Where to invest...

woody3882

I have been watching the P/M numbers for a long time now and feel this is the time to jump in. I have about 20K that I am willing to invest in Precious Metals.

Now for the age old question. I am partial to Gold & Silver. Which do I invest in or should I split it evenly

If you where spending my savings, what would you buy.

I am not concerned with a doomsday scenario, But I would like to lock it away in the safe deposit box until the market shows a decent return in the future.

I know this question must have been beaten to death in the past, but I am looking for some good honest opinion from experienced stackers.

Thanks

DrBuster

Monster box of silver and the rest gold on one of the +$29 specials would be my wag.

fishcooker

Depends on the size of the safe box and any weight restrictions the bank has. My bet is you'll end up leaning towards Gold to get more $ in less space & weight.

derryb

prices will be lower. I prefer a 75% dollar allocation to silver, 25% to gold.

hchcoin

If you believe in the gold to silver ratio theory, buy silver when the ratio is high (like it is now) and convert it to gold when the ratio goes back down to traditional levels (to the 40's or 50's). Then you hold the gold until the ratio goes back up and convert it back to silver.



Based on this theory and the recent drop in PM prices, I can't see any better time to buy silver than right now if you believe the theory.



Here is an example. You buy 80 ounces of silver right now (the ratio is around 76:1 right now) for around $15/ ounce costing $1,200. The $1,200 is only enough money to buy 1 ounce of gold right now. You hold this position until the ratio drops to 40:1 and then swap out your silver for gold. You can now buy 2 ounces of gold with your 80 ounces of silver. You just doubled the amount of gold you would have stacked if you bought it back when the ratio was 80:1. Then you sit and wait till the ratio goes back up to 80:1 and swap back into silver. At this point your 2 ounces of gold are worth 160 ounces of silver. Just keep repeating the process over a long period of time.



The theory basically states that it doesn't matter what the price of PM's are, it is the relation between the prices that matters when building your PM stack. Seeing that silver has had a multi year slide and it now relatively cheap compared to a few years ago, why not buy silver?

Baley

Originally posted by: woody3882

I have been watching the P/M numbers for a long time now and feel this is the time to jump in. I have about 20K that I am willing to invest in Precious Metals.

Now for the age old question. I am partial to Gold & Silver. Which do I invest in or should I split it evenly

If you where spending my savings, what would you buy.

I am not concerned with a doomsday scenario, But I would like to lock it away in the safe deposit box until the market shows a decent return in the future.

I know this question must have been beaten to death in the past, but I am looking for some good honest opinion from experienced stackers.

Thanks

They're good questions, and I'll fire a few back at you:



Do you like looking at coins and bars of metal, and do you want several different kinds (a "pretty" or "neat" or "historical" collection) or simply a pile of identical low-premium-to-spot bullion?



Do you want your precious metal buys to be bulky and heavy? (or would you prefer it to be compact)



When the time comes to sell, do you expect to sell it all at once? (in one or just a couple fast and easy transactions) or do you want to sell it bit by bit yourself? (which is how you get the above mentioned "premium" back out, but it's work)



Anyone in your will who would inherit the items have any interest in owning metal, or knowledge and/or willingness to educate themselves a little about metals?



After thinking about the above, do you still want physical metal? (rather than a gold ETF for example)



If so, buy what you like and enjoy it for the long haul

guitarwes

$1500 face value of Walker or Franklin Halves.

s4ny

XF/AU Franklin Halves



AU pre 1933 gold, or something like MS62 Saints if you prefer slabbed.

GRANDAM

In round numbers,,,,,,



Silver is $14/oz



Gold is $1100/oz



Silver was $49



Gold was $1900



So if we achieve old highs at some point a few years down the road Silver could return 3 1/2 x your money



while Gold would return roughly 1.75 x your money.



IMHO Silver has more upside potential. Buy 1 oz, 5 oz or 10 oz pcs,,,,,, nothing larger.



Large bars are harder to sell when prices are high.



Silver Eagles are good as are Maple Leafs and generic bars or rounds purchased from major manufacturers.



