PMs VS. Dollars - Advice please.

Downtown1974

I'd like some opinions on what you guys think I should do here.

First off, I have a moderate sized stash of silver all in the form of ASEs. I add to it on the dips when I can.
In my credit union, I have an emergency fund that I have never had to withdraw from since I opened it in 2005. There is enough cash in there to get me and my family through for a year. The only time I anticipate having to use it, is if I was laid off. My wife and I do not suspect to be laid off, but you never know.

So...here is my question. Would you be taking cash out of that account and buying PMs with it? Should I just keep buying like I have been with my play money? Should I wait and see what happens with Greece and Spain before dipping into an emergency fund? Will the writing be on the wall when it is time to empty that account?

BTW...Im not concerned with it making money for me (.40%), but rather...the credit union is just a safe spot for it.

erickso1

Well, I think you answered your question.

I have an emergency fund for family.

The text books suggest 5 to 6 months emergency cash. In normal times. (some suggest 5 to 6% of your total portfolio)

Since you aren't concerned with the return, you'll have to weigh which emergency carries more weight/probability. You and/or your wife losing your jobs (or some other short time frame, high importance emergency), or global financial meltdown leading to a metal based currency.

If you are looking at the move to PM's to generate a better return on your cash, then you have to figure out which is more important. An asset that can appreciate/depreciate in value and whose liquidity can change in an emergency (think walking into a coin shop/gold silver buyer, etc), but whose longer term preservation of capital is greater, or cash from an ATM.

Just my thoughts, but I'd be interested to hear others.

derryb

tough call, I personally keep my savings in metal and cash in when I need to make a withdrawal.

I would consider using some of it to get out from under any debt (other than your home) that is costing you interest each month. I would also look into IRA contributions in a self managed on-line broker account. Plenty of ways to trade metals with it (ETFs). My preference is the ROTH over the regular IRA.

Keeping cash in these times of deflation is not a bad move.

CU is a good place to keep cash.

You might consider alternative tax saving moves such as contributing to an education account for the kids. Some states even offer reduced cost college pre-payment plans.

RedTiger

You know the answer. Other emergencies might be big unexpected expenditures that might not include a layoff, but might still be substantial in size. Some things in this category might include: uncovered dental emergency, major car repair, major home repair.

Let's play what if:
a) Best case: You take the money out, buy silver with it. Silver goes way up, back to the old highs of $50. Then what? You have gotten a whiff of the excitement. Can you time the markets successfully? What makes you believe that? One or two lucky times? When do you restock the emergency fund? Part II is what if you keep playing and then go on to lose the money. Many market timers eventually run into a horrible cold streak and lose. More than a few, lose it all, because they become more desperate as losses mount and go for higher and higher leverage. The worst are like junkies, they need the adrenaline fix and each time the fix needs to be bigger, and no matter how far they get up, they will give it all back.

b) Worst case: You take the money out and buy silver. Silver falls. You do get laid off and U.S. unemployment rate has now doubled again, so job prospects look terrible. What then? What do you tell the wife? That you gambled your safety net, based on the opinions of a bunch of strangers on the Internet?

c) You take the money out, and silver basically flat lines. What then? What is the plan? Sell the silver in a year and pay the dealer their vig and be happy with the experience? Or sit, and sit and sit until it moves?

Tell us what is making you have the itch right now after seven years? A one day spike in price? The news out of Europe? If those are your reasons, it is beyond silly, and I suggest that you print this thread out and show it to your wife so she can talk some sense into you. Silver is one of the more volatile places a person can put their money. It isn't like you are in Greece, or one of the countries under financial hurricane watch. The storm may come to the U.S., indeed, it almost surely will, but you already have a decent stash of silver. Why would a person want to bet their safety net now? Today? What has changed? Another suggestion is to take a week long break from the computer, and the news.

You are likely to do what you want no matter what I write or anyone else writes.

Downtown1974

<< <i> The storm may come to the U.S., indeed, it almost surely will, >>



That is the whole premise of my question! You just admitted it here.

