Precious Metals

[DallasTXGator]

Here's my problem with silver - spot price based on the commodity markets is about $23.50/oz today. The cheapest physical price is $27 to $28 or more depending on the round/bar. That's about a 15% to 20% premium.. I assume if I were to turn around and sell I would get roughly the spot price. So I need a 20% move in my direction to just breakeven. No thanks.

I do own physical silver which I acquired over the years at far less of a markup. Although I will admit most was purchased in the the mid $30 range. So I have been perpetually behind already.

Buying paper silver is really just a coin flip with a 50% chance of making money. The whole idea of actually physically owning it in case of some financial disaster does have some value but it's a large premium and you have to store it and eventually sell it....

 

[Detroitgator]

Here's my problem with silver - spot price based on the commodity markets is about $23.50/oz today. The cheapest physical price is $27 to $28 or more depending on the round/bar. That's about a 15% to 20% premium.. I assume if I were to turn around and sell I would get roughly the spot price. So I need a 20% move in my direction to just breakeven. No thanks.

I do own physical silver which I acquired over the years at far less of a markup. Although I will admit most was purchased in the the mid $30 range. So I have been perpetually behind already.

Buying paper silver is really just a coin flip with a 50% chance of making money. The whole idea of actually physically owning it in case of some financial disaster does have some value but it's a large premium and you have to store it and eventually sell it....

Usually about a buck over... not including any other associated costs.

 

[DallasTXGator]

Usually about a buck over... not including any other associated costs.

Ah, I got it. So there is some premium when selling. That helps, but still the first 10% of gain is offset by the initial premium ...

 

[Gatormac2112]

Yeah if you're not stacking for an economic meltdown where precious metals are the only form of currency, silver just doesn't make much sense. Now gold at least has appreciated in price quite a bit, but I still don't consider it a great hedge against inflation. Gold is better than cash though.

 

[BMF]

Here's my problem with silver - spot price based on the commodity markets is about $23.50/oz today. The cheapest physical price is $27 to $28 or more depending on the round/bar. That's about a 15% to 20% premium.. I assume if I were to turn around and sell I would get roughly the spot price. So I need a 20% move in my direction to just breakeven. No thanks.

I do own physical silver which I acquired over the years at far less of a markup. Although I will admit most was purchased in the the mid $30 range. So I have been perpetually behind already.

Buying paper silver is really just a coin flip with a 50% chance of making money. The whole idea of actually physically owning it in case of some financial disaster does have some value but it's a large premium and you have to store it and eventually sell it....

This is why I've never gotten into buying physical silver and gold - you pay a premium when you buy AND sell. It makes no sense, unless you're a "prepper" and think the world is coming to an end.

Here's some charts on SLV:

 

[Concrete Helmet]

This is why I've never gotten into buying physical silver and gold - you pay a premium when you buy AND sell. It makes no sense, unless you're a "prepper" and think the world is coming to an end.

You actually get a "premium" so to speak when you sell bullion instead of bars, that's why it is recommended to buy them for the average holder/collector. The biggest problem with silver is well....it's freakin heavy and bulky when you accumulate enough...I take a small gun safe with me every Friday when I leave the house(housekeepers come)and that SOB get's heavy by the time I walk down the driveway to my truck

 

[Detroitgator]

You actually get a "premium" so to speak when you sell bullion instead of bars, that's why it is recommended to buy them for the average holder/collector. The biggest problem with silver is well....it's freakin heavy and bulky when you accumulate enough...I take a small gun safe with me every Friday when I leave the house(housekeepers come)and that SOB get's heavy by the time I walk down the driveway to my truck

My safe weighs 1 ton empty, it's not empty.

 

[Concrete Helmet]

BTW interesting note for those with a longer term point of view...
In the last 5 years Gold is up 30%
In the last 5 years Silver is up 17%
In the last 20 years Gold is up 538%
in the last 20 years Silver is up 458%

 

[Concrete Helmet]

My safe weighs 1 ton empty, it's not empty.

I have a small in wall safe at the office but it's only about 1ftx1ftx1ft....other than that I use small portable gun safes...and

 

[Gator By Marriage]

My safe weighs 1 ton empty, it's not empty.

Does it get heavy by the time you walk down the driveway to your truck? Or are you just stronger than @Concrete Helmet ?

 

[Detroitgator]

Does it get heavy by the time you walk down the driveway to your truck? Or are you just stronger than @Concrete Helmet ?

well, i don't try to carry my safe, i'm not stupid. That said, what he was describing sounds like what i have to deal with every day carrying around my huge balls.

 

[Gator By Marriage]

well, i don't try to carry my safe, i'm not stupid. That said, what he was describing sounds like what i have to deal with every day carrying around my huge balls.

We all have our crosses to bear - so to speak.

 

[Concrete Helmet]

well, i don't try to carry my safe, i'm not stupid. That said, what he was describing sounds like what i have to deal with every day carrying around my huge balls.