The 75% Silver 25% Gold is a good way to go.

woody3882

Thank you I appreciate all the good input, 75/25 is what I think I am going to do..

TwoSides2aCoin

Been buying since silver was $5. Remember buying a lot when it hit $15 on it's way to $30. Sold a bunch and bought more on it's way to $45 where I sold and went on vacation to Australia in 2012. Came back and it was back to $30. Bought it at $30 on it's way to $20. Sold a lot around $25. Started buying back around $22 , then it went back up to $28. The more I try to get away , the more it comes back down to where it's "fun" to swim in. No need to wade. Just dive in. Or wait until it goes down to $12. No sense in hurrying.





Gold ? Buy it when it's a good buy. Hold. INVESTING ? Nuts !

woody3882

Questions for TwoSides2aCoin 1, Can I take from your advise that you feel it is best to "play the Market" rather than just hold on to it.

2, without getting to much info, What is your opinion of "a lot" you will probably answer with "what ever you can afford" but realistically what does one in the stacker

world consider a lot, 1-5K, 5-10K, 10-20K 20-30K etc I am serious, looking for an honest opinion.

3, Is there a rule of thumb when you say to yourself that it is time to sell (ex: 10% increase etc) or is it just a gut feeling

I have been selling off a lot of my currency collection in the past year, and have many more to go, I am flipping the cash into gold and silver, that is why i am asking so many questions.



I do appreciate your help.

Thanks

gsa1fan

1 oz BU American Gold Eagles

Justacommeman

If those are the two choices 80/20 gold. Otherwise invest in yourself or in something you know



mark

jmski52

How you buy into metals depends on a few things, including your age, financial status, career status and your anticipated needs for money in the foreseeable future.



It also depends on how you see the things going on around you. Are you investing with the expectation to make a certain return in a specified amount of time, or are you buying for some other reasons?



Do you consider buying metals as a hedge, or as insurance of sorts? What's your tolerance level for significant swings in price? What percentage of your net worth are you planning to allocate to metals? Ask yourself some of these questions to make sure that you don't get surprised down the road.



In any event, I'd recommend buying coins that are always liquid and I would shop around between 2 or 3 reliable dealers for the best buy-sell spread before making a purchase. And I would focus hard on the "reliable" part. Ask here for opinions and referrals - this forum has a good handle on who some of the better dealers are.



Beyond that, follow your own interests. Some guys like coins, some like bars, some like silver, some like a mix. Some like numismatic coins. I'd take it a little slow at first while you're learning the language, but you're doing the right thing by asking questions.

Good luck!

roadrunner

....Here is an example. You buy 80 ounces of silver right now (the ratio is around 76:1 right now) for around $15/ ounce costing $1,200. The $1,200 is only enough money to buy 1 ounce of gold right now. You hold this position until the ratio drops to 40:1 and then swap out your silver for gold. You can now buy 2 ounces of gold with your 80 ounces of silver. You just doubled the amount of gold you would have stacked if you bought it back when the ratio was 80:1. Then you sit and wait till the ratio goes back up to 80:1 and swap back into silver. At this point your 2 ounces of gold are worth 160 ounces of silver. Just keep repeating the process over a long period of time.



The theory basically states that it doesn't matter what the price of PM's are, it is the relation between the prices that matters when building your PM stack. Seeing that silver has had a multi year slide and it now relatively cheap compared to a few years ago, why not buy silver?

Understand that while "building" this stack, each of these trades is a taxable event at the collectible's rate of 28%...or whatever it currently is. While one can trade like-kind collectibles back and forth without a taxable event triggering, it's not that way for precious metals which are treated like cash. You can't trade cash (dollars for euro's etc.).

derryb

Originally posted by: roadrunner

....Here is an example. You buy 80 ounces of silver right now (the ratio is around 76:1 right now) for around $15/ ounce costing $1,200. The $1,200 is only enough money to buy 1 ounce of gold right now. You hold this position until the ratio drops to 40:1 and then swap out your silver for gold. You can now buy 2 ounces of gold with your 80 ounces of silver. You just doubled the amount of gold you would have stacked if you bought it back when the ratio was 80:1. Then you sit and wait till the ratio goes back up to 80:1 and swap back into silver. At this point your 2 ounces of gold are worth 160 ounces of silver. Just keep repeating the process over a long period of time.

