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Old 04-19-2010, 06:33 PM   #1
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Default Investing in silver

Just curious, do you think silver is a good investment? If so, in what form do you buy your silver? I saw a YouTube video the other day where Jim Rogers said he is buying silver and holding on to his gold. If gold goes down to say $1000/oz, then he will buy more gold. But right now, he is buying silver. Comparable to the price of gold, silver is at least affordable. Any thoughts?
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Old 04-19-2010, 06:43 PM   #2
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"Just curious, do you think silver is a good investment?"
It is a hedge, not an investment. A hedge is something you buy and hang onto to protect the value of your money against inflation or deflation. An investment is something you buy and then sell to make a profit.
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"If so, in what form do you buy your silver?"
One ounce rounds and ten ounce bars. Brand does not matter, so long as they are not Chinese. Buy PMs over the counter from a local coin shop. Pay cash. Expect to pay 5-10% markup when you buy gold, and 12-15% when you buy silver. That is because silver is heavier, bulkier, and more expensive to ship. If you buy U.S. Mint silver or gold Eagles, you be paying a lot more for a brand name that really means nothing.

Do not tell *anyone* you have PMs; friends, neighbors, relatives, your hairdresser, NOBODY. Be wary about putting it in a bank safety deposit box. If Obama pulls an FDR and tries to seize PMs, it would not at all surprise me to see safety deposit boxes frozen, with access only allowed with a government auditor present. If I had industrial PMs like platinum or palladium, I might keep them in a safety deposit box, as they are less likely to be seized by Uncle Sugar. But gold and silver belong in a safe or really, really well hidden (or optimally, in a really, really well hidden safe). Remember that lots of people have metal detectors.
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"I saw a YouTube video the other day where Jim Rogers said he is buying silver and holding on to his gold."
Good advice.
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"If gold goes down to say $1000/oz, then he will buy more gold. But right now, he is buying silver. Comparable to the price of gold, silver is at least affordable. Any thoughts?"
There is a post around here somewhere about the ratio in price between gold and sliver. IIRC, if the ratio is around 50:1, then gold is a good buy. If it is up around 70:1, then silver is a better buy.

Last edited by Ought Six; 04-19-2010 at 06:54 PM.
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Old 04-19-2010, 07:06 PM   #3
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It is a hedge, not an investment. A hedge is something you buy and hang onto to protect the value of your money against inflation or deflation. An investment is something you buy and then sell to make a profit.
Well, I am sure there are people that would disagree. If someone bought silver when it was $4.00/oz and sold at today's price, that is definitely a profit. But I understand what you are saying. I am not trying to get rich or make a profit. Mostly I am concerned if/when the fiat money system fails. However, I don't want to lose money either. Another words, when/if I sell, I don't want to go in the hole. I hear people say, "buy low, sell high". So I am wondering will the price of silver keep going up?
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Old 04-19-2010, 07:14 PM   #4
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There are plenty of PM investors out there. Most of them are not very successful. If that is what you want to do; buy and cash out, then leaving your money exposed; you can certainly do that.

The small amount I have is an emergency fund in case the entire economy crashes and the currency suffers hyperinflation. I will not sell it unless I have to in order to survive.
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Old 04-19-2010, 07:15 PM   #5
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I'm assuming that it will take more Federal Reserve notes or digits to buy an ounce of silver in the future.
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Old 04-22-2010, 09:38 PM   #6
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Here is one of the videos I mentioned in my earlier post where Jim Rogers (the commodities guru) talks about owning silver and gold, among other things. That is funny when he tells Maria from CNBC to become a farmer.

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Old 04-23-2010, 05:04 PM   #7
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I wonder what triggered todays blip upward?
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Old 04-23-2010, 07:02 PM   #8
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Originally Posted by VT9 View Post
I wonder what triggered todays blip upward?
If I had to guess, I would say the situation in Greece.

Greece Asks for EU/IMF Aid to Be Activated
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Old 04-23-2010, 07:32 PM   #9
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In Jim Rogers' video, he mentioned palladium. I have been doing some reading about palladium. Apparently, at one point (its all time high) was $1100/ounce. Now it is $564/ounce so I was curious to learn more and was wondering what form to buy it in. So I called the local guy who deals in precious metals to ask him if he buys palladium. He said he only buys the coins. He told me that he has personally invested in palladium, and he thinks it is a good investment. However, he said silver was still the best investment right now.
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Old 04-23-2010, 08:31 PM   #10
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I bought four one ounce bars of palladium when they were ~$235 each. I sold them when they were over $300, so I did make a little off of them. But palladium is an industrial PM, and if the economy crashes and industrial demand collapses, it may not be worth much until industrial production ramps back up. BTW, palladium's main uses are in electronic components and auto catalytic converters.
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Old 04-23-2010, 11:28 PM   #11
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I bought four one ounce bars of palladium when they were ~$235 each. I sold them when they were over $300, so I did make a little off of them.
If you don't mind me asking, what made you decide to sell your palladium?
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Old 04-24-2010, 12:18 AM   #12
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When I bought it, I thought that the economy would recover after a few years of recession. I soon became more pessimistic about the economy and the possible recovery of industrial production in this nation, so I decided that staying in industrial PMs was a bad bet.
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Old 04-25-2010, 12:47 PM   #13
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We don't have any wealth to preserve, but I grow more pessimistic each day about the country's ability to avoid a complete financial meltdown a la Argentina. I buy what gold and silver bullion coins and junk silver I can afford instead of putting money into a savings account -- some may feel it's a tad misguided, but I believe that in the long run it will protect us better than holding funds in a (potentially) government-controlled bank account or 401K.
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Old 04-26-2010, 12:40 AM   #14
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I contribute 6% of my income to a 401k because that is the maximum amount my company will make a matching contribution for. Getting your money doubled is too good to turn down. But I move as much of it as I can into the brokerage account I have within that 401k, and sink it into PM holdings like Canadian Exchange Fund and Standard Silver Resources, Inc. Both of those companies have excellent reputations and fully back their paper with actual physical bullion in their vaults.
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Old 04-26-2010, 07:40 PM   #15
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Yeah, if DH's job matched at all, we would probably participate anyway. But they don't, so until I go full-time and it's even an option, we're not. Good information on the PM holdings, though -- I wouldn't want to invest anything in the stock market right now.
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Old 04-27-2010, 08:19 AM   #16
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Quote:
The manipulation by JP Morgan through naked short selling is providing
an opportunity for normal everyday investors to purchase silver at
dirt-cheap prices. Without JP Morgan's naked short selling, it's possible
silver would already be well above $30 per ounce right now.

