I want to begin putting money into metals for a long-term savings security investment. I don’t have a lot of money I can dedicate to this monthly-- but I would like to assign $100 or so a month to this. Is that done by others?
I figure buying three or four ounces of Silver per month is better than letting the cash sit or be spent on stuff.
I am aware of a site called GoldMoney-- it seems like a good place to start. Have any of you used this place?
I see how people buy gold by the gram there, too, but in a digital form. I like the idea a lot, but I’m nervous about not being able to actually hold the metal, which I plan on keeping at home.I think if it’s digital, it’s only a government communications/internet block away from non-existant. How possible is it for the government to halt/confiscate transfers through these kinds of companies?
Before I do commit, I’d appreciate any thoughts on what you all considered before you pulled the trigger yourselves, or points I might be missing.
Yes, that’s why I was thinking about having the silver I buy delivered every few months (or even every month, if the shipping wasn’t too expensive to make it prohibitive).
The thing I like about buying gold by the gram is the fact that you can get the real thing over some time in a payment method-- but the fact that you rely on the business to stay available until you’ve bought a full ounce is scetchy to me as well. I guess it just makes more sense for me to buy silver, since it’s far less expensive–
Once you have accumulated the silver, what would you use it for?
You will buy it at a premium, sell it at a discount.
You will pay shipping costs. You will have to store it, and lug it around wherever you go. You will likely receive a 1099 when you sell it, there will be a taxable gain if the value rose from your original cost. What if it gets stolen, will you pay to insure it?
Treating it as an investment, when will you sell? Do you have a “stop loss” strategy? Do you just keep buying no matter what the price does? What if the price drops to $7.00, do you sell? Do you really have an investment plan?
Buying gold by the gram seems very costly. At the going rate, what is the price per ounce?
I would agree that ETF’s (GLD) and any investment in non-physical metal entails risk. And the physical metal will be confiscated if our overseers deem it to be in the best interest of ______________ (fill in the arbitrary blank).
Investment categories include, in order of liquidity: Cash (bank deposits), stock market, government bonds, corporate bonds, metals, annuities, real estate, capital investment in your own business.
Of these, capital investment in your own business seems the best, to me anyway. But since very few of us are entrepreneurs, we are going to be hard pressed to protect our savings. And since we depend on entrepreneurs for our livelihoods, the government has done everything possible to strangle capital formation and the actions of the entrepreneur.
well, the price of silver has certainly went up in the past 5 years because of increasing economic uncertainty and possibly because inflationary fears. but even then gold has risen much more dramatically. and i am not sure i would expect this trend to continue indefinitely. as i see it, the cost of finding and mining silver can only continue to fall. so i would think over the long haul, you’re fighting a losing battle with technology.
here’s a neat chart with 650 years of silve price data (in 1998 dollars).
As one person here previous to me said: buying gold and silver is not an investment startegy but rather, at this point, insurance against hyperinflation. Federal Reserve Chairman Ben Bernanake has said recently that he would do everything in his power to make sure that deflation didn’t happen in the United States. In fact, one of the speeches he gave was titled: “Deflation: Making Sure it Doesn’t Happen Here.” Hyperinflation is just about assured to happen at this point. I direct you to the wedbsite shadowstats.com, where you can read their 36-page Hyperinflation Special Report. It’s a dry read and, in my opinion, very poorly written, but it contains some vitally important information and predicts that hyperinflation will happen by 2014-15. I would also recommend going to infation.us and subscribing to their free newsletter for more information about what’s going on and the absolutely absurd, rediculous and shocking truth, not only about US politicians’ astonishing ignorance and ineptitude about what caused our economic woes and what to do about them, but also their marked, myopic - nay, blind! - insane and seemingly all-consuming and unstoppable propensity to do nothing but exacerbate them with every move they make. Also, I highy recommend watiching the movie “Meltup,” which can be found on YouTube.
People are not flocking to gold and silver because of “uncertainty” in the economy, as one commentor here said. They are buying these assets because of certainty! Those who are buying gold and silver are buying them because they know where cheap money, 0% interest rates, a rabid urge to by up toxic assest in droves without even caring to reveal to Congress what those assets were, endless, unsustainable deficits run amidst countless wars and ever-increasing entitlement handouts, a virtually nonexistent manufacturing base and ceasless and repeated flaring up of the printing press leads - it leads to BIG-TIME INFLATION!
