on. Not just because you can.
Not my point. Why base selling decision on whether or not you want to buy something else. Why not sell just for the sake of selling and increase liquidity? Saving dollars in the form of gold is not the same as saving dollars in the form of dollars.
Knowledge is the enemy of fear
<< <i> why buy "junk" in the first place?
Sometimes, you don't know it's junk until you get tired of it.
Don't try to tell me that you've never made a poor purchase.
With stocks, sure, offsetting losses have reduced the tax liability of big winners.
But believe it or not, defined that way, I've never made a poor purchase of coins, as I very rarely sell anything, mostly build a collection.
And those times I did sell something for whatever reason, I have never sold a coin or piece of precious metal for less than I paid in terms of number of US dollars.
(we'll ignore purchasing power decay and the opportunity cost of tying up the money, for the sake of the absolute dollar argument; with those factored in, the answer is different
Liberty: Parent of Science & Industry
<< <i>Saving dollars in the form of gold is not the same as saving dollars in the form of dollars. >>
gotta agree with you on that one.
<< <i>Why base selling decision on whether or not you want to buy something else. Why not sell just for the sake of selling and increase liquidity? >>
Why increase liquidity by selling gold for dollars if you're just gonna hold dollars that are worth less each year and the gold is worth more each year? Why not keep your savings in a better performing asset and sell for dollars only when you NEED dollars?
On a side note, has anyone noticed that other countries are positioning themselves to no longer need the US dollar to conduct international trade? Oughta tell you something about the dollar's future.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
That depends upon how much liquid capital you want sitting around. Liquidity has a value, and it also has a cost - as does gold. I think you do have to allow for some working capital, and there's nothing wrong with letting it sit while you wait, and watch.
Saving dollars in the form of gold is not the same as saving dollars in the form of dollars.
I'm not at the point of saving dollars. They aren't really real anymore, are they?
we'll ignore purchasing power decay and the opportunity cost of tying up the money, for the sake of the absolute dollar argument
See above. I think it's good to have some dollars accumulating while you let the market do what it does. But for me, letting the dollars accumulate doesn't exactly equate to saving. When I'm letting dollars accumulate, I'm planning for any contingency spending and then some.
When I hear some of those accumulated dollars screaming, "Help me! Save Me! Rescue Me" - that's when I get ready to make another precious metals buy. I just can't stand to see too many dollars suffer for too long.
I knew it would happen.
Please show me the guarantee.
Right now lots of people are sitting on "gold" dollars that have lost 15% of their value over the last 6 months. And lots of suckers bought Proof AGEs in their IRA at $2k more than 2 years ago. These people are losing "money" in many ways.
Show me a guarantee that gold will appreciate at 8% per year forever and I'll give up my desire for liquidity. Until then, gold is nothing more than another alternative asset class or trading vehicle.
Knowledge is the enemy of fear