Alright since were already off topic here and most on this board already question if my elevator goes all the way to the top I may as well tell you that when I get home on Friday I just have to open my safe for 2 reasons....1 is I've heard horror stories about people getting locked out of these smaller safes and I'm maybe just a tiny bit paranoid from time to time about sh!t like this.....The other reason is the majority of my loot is....well lets just say inaccessible.....sooo this is the only time I get to touch and admire the stuff. My gold is sealed and I've never opened it nor will I.....BUT the silver...there is just something about the feel, the texture and the sound that silver eagles make when they strike each other...

Anyway I often call my wife to the room to admire them also(yeah she has mentioned getting help for me also) and tell her I'm rich like a king...she usually just rolls her eyes and walks out but a couple months back she caught me off guard and ask how much I've spent on "that stuff"....the first thing I could think to say is not even half of what I spent on your diamond....yeah guess who's in the market for an up sized ring....I had no idea she would actually look up the spot price price of silver less than an hour later....good thing I didn't mention the premiums...

 

[UFHealthGator]

BTW interesting note for those with a longer term point of view...
In the last 5 years Gold is up 30%
In the last 5 years Silver is up 17%
In the last 20 years Gold is up 538%
in the last 20 years Silver is up 458%

In the last 10 years Gold is down 0.2%.

 

[Concrete Helmet]

In the last 10 years Gold is down 0.2%.

I guess the question you have to ask yourself is if you are alright with longer, slower down cycles. Using the last10 years as a time range could be sorta skewed as we have been in a record breaking bull cycle in the SM....what kind of cycles do you predict for the rest of your timeline? or until you cash out your Roth? Remember gold reached it's all time highs in 2011 and recaptured that in 2020 DESPITE coming out of a 15 year period of moderate to no inflation and an equity/bond bull markets which are normally adverse to increases in golds price....Should we expect those patterns to hold?

Another factor to keep in mind also is that gold is getting harder and harder to mine(we've found the easy stuff) and more and more regulations will increase the mining and production cost, or perhaps it causes people to lose interest and causes downward pressure on golds price?

Conversely if governments around the world continue to put pressure on crypto what do you think happens to the price of gold? Look back at both charts for the last 2 weeks to see something interesting. BTC jumped what about 8-10K while gold took a major nose dive...My theory is traders may have sold off some gold and put it in BC which just broke a support level? Could gold become what bonds are to stocks, flight to safety from BTC during downturns ?

Like I said before I don't believe in putting a huge amount into precious metals because they don't produce income like RE, or bonds(used to anyway)or value stock, but I also think they are worth a long term speculative stash of maybe 3-5% of my total wealth. Worst
case scenario is it sits around doing nothing almost like a art piece or collector car to be sold off if you really need the cash...best case scenario is it sits for a long time and does what it has done over the last 50 years which is to far out pace the US dollar in value.
Again if you want to make quick money off precious metals stick to selling paper shares and mining stocks.

 

[Gatormac2112]

I'm with Crete regarding about 5% of invested money into precious metals. Worst case scenario you have gold in a safe somewhere while 95% of your real investments are bringing in income. Gold will never be a "bad" thing IMO. We just don't know what level of "good" it will be.

 

[Detroitgator]

Here is another way of looking at PMs, and I heard this the other day while driving and listening to, yes, Glenn Beck (don't GAF what anyone thinks of him, i think he's interesting and he does make you think). "I don't look at physical PMs as a hedge against inflation, I look at them as a hedge against insanity. History has shown that principles have remained the same over time, but every once in awhile, insanity happens, and things always return to fundamental principles."

This has always been my personal philosophy on owning physical PMs. They are not an investment, speculative or otherwise. As a student of history (although not formal student), I do know this: in the 3-5,000 years of civilization, going back to Greeks and Romans (or whomever), every time a city state, empire, or nation has strayed from sound money (not to be confused with "currency"), it has ended badly and always resets the same.

Now, could there be a "first time" in the history of civilization/money/currency that that does not happen? Sure, but as I have also always said in over 20 years on these boards: "We are no smarter today than they were 3-5,000 years ago, we just make bigger mistakes much, much faster."

 

[Concrete Helmet]

Now, could there be a "first time" in the history of civilization/money/currency that that does not happen? Sure, but as I have also always said in over 20 years on these boards: "We are no smarter today than they were 3-5,000 years ago, we just make bigger mistakes much, much faster."

Every government to date has found a need to debase it's currency whether it be through physical means, mechanically or digitally...it is quite simply the easiest way to raise spending and tax the citizens without them even knowing it...

 

[Concrete Helmet]

Precious metal fun fact I learned from a book I read several months back. The term "sound money" came from the Roman soldiers returning home to receive their pay which was in the form of silver coins. They would only accept coins that made a certain sound when struck together with a similar coin because they learned of the government putting additional forms of metal into the coins(debasement) to lessen the cost of coins....sound familar?

 

[UFHealthGator]

I don't see the point of Gold in a post apocalyptic world. I personally would have a large stock of canned food, drinkable water, guns and ammunition, working technology like a PC with large amounts of human knowledge stored offline on it. I would imagine things like that would be significantly more valuable than a shiney coin. I just need to look at it from an investment standpoint in current preapocalyptic times.