new investor - silver or gold?

I decided to completely invest in precious metals after I lost a grand in stocks overnight...basically paper money that evaporated.

I can put away about $500-600 per month at the moment, what should I primarily be buying? I'm mainly buying for investments as I'd eventually like to sell of part of the collection to buy a house without taking out a mortgage.

Over the weekend, I've bought about 20 ASE at $30.80 which is about $4 over spot. With 1/10th gold, the best price I can get is $182 which still looks like $20 over spot. Should I just go massing ASE or buy some 1/10th AGE at a huge premium? Or maybe even build up the ASE collection and trade up for 1oz AGE?

 

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Im sure I wont be the first to tell you this but don't rely on only PM's

 

I would prefer to invest in gold coins.

 

If it is for an investment, don't buy bullion. If it is for love of coins, buy coins. I would go for silver because I think it is undervalued over gold but I'm totally guessing.

 

Its always dangerous to make investment choices based upon only a short period. This is a sucker move, just like small investors always want to invest in the fund that did the best alst quarter.

For "investing", you need to keep your eye on where you want to go, not where you are. This is why most advise diversified portfolios to reduce overall risk.

The problem with the PM market is the large buy/sell spread. Lets say the market was flat for a few years, and you go to sell those ASE's you just bought. Well, you just lost about 10% sir, since the dealer will not pay you what you bought them for. That is assuming the market will be flat, with the tremendous runup of PM in the last 5-10 years there is a distinct chance it could go down. You are not buying PM at the bottom of the market by a long shot, and its possible you are buying at the top.

For those reasons I would suggest caution and diversification. If you know you need this money in 3-5 years, even though the yields suck, the best place for the money in probably in cd's.

 

Rolls of Ase's

 

I would put a little money into both gold and silver. The tenth oz. for $182 is probably the best price available right now.

 

Why not Bullion?

 

Investing in ANYTHING should be viewed as a LONG TERM commitment. The only way to lose money in investing is to sell quickly at a loss. So whatever you do, look for 5-10 years down the road and not the immediate forecast. As far as gold, I can't see much more room for inflation of gold prices, given how high it is. That market will come down soon, as it is unsustainably high.

 

Put $350 in the bank and invest $250

 

Why on earth buy 1/10...the premiums on fractionals are higher

 

As a lot of folks have suggested, diversify. Don't put everything in PM, and don't expect a return on your investment quickly. With the way things are now, especially in an election year, the trouble in Europe, etc (the same things making the stock markets uneasy), you could see a decline in your investment, which is just as likely as unlikely.

I like PM's as an investment over time for many reasons, and will continue to add over time, more or less at a time based upon current price and trends.

I currently have a ratio where I invest in both in about the same monetary value. My current ratio target is about 50:1, silver to gold. So, for every 50 ounces of silver (roughly $1400 at spot), I also pick up one ounce of gold (roughly $1600 spot). I feel it's good to have both metals.

My opinion is to also have different types and sizes of each. I've got a good amount of 1/5/10 oz bars, along with 1oz "rounds" or "pucks" (i.e. bullion grade ASE's and other coins) for silver, and 1/10, 1/4 and 1oz gold, some bullion grade, some I'm going to send out for grading ('86 gold eagles, '08 double eagle). I like the look and collectibility of proof ASE's, and consider them both collectibles as well as pure bullion if absolutely needed.

Hope this helps in some way.

 

Agreed the premiums may be higher, but I believe fractionals, even as small as 1/10 are very useful. You can find them for low over spot if you're buying just bullion grade, and they're much easier to offload if you're looking for just a small amount of cash at the time. In my view, people who can easily afford $200 for 1/10 or $400 for 1/4 are much more readily available than someone who has $1600-$1800 in a shot to buy a full ounce.

 

Again, diverse your portfolio with a couple different types of investments. I would ride the silver train, it's cheap right now. And the speculator train will start to move to run concurrently with the Mayan calendar "end of days" hoo ha. Probably go until mid-november and then sell them off.

 

You can lose a substantial sum of money overnight with precious metals, too. In both cases (stocks and precious metals), however, you don't lose anything if you don't sell at the new, lower level. Read and learn. During that time, perhaps you simply sock the extra money away into a savings account. I realize this has no real return on investment, but it is liquid and keeps you from making poor decisions in the early going.

Personally, I have been buying gold and silver for quite a few years.

 

If you only have $300-400 a month to invest, bullion will take you a lifetime to realize a profit on, if you see one. For that small amount I'd get a tax free IRA. That way you won't have to worry about losing anything.
Guy

 

Btw OP, just this morning I made almost $2k on stocks. Does this mean I should sell all of my PM and dump it into stocks?

Not picking on you sir, just illustrating that market adjustments go both ways, and neither are the basis of making long term investing decisions. I still believe you need to think long and hard when you will need this money, and invest accordingly. I for one, even though I own PM, would not want to be buying it in today's market if I knew I NEEDED that money in a few years. That is too short of a timeframe to risk on any investment. I you know you need it in just a few years, best to just keep it in cash, (short term bonds, cd, etc), IMO, as all other investment options would be too risky.

 

Don't put all your eggs in one basket. Invest in different things, not just PM's or stocks or real estate, spread it out if you can. Also, listen to medoraman, don't take the plunge on what occurs overnight and in short time frames.

 

Thanks for the replies.

What about inflation? I"m actually looking to keep pm for 10-15 years and I always keep some back cash for emergencies.

Basically, I dont like to take out a 300k mortgage on a house. With stocks, there is a huge potential to lose and nothing to show for it. With pm, even if the price goes down, you still have the metal and demand for it may go up after several years. I prefer to save up and buy theland or house. Pm seems like a food way to save up for it


if qe3 passes, gold and silver myst go up right?


(typing this on a smartphone sorry for sp mistakes)

 

Nothing wrong with putting a little skin in the game, and getting physical for it. It makes the senses more keen when you begin to learn. However as said above, don't put more than a well reasoned percentage into any one basket! PM sent.