As a stacker/investor.
mrpaseo
Posts: 4,753 ✭✭✭
What are my steps? This is what I have come up with.
NOTE: Dollar cost average is your friend.
1. Decide what you want to stack and find the current going rate.
2. Compare to get the best deal.
3. Purchase what you can with the allotted monies.
4. Spend the same amount per period.
5. Track your avarage cost and try to make additional purchases below that percentage to lower your average.
Questions:
1. As a stacker/investor (Long term), type shouldn't really matter so long as there is a selling market for that item right? Or should I stick to a certain type even if it is not the cheapest available.
2. Should I keep track of the types or just the total content of the PM value? (i.e. by the oz). So, if I decide on ASE and Maple's, should I track them together or separate (What do you do?)
Thanks,
Ray
NOTE: Dollar cost average is your friend.
1. Decide what you want to stack and find the current going rate.
2. Compare to get the best deal.
3. Purchase what you can with the allotted monies.
4. Spend the same amount per period.
5. Track your avarage cost and try to make additional purchases below that percentage to lower your average.
Questions:
1. As a stacker/investor (Long term), type shouldn't really matter so long as there is a selling market for that item right? Or should I stick to a certain type even if it is not the cheapest available.
2. Should I keep track of the types or just the total content of the PM value? (i.e. by the oz). So, if I decide on ASE and Maple's, should I track them together or separate (What do you do?)
Thanks,
Ray
0
Comments
Only in an upward trending market.
Knowledge is the enemy of fear
<< <i>Dollar cost average is your friend
Only in an upward trending market. >>
Huh? Does that mean I should only buy when Silver spot is going up?
Buy silver dips (build cash in between).
Keep an eye on the market but don't sweat the subsequent dips.
Sell only when you have a better use for the money or when it looks like bull market has ended, which ever comes first.
Don't make it more complicated or time consuming than necessary. Treat like a savings account - add when you can, subtract when you need to and don't stress yourself in between. Silver is volatile, learn to live with it without letting the ups and downs make you up and down.
"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
To a large extent, that is how I look at my stack ... although I also keep a reserve of Uncle Sam FRN's at the ready (in the bank, mm's and a few out). That is my primary liquidable savings. PM's are my secondary savings.
Keeping it simple is almost always best. And as he also suggests, I don't sweat the moves much. I watch and adjust my expectations of price. If I see a major fundimental shift, I try to reconsider my position and how I am going to act going forward.
When I have enough extra FRN's built up, and I feel that silver or gold (or both) are at worthwhile price, for me, then I buy some more. Sometimes I buy something else. Sometimes I even buy stocks.
When the time comes I decide I want or need that cash back, I trim the stacks ... cash, stocks, pm's ... whichever ones make the most sense.
I disagree with cohodk about dollar cost averaging ... it is helpful both ways, but if you are buying into a longer-term bear market, which, based on some of his posts, is what I think he see's for PM's ... well, then, although it's better than dropping it all on the first day, it still doesn't help that much ... in that case, it is indeed better to wait it out. He could be right, in which case stacking FRN's until the dust setlles would be a better option over that term.
Whether I am upping or lowering my DCA really doesn't matter too much anymore, at least to me ... it is more a question of am I paying a fair price today, and am I comfortable with the price, today. Over time, unless it is a major purchase, it hardly makes any difference anyway. Ultimately, I look at it more of how many ounces I own.
I am somewhat diversified with my stack, however, I think unless you are "collecting" bullion types, which I see as different than stacking, you can go to far. My oldest son stacks silver, and I told him what I believe ... stick with what's known and what moves, without too high a premium ... ASE's, Maples, known 1, 5 and 10oz bars, 90%. While ASE's and Maples carry a higher premium than I'd like, I buy them because when I have sold them, I have recovered a fair amount of the premium. Actually, the buy/sell spread losses (on a percentage basis) seem to be similar across all of those I mentioned if you are buying right and selling reasonably. I think focusing on a few different types is better than scattering all over, but that's my take.