As for what companies to buy bullion from (ALWAYS buy the physical bullion, never just pieces of paper certifying you own the stuff: that’s how JP Morgan has up untill now been able to naked short massive amounts of silver and artificially depress its price far below what it should be by flooding the market with “paper silver” that probably doesn’t even exist) I would highly recommend BullionDirect and Gainesville Coins. They have great prices and only charge a small amount above the spot price for bullion, especially on the Nucleo Exchange.
Don’t buy gold by the gram unless you only plan to buy a little bit of gold: it will ultimately cost you more otherwise. If you have the cash to buy gold in larger quantities, I suggest you do it. If you don’t have the cash for that, throw most of what you have into silver, and buy small bits of gold merely for purposes of divirsification. Also, don’t buy numismatic (collectable) coins; they come at a premium, so you’ll wind up paying more for the same metal
As for government confiscation of your gold/silver, well, unfortunately, there’s not much you can do about that. They did it once before, they can (and proabaly will) do it again. See:
First: also consider getting gold, especially easy to sell coins like US dollars, Mexican pesos etc. If you haven’t got much money Quarter-Eagles and 2 pesos are a good way of getting started. Before you say “gold is overpriced” read the universal adivce “Gold is not an investment but a warranty against inflation”. Since most of us have lived all their lives in an inflationary environment this is an extremely precious advice. Even if you don’t end up selling your gold you’ll be able to pass it on to your children and grandchildren.
Second: before starting buying online (which is very expensive) or certificates (what warranties do you have the company issuing them actually holds silver and gold and isn’t just “repackaging” certificates?) start scouring local pawn shops and precious metal merchants. Yes, holding physical gold and silver is always preferable to pieces of paper. If you don’t feel safe about holding the metals at home you can rent a safety box from a local bank: it will be probably cheaper than insurance (if you don’t have it already).
Third: don’t overdo it. If you put 5-10% of your money in gold and silver that’s enough. Always remember the average person/company has 0% in precious metals.
What does a graph of past CPI levels have to do with the prospects for future inflationary pressures? I’m not big on the sky is falling view of unavoidable hyperinflation myself but it’s possible I suppose, especially if current trends continue. One thing is for sure though and that is that your graph proves absolutely nothing my man.
“One thing is for sure though and that is that your graph proves absolutely nothing my man.”
There are plenty of places online explaining why the CPI is a fraud and why the gov’t has many reasons to post lower than real inflation figures. A little google will go a long way.
well, the argument for hyperinflation essentially rests on the idea that monetary policy has been and will continue to be greatly expansionary. however, i am not so sure that it has. if you compare the cpi to the fed funds rate (one of many indicators of the direction of monetary policy) you will see that that even though the ff rate had been falling or stuck at zero for over2 years we still don’t see a consistant rise in inflation. indeed, we are seeing signs of disinflation. i don’t see how this could happen if monetary policy has actually been significantly expansionary.
if investors believed that we were going to run into hyper inflation in the next few years, we would expect to see the TIPS spread to be increasing.dramatically. i can’t emphasize that enough. hyperinflation is a VERY VERY strong claim. during the height of the german hyperinflation during the interwar period, prices doubled every 4 days. At an inflation rate of 3%, prices will double around every 24 years.
yet when we look at the tips spread over the past few years we can see that there was some widening last year, but that for the majority of this year the spread has actually been narrowing again. This is not at all what we would expect to see if investors actually anticipated hyperinflation in the next 5 years. So either we know something they don’t or we are severly over estimating the risk of hyperinflation.
well i am open to other metrics of price inflation or expected price inflation if you have them.
i know that some people in the media like to relate rising gold prices to rising inflation expectations. however, if you look at the data you will see that the price of gold has been rising for almost a decade. so either monetary policy went severly off course in 2002 and no one else noticed or there are other factors (besides inflation expectations) that are influencing the gold price that we must account for.
Our leaders are shortsighted. The president turns over office every 4-8 years. They don’t care about 10 years down the road. See all previous presidents. Even if the fed is being superresponsible, they can only do their best to offset the damage of politicians. They are also screwed if anyone (like china) decides to drop their dollars or t-bills. The fed can only do so much.
