General

Re: Buying precious metals on a budget - advice, please?

Stolz2525 — Fri, 01 Aug 2008 15:50:27 GMT

bullfrog:
I can point to 1980, when silver topped out at $50 an ounce, then crashed to $4-5. It stayed in that range for years and still to this day hasn't recovered.

You could point to that, but it wouldn't be very honest of you. The Hunt Brothers made their run trying to corner the silver market in 1980 and ran up the prices. This is a once in a lifetime fluke that failed, and could have happened in any commodity just as easily. As for having not yet recovered, I would think that would be a reason FOR investing in something, not avoiding it. Part of the reason the silver price hasn't recovered yet is the number of short positions currently taken on it.

To quote the Mogambo who quotes Theodore Butler...

"it seems that the commodity exchanges routinely allow their little buddies to sell fictitious commodities, like "paper" silver, for example, until we are talking about a short position in silver that is (according to Theodore Butler) "an amount of silver equal to all the known silver bullion in the world.""

Re: Buying precious metals on a budget - advice, please?

bullfrog — Fri, 01 Aug 2008 15:16:58 GMT

Yes, metals and commodities generally go up and go down together. What I'm really saying is that the other metals tend to be more speculative and volatile than gold. I can point to 1980, when silver topped out at $50 an ounce, then crashed to $4-5. It stayed in that range for years and still to this day hasn't recovered. Gold hasn't fallen as badly during that time - $850 peak in 1980 and traded around $400 much of the time since.

The vast majority of silver is used for industrial purposes and only a tiny portion for coinage. If industry slumps, I suppose silver would take a big hit. Gold would go down to, but not as badly. Gold has traditionally been the currency standard and the primarly metal that's been held by large banks and government.

Re: Buying precious metals on a budget - advice, please?

fsk — Thu, 31 Jul 2008 00:01:06 GMT

MacFall:

bullfrog:

And ss someone has already mentioned, pay off your debts first before investing.

That's the trick though, isn't it? I owe $14,000 to American Education Services for one year of totally useless education. That's why my disposable income is so slight; I'm trying my damnedest not to let the interest pile up on that.

The correct answer actually depends on what rate of return you get on your investments. Your student loan probably is at an interest rate of 8%. True inflation is 20%-30%. If you invest in gold or silver, your expected return is 20%-30%. Therefore, it's rational for you to make the minimum payment on your loan and invest the difference.

Re: Buying precious metals on a budget - advice, please?

MacFall — Wed, 30 Jul 2008 23:41:15 GMT

Oh, thanks for all the advice everyone. I'm taking notes furiously. :)

Re: Buying precious metals on a budget - advice, please?

MacFall — Wed, 30 Jul 2008 23:36:03 GMT

bullfrog:

And ss someone has already mentioned, pay off your debts first before investing.

That's the trick though, isn't it? I owe $14,000 to American Education Services for one year of totally useless education. That's why my disposable income is so slight; I'm trying my damnedest not to let the interest pile up on that.

Unless I manage to get a novel published or encounter some other, similarly unlikely (and for me, completely unprecedented) stroke of good luck, it will take me more than ten years to get out of debt.

For all I know, the dollar won't exist anymore by that time. Hence, this thread.

Re: Buying precious metals on a budget - advice, please?

Stolz2525 — Wed, 30 Jul 2008 19:34:12 GMT

fsk:
When buying, does he charge you spot, or spot plus a % markup? When selling, what is the discount to spot? There's always a bid/ask spread.

When I'm buying I pay spot. If I wanted to sell back to him, I think he takes off 5-8%, but I'm not sure. I've never sold back to him and I don't plan to so I wasn't too worried about it.

Re: Buying precious metals on a budget - advice, please?

Stolz2525 — Wed, 30 Jul 2008 19:32:38 GMT

fsk:
Has anyone had a problem with forget metal coins? There are alloys of cheaper metals that have the same specific gravity as silver. This makes it easy to forge silver coins and bars.

I think forged coins (especially of the bullion variety) are very rare. I can't imagine that silver coins are even worth bothering about unless you are buying 100 or 1000 oz bars. I would think most of the forging would happen with collector coins and bar bullion.

Re: Buying precious metals on a budget - advice, please?

fsk — Wed, 30 Jul 2008 19:31:04 GMT

Stolz2525:
Nice thing is for bullion he charges the spot price in the paper so if I notice it's gone up toward the end of one day I'll run in and get some after work.

When buying, does he charge you spot, or spot plus a % markup? When selling, what is the discount to spot? There's always a bid/ask spread.

Re: Buying precious metals on a budget - advice, please?