Finally, I track my purchases on a spreadsheet. Date, amount, type, total cost, cost per ounce, and premium above spot on the prurchase date are all represented. I value everything at spot, even though some might bring more and some might have to be sold at a few points back. When it comes time to sell any or all, I am really going to want those records ... and I'll be selling the least profitable first. Think taxation. I do track them in seperate groups though ... ASE's, Maples, Philharmonics and Libertad's are in one group .... bars in the next ... and 90% in the third. Gold is similar as I have "numismatic" gold with minimal purchase premiums (less than 25%), some modern commem's, and AGE's.
Hope this all helps.
It's a hundred plus outside and I went out to the range earlier and shot some sub' quarter-dollar sized groups at 100 with the -06, and worked on sighting in different ranges with the marlin 22 wmr ... so sitting here at the computer on a Saturday afternoon doesn't feel so bad now. At least it's cool.
Keep asking questions until it all feels right for you Ray.
“We are only their care-takers,” he posed, “if we take good care of them, then centuries from now they may still be here … ”
Todd - BHNC #242
Stack your shiny when you can, with what you can that you don't want to think about for a while.
Forget about it.
Have a vague DCA idea.
Forget about it.
If you want to tally ho do that once in a while.
Forget about it.
Rinse. Repeat. Ponder every 3 years.
So says Stevie Ray Vaughn and some Bacardi 8....
You don't need to be anal about dollar cost averaging. My reasons for owning precious metals are simply - to keep my assets as far away from the banking system as possible, and to keep my assets under my personal control as much as possible.
If I do that much, I've accomplished my goal.
If you save up to buy larger chunks at one time, you accomplish simplicity in your accounting system by having a single cost for that purchase. Buying more often requires lots more recordkeeping (if you plan to account for your tax gains from any price appreciation).
I prefer the "savings account" mentality. You may dodge the bullet if hyperinflation occurs, but if that doesn't happen you still have two eventualities that can occur:
1) You make a profit, and pay taxes on the gains.
2) You take a loss, and apply the loss against your other income to net out a lower (or zero) tax liability for the year.
In this brave new world, TAXES will be the driving variable in sorting out individuals' level of affluence.
I like to buy in chunks for another reason. If I need cash for something, I can withdraw the amount I need and adjust for tax gains & losses all at the same time. If one particular chunk is showing a "gain" and a different chunk is showing a "loss", I can sell enough of each to have the tax gains & losses balance out to zero.
With fewer (larger) transactions, the accounting is easier. As your portfolio grows, your transaction size will probably grow a bit as time goes on.
I knew it would happen.
<< <i>My reasons for owning precious metals are simply - to keep my assets as far away from the banking system as possible, and to keep my assets under my personal control as much as possible. >>
:
Assets? What assets? I have no assets!
<< <i>well said, jmski52, but in regards to
<< <i>My reasons for owning precious metals are simply - to keep my assets as far away from the banking system as possible, and to keep my assets under my personal control as much as possible. >>
:
Assets? What assets? I have no assets!
But if I had any, I would do like derryb said:
<< <i>Treat like a savings account - add when you can, subtract when you need to and don't stress yourself in between. >>
If the investment you are buying continually goes down or nowhere (as in the opposite of "only in an uptrending market"), then as an investor you will get killed.
Ask those who dollar cost averaged gold from 1985 to 2000. Death.
Knowledge is the enemy of fear
Since my purchases are for the long term as opposed to flips, I am not necessarily concerned by the day-to-day / week-to-week fluctuations in spot.
Fact #2. Banks are dis-investing right now in order to meet new capital requirements and need a lot of capital to meet those new standards.
There are many assets coming to market that the big players are going after. Those big players see the potential in these new acquisitions and make a lot of front money and management fees off the investments and are not as interested in PM's that yield zip as they were years ago before the markets were flooded with these new buying opportunities. We haven't seen anything yet in this regard. People who need to dump usually are very quiet about it. You may be amazed by the many asset sales you will read about in the WSJ in the next few years. A lot of greedy people and institutions will be FORCED into reality.
