When should I sell my silver

I decided to sell a 1/3 of my silver after it blew past $40/oz. It bothers me seeing the price heat up so fast, a $1+ a day means too many people are in on the action at this point. There is a lot od speculation now, both from professional investors and also from regular people like us, especially abroad (remember, silver is not just an investment for Americans; Asia is beating us by the tonnage when it comes to silver accumulation by common people).

The 1/3 that I sold I acquired for $15/oz, so selling at $42/oz was acceptable for me. I'd rather take a smaller profit than run around in a selling frenzy once I start seeing the price starting to dive and everyone jumping ship. The other 2/3 of silver that I have have much more numismatic value than bullion value, so that's where that figure came from.

 

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Okay, here I go. I'm thinking of cashing in my tax free municipal bonds that are losing $300 or more per month. I can't take it anymore. What I would like to do is cash in this plan, 48K bucks.. Buy bullion silver. Sell what silver I have, which has more than tripled, and gold, which has almost doubled. I'm not sure what to do with my profits. Silver I believe will keep climbing for the next two years. It has been my best investment. Gold did very well but carries high premiums and is expensive. I'd appreciate your comments and critisms.

 

It doesn't make any sense to sell the "old" silver and buy "new" silver. It just creates a potential tax liablity. But you must be comfortable with your holdings and sell if you can't stand the losses. It isn't worth getting sick over.

 

Thats almost exactly my situation and what I did a few weeks ago! I sold all of my junk silver and kept the proof eagles and 1 eagle from each year for my eagle album. I reinvested the money in my Mercury Dime collection. I also have a kid on the way due in August as well.

 

Cloud is right about selling silver with one pot just to buy with another. If it were me I would keep what you have, and buy some more maybe 10 oz bars since they are pretty close to the same premium as 100 oz but better than 5's, but only if you already have enough smaller denominations. Keep enough cash in case of a couple major emergencies, and put the rest into things you won't want to have to spend your silver on if the day comes when it is the primary medium of exchange. Guns and ammo should retain their value well. Have reliable and versatile transportation, plant a garden, and have plenty of supplies on hand.

As for when to sell silver, I might advocate it now if I wasn't concerned about potential for a future shortage, but the price is very tempting. That aside, and ignoring the buy on the dips strategy, I am following Federal Reserve policy as an indicator. That is what got me into this arena, and since nothing has changed since then, and it has been quite profitable, I am going to let them determine my market sentiment.

 

So, a serious question. If you believe the Fed is dictating your actions, why is it affecting silver disproportionately? Why are you buying only one commodity in response to Fed action? Seems to me, if this is truly what is driving this market, ALL commodities should be moving together. Since they aren't, there are other factors at play, meaning if you are buying just silver Fed action ISN'T all that is driving you.

 

Just remember that dollar gains are not relevant. I mean that a $1 gain in a $40 market is not more severe than a $.25 gain in a $10 market. I find looking at percentages more relevant and helpful to overcome this human prediliction of associating an importance to certain things.

 

I agree with your thoughts on the gains, however even looking at percentages you get a 2-3% gain per day. That is pretty quick, and there have not been many adjustments lately. I also think that new investors and manipulators are skewing the market. I think it has the longterm ability to go past $50 and higher, but any investment that can double and triple in a few months time is one that I am going to be skeptical of.

The prospect for big gains always comes with the prospect of big losses. Only invest what you are willing to lose and I was no longer willing to lose what I had invested so I pulled the majority of my profits out. We will see if it was a good call or a bad call but the bottom line for me is that I made money instead of losing it.

 

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I Have been selling off a little here, a little there, most of my private minted silver rounds are long gone, all my one ounce bars are gone, I still have some 5 and 10 ounce englehaqrdts, lots of ase's, junque silver, and a bunch of govt minted bullion. I plan on selling off a bunch more of my more common junque silver and maybe a few dozen eagles in the next week or so, in order to have some cash for the csns show at the end of the month

 

Here' more. The bonds are my biggest investment. When I cash them in I'll be just getting what principal is left so that's not taxable. Selling the old silver and gold and taking a profit now and buying more at today's prices is like profit averaging, isn't it? I figure if silver goes to $50 or more then I'll cash some in and take more profit. Silver prices tend to follow gas prices and $5 a gallon is inevitable. Maybe I'll buy some nice old coins after the second profit taking..
I'm retired and depend on SS for rent and a little bit more. I'm at the bottom of the tax code and capital gains won't hurt me
too much. Nothing else seems to be making me any money.
There's one hitch and a big one. I've got a gold coin at Heritage Auction now and it'll net about $35-$40K. That'll be capital gains for this year. If I sell the old silver and gold that'll just be more capital gains which I DON'T want. That leaves me with waiting a year or using the principle from the bonds and that's all I have. Need more advice, please. zeke

 

Exactly, it's not the issue of a $1or $2 rise that bothers me, it's the -2% or -3% decrease that literally can happen within a few hours. I don't follow any real indicators or concrete numbers in trying to assess what will happen with silver, I just keep the big picture in mind and keep my eyes open about what goes on around the world in terms of investments. For example, a week ago I read a number of articles in the WSJ and Financial Times about the hardcore increase in purchase of silver bullion in India, China, and other countries that are an enormous chunk of the world's total investment in silver, for example. Also, a number of articles started popping up about investors getting into silver, influencing the market, and every single store in my area now has a sign that says "We Buy Gold and Silver!" which also bothers me. When everyone is rushing through the door to make money on this magical commodity and predict that the price of it will double, triple, quadruple squared in the next few months, it is my personal sign to myself that it's time to get out. I'm a conservative investor in bullion, I'm not looking to make a lot of money, just a bit exstra to invest in other coins, that's all. I'd rather bow out at $42/oz and count my cash than risk a rush to sell one day because silver dropped 5,10,15% over the course of hours, days, etc.