Edited to add. This is not "need a new roof" or "need a new transmission" money. This is a personal SHTF scenario account.

Downtown1974

derryb, very informative post as always. I do have a 529 college account set up for my youngest daughter that I set up while my wife was pregnant with her. My oldest is already out of college (paid for).

jmski52

The ready liquidity of cash has a value, more so in a deflationary environment. I vote cash or keeping the account (with cash accessibility) as is.

Let me repeat, the liquidity of cash has a value beyond face value.

cohodk

the liquidity of cash has a value beyond face value

perkdog

Bob, in my own personal opinion I would NOT touch the savings. The way I do it is once I put the money in the savings it doesnt get touched, my "Play Money" gets spent on PM's, gambling, fun ect.. ect.. I sincerely dont care if the silver I bought with my play money goes anywhere and if it goes down to $1 I will look at it as money spent, if I took it out of the savings then it would hurt alot more.

I might be in the minority here but the bottom line I feel more comfortable with Cold Hard Cash in an account over a stash of PM's, remember in a nasty situation you still got to sell the PM's AND get paid, it can be a pain in the azz.

ArizonaJack

We are in the same damn boat.....it's called uncertantity........I am 50-50...cash/metal in my stash

Justacommeman

cash can be very opportunistic. MJ

golfer72

<< <i>Bob, in my own personal opinion I would NOT touch the savings. The way I do it is once I put the money in the savings it doesnt get touched, my "Play Money" gets spent on PM's, gambling, fun ect.. ect.. I sincerely dont care if the silver I bought with my play money goes anywhere and if it goes down to $1 I will look at it as money spent, if I took it out of the savings then it would hurt alot more.

I might be in the minority here but the bottom line I feel more comfortable with Cold Hard Cash in an account over a stash of PM's, remember in a nasty situation you still got to sell the PM's AND get paid, it can be a pain in the azz. >>

In a nasty situation you may not be able to get your money out of the bank either.

Stew

derryb


<< <i>I personally keep my savings in metal and cash in when I need to make a withdrawal.
I would consider using some of it to get out from under any debt (other than your home) that is costing you interest each month >>




jmski52


<< <i>Let me repeat, the liquidity of cash has a value beyond face value. >>




ArizonaJack


<< <i>I am 50-50...cash/metal in my stash >>




Justacommeman
cash can be very opportunistic. MJ


golfer72
In a nasty situation you may not be able to get your money out of the bank either


Absolutely Stellar Advise Gentlemen

In these uncertain times, varied and far reaching diversification in assets is very helpful
to the ability to adapt to whatever situation or opportunity comes your way.
And as with precious metals, it is with cash, "If Don't Hold it, You Don't Own It"
Just ask the people who stored their precious metals and had accounts with MF Global.

Adapt and Overcome

piecesofme

Sounds to me that you've been making good calls all along. The college fund thing takes real disipline, nice job on that.
So since you have been making good calls, if I were you, I would continue to go with what YOU feel is the right thing. Never hurts to ask like you have, but I think you've done well for you & your family...just keep doing that.

tneig

If its your emergency fund, then you are doing the right thing. "It has nothing to do with the other money aspects. " Keep it that way.
You are lucky enough and wise enough to be saving and holding that year's safety net. Most don't or can't. Enjoy the security of it.
You are not planning for a zoombie apocolypse or the fall of the dollar or banks crashing, or the voilitility of PMs with 'that money.'
Do Not let it burn a whole in your pocket. Continue to invest otherwise using your incoming money. Do not mess w it right now!
Its the standard safety net, don't speculate with it or mess it up. You've been lucky that you haven't had to dip into it.
Most times in peoples lifes, things come up, and you likely will run into one of these things too. Be wise.


Save and invest MORE now, -beyond and separately in various avenues. You have enough now in the safety net.

Downtown1974

Thanks for taking the time to post your thoughts everyone. I will take the advice of the majority and let my "emergency" fund stay as it is. I will continue to buy silver when I can, but with my play money.

I think I may take redtigers advice on taking a week off from the news too.