Investment funds like to sell the sizzle and they have already done this once with PM's. Hard to sell the sizzle twice in such a short time.
There are real property sellers caught in financing squeezes right now who have to sell. There are also poorly performing, poorly managed businesses w/ assets that are ripe for the picking.
We are in a secular bear market for PM's. PM's might tend to drift toward replacement prices...AKA.. What does it take to get it out of the ground or recycle it? To me, right now, that is a better indicator of what the true value of PM's are right now.
My current 2cents on this current market. Could change tomorrow. I think we are in for a several year realignment of assets in a deflationary market.
Don't put more than 15-20% of your liquid assets into PM's right now unless you have no clue as to what else to buy.
Ask those who dollar cost averaged gold from 1998 to 2012. Cowabunga.
Assets? What assets? I have no assets!
Boating accident. Again.
Banks are dis-investing right now in order to meet new capital requirements and need a lot of capital to meet those new standards.
Ah, banks. You gotta love them, especially when they play dirty and then get bailed out as a reward. To be sure, there will have to be a financial reset since the existing system isn't sustainable. New capital standards for banks isn't the same as the old FASB Accounting Standards. The system is still way-broken. Until it gets fixed correctly, the game is over. Nothing has changed.
I knew it would happen.
Two indians passing each other in a hallway. What do they say to each other?
HOW.
Fixing it(the banking system) means survival of the fittest. Bad banks get absorbed by the banks that did not over commit their resources into the latest craze. I have to believe that BAC was promised something very quietly if they absorbed Merrill. Lehman had far superior assets at the time and BAC passed. I almost believe that since Merrill had a more public persona than Lehman...the idea of Merrill BK'ing was never considered. Lehman BK...who would notice? Who did notice? Certainly not joe6pk. Lehman would have been a better candidate to rescue but it wasn't in the cards politically.
I do not believe that the banking system can be fixed with one downstock* of the pen. Just a little at a time. In increments. Remember, the banksters control the purse strings to who makes the laws. I believe it is called...a puppet on a string.
Let's just hope that the resetting of banking laws do not make the citizens and the country so weak as to not have the ability to continue to lead the world.
China: Allies, Myanmar, N. Korea
Russia: Allies, Chavez, Castro, Syria, Iran
Those two countries aren't in a position to lead.
edit: *downstroke
Step 1 - break this link.
Step 2 - repeal Dodd Frank's 2700 pages of bs, and re-implement Glass Stegall. Maintain the Chinese wall between investment houses and depository lending.
Step 3 - stop browbeating & intimidating FASB and let the correct (previous) standards for asset valuation stand.
Step 4 - let failure take its course, let bad banks fail & their execs find jobs at McDonalds - and stop rewarding crooks with bailouts.
Step 5 - restrict, and then eliminate fractional reserve banking.
Step 6 - ENFORCE the laws that are already on the books.
****Fixed****
I knew it would happen.
<< <i>Ask those who dollar cost averaged gold from 1985 to 2000. Death.
Ask those who dollar cost averaged gold from 1998 to 2012. Cowabunga.
. >>
Exactly. In an upward trending market. Per your numbers its already been a 14 yr bull market. Long in the tooth may be an understatement. Time will tell.
Knowledge is the enemy of fear
More countries are buying gold as sovereign default risks continue to increase. Nothing has been fixed. We shall see.
I knew it would happen.
Step 8 - require lending institutions to loan their own assets
Step 9 - term limits for legislative and judicial branches
"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>Dollar cost average is your friend
Only in an upward trending market. >>
Huh? Does that mean I should only buy when Silver spot is going up? >>
mrpaseo, yes back to your original question. One of the first things I learned on these boards is "Don't catch a falling knife." In other words, if spot is moving down, don't buy until you see the upward correction.
What say the rest of you?
<< <i>mrpaseo, yes back to your original question. One of the first things I learned on these boards is "Don't catch a falling knife." In other words, if spot is moving down, don't buy until you see the upward correction.
What say the rest of you? >>
Agree
"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
Over the last weeks, we've seen $1 +/- around $27. When its $26.00 then goes up to $$28.50, is that an example? Or do you mean more, $29/$30....