Stolz2525 — Wed, 30 Jul 2008 19:24:48 GMT

fsk:
Sales tax on bullion coins? I haven't heard of that one. I thought that sales tax only applied to nusimatic coins, but I guess the law varies by state.

Supposed to be on everything here I think. I tried a couple coin dealers before I found one willing to waive it.

fsk:
With sales tax added on to your coin purchase, that's a heavy purchase premium!

Agreed, that's why I pay cash, as I don't care so much about the anonymity. Nice thing is for bullion he charges the spot price in the paper so if I notice it's gone up toward the end of one day I'll run in and get some after work.

Re: Buying precious metals on a budget - advice, please?

fsk — Wed, 30 Jul 2008 19:15:44 GMT

bullfrog:
Buy gold only. Skip silver and the other metals.

Has anyone had a problem with forget metal coins? There are alloys of cheaper metals that have the same specific gravity as silver. This makes it easy to forge silver coins and bars.

Gold is harder to forge, but I heard that gold-plated tungsten works.

Is it possible to forge platinum, which is denser than gold?

Has anyone had a problem with this, or are forged coins rare?

Re: Buying precious metals on a budget - advice, please?

fsk — Wed, 30 Jul 2008 19:08:22 GMT

Stolz2525:

This depends of course on the place you buy it too. The two dealers I have used in town aren't very government friendly if they can avoid it, so I imagine getting around this wouldn't be too hard. The one I've been going to recently will wave sales tax if you pay in cash, so I'm positive he isn't keeping records anywhere, and he doesn't even know my name.

Sales tax on bullion coins? I haven't heard of that one. I thought that sales tax only applied to nusimatic coins, but I guess the law varies by state. With sales tax added on to your coin purchase, that's a heavy purchase premium! In that case, I'd set up an off-the-books gold/silver barter network.

Even though the coin store guy doesn't have your name, at any time the bad guys could say "Install a hidden camera in your shop or we'll violently shut you down. We want to know who your customers are." On the other hand, a barter group would have the same risk.

Re: Buying precious metals on a budget - advice, please?

Stolz2525 — Wed, 30 Jul 2008 19:04:31 GMT

bullfrog:
Buy gold only. Skip silver and the other metals. Silver can be very volatile. And silver, unlike gold, behaves more like a commodity. It is used mainly for industrial purposes. Should the industry or economy slump, so can the price of silver.

Do you have any examples of this? I've been watching both of them for a while now, and they stay pretty much in lock step with each other from what I've seen. I've bought only silver up to this point because I prefer to go buy a little each time I get a paycheck instead of holding it for a few weeks until I can buy gold with it (I've found it dissapears for other things if I don't go buy the metal right away). If this is true though, I'll definitely start divesting toward gold.

Re: Buying precious metals on a budget - advice, please?

Stolz2525 — Wed, 30 Jul 2008 19:00:41 GMT

fsk:
According to what I read, only transactions larger than a certain size are reportable, both for buying and selling, with more restrictions on selling.

This depends of course on the place you buy it too. The two dealers I have used in town aren't very government friendly if they can avoid it, so I imagine getting around this wouldn't be too hard. The one I've been going to recently will wave sales tax if you pay in cash, so I'm positive he isn't keeping records anywhere, and he doesn't even know my name.

Re: Buying precious metals on a budget - advice, please?

fsk — Wed, 30 Jul 2008 18:42:16 GMT

I wrote a post on buying gold and silver. I haven't personally bought any gold or silver myself, although I did my research. Some vendors will sell you only a few ounces of silver online, but charge you more per ounce.

At coininfo.com, you may search for coin dealers near you.

The pros of buying online are that prices are cheaper compared to stores. The con of buying online is that you don't have anonymity.

The pros of buying in a store are that you may pay cash and have anonymity. However, I don't know what the reporting requirements are. They keep strengthening them. According to what I read, only transactions larger than a certain size are reportable, both for buying and selling, with more restrictions on selling. You'd have to try buying/selling coins in a store and seeing if they ask for ID.

Re: Buying precious metals on a budget - advice, please?

bullfrog — Wed, 30 Jul 2008 17:26:14 GMT

Buy gold only. Skip silver and the other metals. Silver can be very volatile. And silver, unlike gold, behaves more like a commodity. It is used mainly for industrial purposes. Should the industry or economy slump, so can the price of silver. Same goes for palladium and platinum. Not that gold can't fluctuate. But it shouldn't be as bad as the other metals.

You can purchase from NWT. They are a large bullion dealer and they have a website. You could also purchase from eBay. Once you accumulate large holdings, I would diversify where I would keep them - some at home, some at my local bank, and some in a Swiss bank. Also, don't buy mining stocks or futures contracts. Just buy the real thing.

And ss someone has already mentioned, pay off your debts first before investing.