When you realize that it's time to get out of a market, it means it's already too late, because what you're seeing is the curve on that graph already in a downward slope. Someone here said it well, you can never be on top at the high point, you'll start selling when you realize you're already seeing the downward turn.

But everyone has their own opinion, I don't think it's wrong to keep silver right now and wait longer, I don't try to dissuade anyone. I just look at it from my position in relation to what my goals were when I got into silver. I'm happy with a modest profit, and I wish everyone the most $$$ that they can get their hands on.

 

I would simply point to Fed policy being paramount to monetary value and inflation, and PM's history of being used as currency and thus the de facto alternative that people will seek to preserve their wealth. Excessive money printing demands a weaker currency because the goods and services it is representing are not increased at the same rate. The worse the dollar does, the more flight to safety. So silver is weighted disproportionally to other goods and services the worse inflation gets IMO. I think it's only doing better than gold because it's affordable for the average person who may not have a lot of cash. If the Fed reverses their policy then silver should also be one of the hardest hit due to the level of speculation on future inflation that is currently buoying it. If we knew when that would happen maybe we could say that today's price is above equilibrium, but we have no indication it won't continue either. Some might say that makes it a bubble, but if we continue the current course I don't see why it would ever break until we get a new currency with a much better exchange rate on silver than current dollars.

You are correct that I do have other motivating factors, such as having something of value that does not degrade over time, that is universally accepted as a bartering tool, and that does not require my dependence on questionable power structures. Now if you mean there are other players in the market that are driving the price up artificially, it wouldn't surprise me. However, the only evidence I have seen so far is to the contrary.

 

That's fair Inflexion, I was simply asking why people who say the Fed is motivating them invest in silver so much. To me, gold, platinum, and many other things fit the bill as well if not better. I just look globally and see silver disproportionately going up over other items that people who worry about inflation would also buy. That was the basis of my question. This disproportionate rise, and people who use Fed actions as justification, is my concern. If all storable commodities rose the same percentage I wouldn't have asked.

 

Not disagreeing with you man, just pointing out that percentages are a better judge of markets. Humans have a weird attachment to certain numbers, like $.99 is a much better deal than a whole dollar.

 

You guys have made this too complicated :/

 

Whether it's Fed policy or something else, know what your reason is for holding silver like InfleXion does and sell when the reason no longer applies. If you don't know your reason, find one or sell.

 

People mistakenly believe that gold and silver move hand in hand but they don't. Gold rises in price due to Fed actions, silver doesn't . Silver on the other hand is subject to extreme speculation on the futures market. 760 million oz of silver was traded on the futures market today which is equal to an entire year's worth of production for the entire world. It's an insanity at best when you consider that these contracts are supposed to represent real silver which there is no way they can. Speculators are making a high stakes bet they will be paid off at a significant premium to settle in cash, (which they always do). What silver ends up doing over the next few days, weeks, month, is anyone's guess but it's high stakes poker at this point. Tread here at your own risk.

Gold is not being speculated up in price. Gold is rising due to the failed economic policies of the USA. Don't try to attribute the rise of gold to the rise of silver because they are unrelated. Remember governments and central banks hold gold as an asset, they could care less about silver.

 

I think it's just because people have less money, and you can get more silver without spending a chunk of change. Also the shorting of silver by JPM inclines me to believe it has been artificially suppressed, and that this is more of a correction than a discrepancy. Just speculation when it comes down to it though. So the Fed is what got me into PM's, but I personally chose silver because of the gold/silver ratio at the time around 70:1 and also for ease of bartering vs. gold where small denominations aren't very practical.. so many factors. I didn't really consider anything else mainly due to these 2 being the primary objects of their kind throughout human lore. Hope that clears things up

By today's standards I am a bit more inclined to want gold than before (diversification is best I know), but the current g/s ratio trend is in silver's favor for the time being. Once it gets back to the historic/naturistic ratio (the merit of which is debatable, but I tend to like it due to consistency between the discovery of the Americas and the US Civil War) I would consider doing some swapping into gold to avoid a pullback without risking getting into paper.

 

zeke, I think I get what you're saying about timing your profit taking vs. jumping back in, but it's still a gamble. As much as I do think we will see $50 silver, nothing is assured. Personally I don't want to part with any of my PM's (lol for a second I said 'party' instead of part.. I could go for that). So, along those lines, if you keep what you have you won't have the extra capital gains either. I'm not sure if there are any slick tricks to consider here.

I did see on the news tonight an analyst said there is a 1/3 chance that the US credit rating will be downgraded from AAA in the near future, and I would give it more than 1/3 if they are even talking about it. If that happens we will probably see higher taxes in general, so it might be better to take the hit on the capital gains now. I would seek professional advice though, and I am not one. I'm sure someone here is though!