The theory basically states that it doesn't matter what the price of PM's are, it is the relation between the prices that matters when building your PM stack. Seeing that silver has had a multi year slide and it now relatively cheap compared to a few years ago, why not buy silver?

Understand that while "building" this stack, each of these trades is a taxable event at the collectible's rate of 28%...or whatever it currently is. While one can trade like-kind collectibles back and forth without a taxable event triggering, it's not that way for precious metals which are treated like cash. You can't trade cash (dollars for euro's etc.).

unless you are a business treating your PMs as "inventory" your trades are treated, and taxed, as investments at the collectible rate as pointed out by RR. You would report PM trades to the IRS just as you would stocks. Important to keep good records of costs, dates and expenses related to buying AND selling. If you are not familiar with reporting investment capital gains and losses to the IRS, go to their website and review instructions for completing Schedule D. It's not that complicated.

jmski52

The other method is to map out your strategy for the long haul and then follow it without buying or selling very much. You can still use the Gold/Silver ratio as a guide to help you decide whether to buy gold or silver at any given moment, but you would limit the tax impact simply by not making many transactions, or at least by managing your gains vs. losses as you go.



As derryb mentioned, good recordkeeping is paramount. As time goes by, you will have some holdings in a winning position and some that might be in a loss position. Good management would dictate that whenever you need to liquidate some of your holdings, you would be able to identify an offsetting amount from each of your winning and losing positions - so that you neutralize your overall tax impact while still generating some liquid capital whenever needed.



Having various groups of coins of various denominations, designs and dates allows you to be very specific in choosing how to balance your selling strategy with tax recordkeeping requirements. Spreadsheets are your friend.



The overall goal of course is to make a pile of profit, and the general assumption with all precious metals is that over time, your composite holdings will maintain it's purchasing power along with the general price level. Just try not to pay much in tax (by carefully managing your liquidations) until the very end, if at all.

derryb

If you are savy with Excel you can easily build a spreadsheet that does all of the math for you. I keep one sheet for inventory and then cut and paste the line item to a sales sheet when I make the sale. Knowing what data you need to complete the IRS Schedule D will assist you in designing a good spreadsheet. You only need to report to the IRS items that are sold in the year covered by the tax return. One word of advice: don't clutter your spreadsheet with unnecessary information. Keep it simple.

jmski52

If you are savy with Excel you can easily build a spreadsheet that does all of the math for you. I keep one sheet for inventory and then cut and paste the line item to a sales sheet when I make the sale. Knowing what data you need to complete the IRS Schedule D will assist you in designing a good spreadsheet. You only need to report to the IRS items that are sold in the year covered by the tax return. One word of advice: don't clutter your spreadsheet with unnecessary information. Keep it simple.



This.

asheland

Originally posted by: DrBuster
Monster box of silver and the rest gold on one of the +$29 specials would be my wag.

Musky1011

Equal dollar amounts of platinum, gold,and silver... Metals are not a very good investment to gain on... They are very good if you think the dollar will collapse

topstuf

I prefer an 80/20 allocation.

80% of funds in gold

and 20 bucks in silver.



The silver may be omitted if you have any appreciation of the history of silver pricing.

mariner67

My advisor told me the only way I could afford to retire would have to be 60% stocks, 30% bonds and 10% "scratchers"!

Wink Wink!

TwoSides2aCoin

Woody, I don't "invest" in metals. I work in it.



There's a spread and there are "What if" possibilities. Buying A LOT means taking advantage of discounts when available and selling a lot means giving a dog a bone with some meat on it.

Get some gold, get some silver. Get some land. Get some guns. Get all debt paid down. As investments go, I am not one to advise others unless it's for a metal roof. Then I feel comfortable telling the benefits. But that's another thread for another forum.