Dealers and Stackers - How do you hedge your precious metal holdings?

ebizgobro · August 18, 2014 12:21AM

Some of us are beginning to accumulate a stack of silver and gold coins.

How, if I should, to hedge against the fluctuations in precious metal prices?

jmski52 · August 18, 2014 12:28AM

Only stack what you are comfortable with, regardless of current spot pricing.

When you think that you can't afford to lose 1/2 in one day, then you have too much.

This leads to the ultimate realization that your stack will fluctuate both up and down over time.

Over time, you will feel edgy and pressured to "do something", at other times you will feel like an absolute genius and be on top of the world when there's a nice spike. Neither emotion is particularly valid. There's nothing as good as longterm planning, even if you don't follow the plan obsessively.

The only time I feel anything is when I'm in the middle of making a significant decision. Before pulling the trigger on something big, your senses will accentuate and then it's a good time to review your total picture.

derryb · August 18, 2014 1:01AM

deflation is creating this need for a hedge. Do it with dollars. Keep in mind that if you believe deflation to be temporary then you are probably looking at a buying opportunity. The best buying opportunity for PMs will most likely be right before deflation reverses course.

cohodk · August 18, 2014 1:04AM

Do you have a money in the stock market? If so, how do you hedge that?

derryb · August 18, 2014 1:41AM

hedging can easily become a zero sum game. $50 on the winner and $50 on the loser is not a profitable position. Don't let trying not to lose money keep you from making money. Making money with investing requires some degree of risk. Minimizing that risk through sound investments is more profitable than minimizing that risk through hedging. Every dollar you bet on the loser is more than a dollar lost. It is a dollar not making you money on the winner.

cohodk · August 18, 2014 1:47AM

<< <i>hedging can easily become a zero sum game. $50 on the winner and $50 on the loser is not a profitable position. Don't let trying not to lose money keep you from making money. Making money with investing requires some degree of risk. Minimizing that risk through sound investments is more profitable than minimizing that risk through hedging. Every dollar you bet on the loser is more than a dollar lost. It is a dollar not making you money on the winner. >>

guitarwes · August 18, 2014 5:31AM

<< <i>

<< <i>hedging can easily become a zero sum game. $50 on the winner and $50 on the loser is not a profitable position. Don't let trying not to lose money keep you from making money. Making money with investing requires some degree of risk. Minimizing that risk through sound investments is more profitable than minimizing that risk through hedging. Every dollar you bet on the loser is more than a dollar lost. It is a dollar not making you money on the winner. >>

>>

+1. That's as good advice as I've ever heard anywhere.

rawteam1 · August 18, 2014 9:55AM

yes...

now on other hand, u hedge "bets"...

ebaytrader · August 18, 2014 10:57PM

<< <i>Some of us are beginning to accumulate a stack of silver and gold coins.

How, if I should, to hedge against the fluctuations in precious metal prices? >>

As a dealer, when we buy a large a quantity of physical for retail, we hedge with a paper short. By doing so we lock in a profit margin.

guitarwes · August 18, 2014 11:20PM

Just curious ebaytrader, can you throw out some hypothetical numbers so I can see in black and white how the "buy physical and short paper for a locked profit margin" works?

Dealers and Stackers - How do you hedge your precious metal holdings?

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