And I don’t buy that the fed’s first goal is to stop hyperinflation. Their first goal is to take care of all their politically connected buddies. If that means printing up a bunch of money, they’ll do it.
Furthermore, I wouldn’t use market trends to predict the future. On a free market I would, because speculators would iron everything out and be checked by profit and loss. However, with bailouts and special privileges of the financial sector, their investment decisions mean squat about the real economy.
Using “the market is always right” logic, you would never have predicted the financial crash. To be sure, the big players knew there was a bubble, but they also knew they would be bailed out. The price trends before the bust didn’t mean anything.
That said, I think there is a low chance of hyperinflation in the next 8-10 years. But if there is only a 1% chance it is still wise to buy a small amount of silver. Worst case scenario is silver goes back to $16/oz and then recovers nominally via inflation. No matter how bad an investment silver turns out to be, its way better than cash
i think you might want to take a quick glance at the data before making that kind of assertion. indeed, although the fed did lower rates in the early part of the decade, rates were rising for the majority of the time that the gold prices saw their biggest increases. lets do a couple of comparisons over the past 20 years shall we.
Case 1: when greenspan steadily cut the fed funds rate from 9% in 1989 to 3% by 1993, gold prices remained stable. and since these are nominal prices, this implies that the real price of gold might actually have been falling.
Case 2: when 9/11 happened, the fed funds rate was steadily cut from 3% to 1% by October 2003 (though really rates had started being cut for months before then in response to the 2001 recession). gold prices appear to be slightly rising (i cant seem to download the data behind this figure so can’t verify how much).
Case3: In 2004, the Fed begins steadily increasing rates again from 1% in April '04 to 5% in August of 2008. Yet during this period the price of gold experiences its greatest gains in over 30 years!!!
really, the more i look at it, the less convinced i am that raw gold prices can be used as an indicator of inflation expectations. of course, this is all just eyeballing. let me know if anyone has a statistical analysis that tried to control for other variables besides inflation expectations.
just a note, that may have be my last post for a while. trying to study for exams. even though discussing this is far more interesting, i guess the exams are more important in the long run.
So, i would conculde that lowering the funds rate alone is an insufficient condition for rising gold prices.
I would counter your cases 2 and 3 by saying that the gold price does not simply depend on contemporary fed action, but is rather tied to percieved long term trends at that time. So if the fed increases the funds rate because it becomes apparent that there is too much inflation, gold could go up too. If the fed decreases the funds rate in order to increase inflation, gold could also go up.
So i made a mistake in saying that it was simply tied to fed action. I would say its more likely related to expectations of inflation/economic collapse.
Personally I have a core holding, and actively trade futures. However not in the conventional sense. I pay for delivery upfront, and if I don’t sell in 6-9 weeks, I take delivery. It is an active side income for me. I buy on the dips, sell on the crests, and clear about 5%.
On the way down I sell on par until I hit my core. Same on the way up but I buy according to income. If the fed charges for excess reserves tomorrow. I double my holdings. If the fed raises rates tomorrow, I sell all + half of my core holdings.
The money is already inflated, when it costs the banks to hold this money; the prices will become inflated. The best investment advice wrt gold/silver IMO is watch the fed.
The FED can tank gold tomorrow if they want. Depression will ensue, but they can do it.
They can also begin the price inflation tomorrow if they want. Watch them act accordingly. Hold a core so you can trade if money collapses either way.
I can’t respond to all of the insight and wisdom that’s grown from this thread, but I deeply thank each of you for taking the time to share these thoughts with me-- I can’t say thank you enough.
I do want to clarify that by “investment” I did not mean in any active short-term trading context— just as a way to protect the value of some of my money in a tangible way over time. This is my savings.
I don’t have a lot of money, but I want to be able to save in a way that is long-term wise and safe, and I have learned from many wise people that it is a good choice to make. I’m worried about government confiscation. I don’t trust that they won’t dig up sales reciepts and try and take it away. Aside from having no confidence in the fiat money, there’s no other place I feel safe keeping the meager savings I can afford.
even though discussing this is far more interesting, i guess the exams are more important in the long run.