Remember, JP Morgan is not manipulating silver up, they are manipulating
it down and the manipulation can't last forever. When investors around
the globe call for physical delivery of their silver, there will be a shortage
of physical silver and JP Morgan will be forced to cover their naked short
position, causing silver prices to explode to the upside.

NIA believes silver will eventually see the biggest short squeeze in the
history of all commodities.
http://www.inflation.us/inflationgol...ealestate.html
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Old 04-27-2010, 09:33 AM   #17
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I thought I would let this thread simmer a while before I jumped in.

It is common for people, when they talk of precious metals, to confuse "investment" with "wealth preservation."

These are two different things.

Investment in PMs are almost "speculative" up there with art, diamonds, etc. It takes a very smart person to consistently make money on them.

For wealth preservation it is something else entirely. This is taking a smaller percentage of money you have, moving it into metals you hold so it is your "bottom dollar". In other words if hyperinflation kicks in or you lose everything you still have some wealth.

In the hyperinflation scenario, the "Ruff Percentage" (name after Howard Ruff) which is 5-10%, inflates and makes up for what you have lost in FRNs.

You buy this and hold it. Forever. You don't buy and sell to "make money" on it. You may buy when the price it low and you may sell to get the percentages back in order but that is about it.

Or at least that is the Potemkin way of PMs.
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Old 04-27-2010, 11:57 PM   #18
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Wow, there has been a lot of good comments in this thread and very helpful as well. From the sounds of it, some of you have been doing this awhile, but I am just getting started. One article I read today referred to silver as the “poor man’s gold.”

I was reading a little about the gold-silver ratio today, just out of curiosity. Seems like the local guy at the precious metals shop mentioned this, but I didn't have a clue what he was talking about at the time.

Trading The Gold-Silver Ratio
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Old 04-28-2010, 03:51 PM   #19
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There is as much fraud in the paper PMs market as their is in other sectors of the economy. I would stay far, far away from gold ETFs, PM commodities futures, mining company stock, and other questionable instruments. If you really understand these markets and are using these sort of instruments for a short-term 'rolling' strategy, that is different. Just make sure you periodically take your profits and sink them into physical PMs, leaving your investment capital to generate more profits. Do not use any more of your money for investment capital than you are willing to lose.

The only 'paper PMs' I buy is paper from reputable companies that is fully backed by physical PMs held in vaults. And the only reason I even do that is that my 401k forces me to stay in paper investments.
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Old 04-29-2010, 01:55 PM   #20
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Silver just spiked up about 5% for some reason. Gold is holding fairly steady just below $1170.
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Old 04-29-2010, 09:23 PM   #21
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I got into the PMs when I was literally a kid, digging silver quarters out of change. My first major speculation was options on silver via Monex, at age 18. I was one of those folks standing in line with rolls of quarters when silver hit $50 (no one actually got $50, BTW).

PMs are lousy investments. Widen your horizons to PM stocks, futures, options, etc., and they are similarly lousy speculations, about 98% of the time (if you can catch that 2%, you're very good indeed). Almost all the big commodities are better levered to inflation, more volatile, more predictable, and more likely to make you money. The guys who make bank are the dealers, PM buyers have been dumb money, for a long time.

Beginning about thirty months ago, I began buying a little metal for the first time in 25 years. America has gone from looking like a sell to looking like a short. Obama has turned out to be a full-blown lunatic. The future seems increasingly dicey, bar a miracle.

PMs are good for one thing: providing an ounce or two (pun intended) of protection when TSHTF. That little bit of metal is beginning to feel quite prudent.
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Old 05-04-2010, 12:22 AM   #22
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From my understanding, the all time high for silver is around $50.00/ounce, but that was due to market manipulation. So I am wondering at what point would the price need to increase before silver is too much, based on the buy low sell high theory. It just keeps inching up, and that makes me uncomfortable because I still want to buy more when I can.
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Old 05-04-2010, 04:56 PM   #23
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Eighty cent silver smackdown today. It may be the begining of the mother of all corrections.
I'd like to buy some pretty SAE's but I loaded up on Maryland aluminum and steel last week.
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Old 05-04-2010, 05:38 PM   #24
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VT9:
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"Eighty cent silver smackdown today. It may be the begining of the mother of all corrections."
I sure would not bet on that.
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Old 05-04-2010, 09:22 PM   #25
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I am kind of glad silver is coming down some. Good thing I never bought any palladium because that had been dropping a good bit lately. As I heard one person say, precious metal investing is not for the faint hearted.

Apparently, with the sovereign debt problems in Europe, investors are moving toward a "flight to quality" so to speak, which includes the US dollars and treasuries. And when those investors start to realize the US is not really any better off than these other countries, what will that do to the price of silver and gold? You be the judge...
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