Its been at this plateu for a bit now...
"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>you can't call the bottom. But, if you buy on the uptick you have a better chance of it continuing upward than you would if you buy on the downward movement. Higher movements only come when it is is moving in that direction. >>
So many smart people on this forum... holy smokes. Okay, I understand buy on the uptick as you mentioned but at what spread? Meaning, do I watch the uptick of the day, the week? The month? I understand no one knows where the bottom or the top is. I am considering holding long term (As in years) and only contributing 5-7% of my savings towards PMs. It seems to me that over that time frame... steady contributions is the way to go. Maybe save up for a month, then watch the SPOT and search around to find the best deal. Purchase, then start saving again.
If someone could share there buying process (PM would be find), I would appreciate it. Otherwise I am going to start surfing the BST forum/local B&M/Pawn shops and "We buy Gold" stores for the best deals while I say up some money.
Thank you all for entertaining my questions,
Ray
Keep good records. It's been said but needs to be reiterated. I'm telling you this not because I did but because I didn't. When it was time to sell off a good bit last year in the runup, doing taxes was a pain in the backside on trying to figure out gains and what to report. Slack documentation will probably come back to bite you sooner or later. Plus, it's so much simplier just to go ahead and take literally 1 minute to document:
what you got
what you paid for it
when you bought it
Just that simple.
On what to buy, I would recommend staying with what you know. 90% is ALWAYS good to buy when it suits a buy price that's comfortable for you and is always well recognizable. SAE's and Maple Leafs are always well respected and, again, well recognizable. Plus they tend to draw a slight premium when selling so you can recoup some of that buy premium back. Just stay more towards the white Uncs in the SAE's and Maples. With some looking, they can be had for about the same as sub-par SAE's and tend to sell better.
Too many positive BST transactions with too many members to list.
<< <i>
<< <i>you can't call the bottom. But, if you buy on the uptick you have a better chance of it continuing upward than you would if you buy on the downward movement. Higher movements only come when it is is moving in that direction. >>
So many smart people on this forum... holy smokes. Okay, I understand buy on the uptick as you mentioned but at what spread? Meaning, do I watch the uptick of the day, the week? The month? I understand no one knows where the bottom or the top is. I am considering holding long term (As in years) and only contributing 5-7% of my savings towards PMs. It seems to me that over that time frame... steady contributions is the way to go. Maybe save up for a month, then watch the SPOT and search around to find the best deal. Purchase, then start saving again.
If someone could share there buying process (PM would be find), I would appreciate it. Otherwise I am going to start surfing the BST forum/local B&M/Pawn shops and "We buy Gold" stores for the best deals while I say up some money.
Thank you all for entertaining my questions,
Ray >>
I generally spend the same amount of money when I go shopping. Some days I get a little more, some days a little less, some days I get some gold, some days I get some silver, some days both. Over time it adds up.
If you're not spending over a grand at a time I wouldn't sweat the daily fluctuations that amount to $20-30-etc. How much is your time worth? If you're saving up to buy say monthly or quarterly then it's worth it. But say you want to do $200/week, waiting for a $0.50 silver or $10-30 gold swing isn't worth worrying about unless you do save up several weeks or months worth before buying.
If you think PMs will continue to new highs in the intermediate/long term, catching silver .50 cheaper or gold $25 cheaper is really not worth the time consumed catching it there.
I personally have 95% savings in PMs, just enough cash for the short term. When I need more cash I sell some PMs. When I have save up enough for another monster box and I feel silver has made a turn upward, I buy the box. As long as PMs remain a protector of value I will continue to keep most of my savings in them. It is important for stackers to realize that PMs, like all other asset classes, eventually reach their peak and then turn south. It's just another place to park your money for safekeeping, not the holy grail.
I bought monster boxes at $16 oz. only to see it drop to $10 oz. Time has shown that not to be a bad move at all. I expect this trend to continue as long as the destruction of the dollar's value continues. When I see sanity from the currency controllers and spenders my expectations will change.
"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