Stock to PM's

I'm looking at selling a portion of stock that's been stagnant for some time now and buying a nice diverse selection of PM's (gold,silver,numis). I'll hopefully have a budget of $30k and right now I'm thinking something like fractional AGE's, a 2009 UHR and a monster box of ASE's. I'm looking for opinions on what the best long term return on investment would be as well as the possibilities of a future SHTF scenario. My current hoard consists of roughly 80% numismatics and 20% silver bullion.

 

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My suggestion is to study the market carefully, and do a considerable amount of research. The PM market is extremely volatile, and buying includes considerable risk. With the high demand for gold and silver in recent years, a person has to make an informed decision if it will continue to rise even in a bull market economy.

 

I would never recommend doing what you're planning, but then, nobody here on the bullion forums wants to listen to anything anti-forever inflationary bullion, so what the heck. If you're going to do it anyways, I'd suggest you buy gold as close to spot as possible, which means staying away from modern bullion and instead buy numismatic gold. It can be had for far less over spot than bullion in most cases. Buy the most for the least and maybe you might not drown.
Guy

 

Thanks for the input coleguy. Out of curiosity on not thinking this is a good idea. Is it based on a believe that PM's have reached their ceiling or such a volatile investment for the long term would be too risky?

 

I personally think it's risky long-term. Many here don't think so, and there have been a billion discussions on the topic here over the years. I invest in areas where I can calculate the risk and the future performance based on many facets, whereas bullion futures are based, right now, on fear.

However, if you buy numismatic gold, even if someday prices fall, they should retain a lot of their current value because they'll still have demand as a coin and not just bullion. Not to mention you have the history behind the pieces which is fun. Use it as a diversification of your portfolio, as most would agree to do, and treat it as any other investment...ie- hope for the best.
Guy

 

Hmmm, I was looking at numis gold coins, and slabbed PCGS they were actually more expensive than modern bullion. Are you recommending buying non-slabbed? or something else?

 

I agree with the above that you ought to stick to gold. However if you are going silver, then I would pass on the monster box of ASEs. I think that a full bank bag ($1000 face) of circulating silver coinage is a better investment.

 

If for investment reasons, why buy slabbed? an oz of gold is an oz of gold regardless of grade. Buy from a reputable dealer and there's no need to buy graded. The people who "invest" in things like MS70 ASE's for 300% over spot are wasting their money and time.
Guy

 

I meant like a pre-1933 MS-62. Not much more than AU-55, but noticeably higher than spot (20%). I am new to this, so I'll get back in my lane, now!

 

One thing to consider is, you have to find safe storage for all these precious metals. Silver takes up a lot of space but $30,000.00 worth of gold could be stored in a medium size safety deposit box. For a safety deposit box, I would pick a small regional bank that is in good financial shape. You also could go to the extreme and store some off-shore.

As far as an investment is concerned, the IMF needs $600 billion it doesn't have to loan to countries that are on already on the verge of bankruptcy. This tells me that in 2012 there could be a lot of world wide bank failures. The IMF also recently sold 400 tonnes of gold which tells me they are very desperate. If ever there was a time for precious metals I would say it is now. The good times are over.

 

I am with Guy. Seems a curious time to get out of stock when they are lowish and get into PM when its had its run.

If you are going to do it, (and long term its great to have 5-10% exposure to PM as a contra asset), he is right, buy the PM not the coin. Why are you justifying doing this? To buy PM. Well, buy PM then, as cheap as possible. If you are wanting to buy slabbed numismatic gold sounds more like you are trying to justify to yourself permission to expand your coin collection. No offense meant, I have been there too.

Chris

 

What do you mean by that? That the opportunity to buy at the relatively low prices we have today is over and they will soon rise? Or, PM's are going to cool way down?

 

What I meant was, the days of investing in real estate and the stock market and making money hand over fist is over. Also gone are the days when you could quit a job and walk down the street and get another one. I lived through the goodtimes of the 1970's, 1980's and the 1990's. The future I see does not look very promising. I see precious metals as a hedge against an uncertain future. I am buying silver when ever I get the chance and consider it cheap. The banks aren't paying any interest so I see no problem in taking the chance with precious metals. If I could get 5 - 10% interest on an investment certificate at the bank, I would most certainly direct any extra cash towards a bank account. The best I can do is 1-2%. Any gains I make in the stock market or other investments are taxable up to 50%. Not the case with precious metals. I guess by owning some silver and gold, I feel I have more control over my life.

 

That's the reason I started to buy silver a few months ago. I figured my money was just sitting in the bank losing value through inflation, might as well take a chance in PM's.

 

timing is everything of course and you'd be buying high now. if you're buying all along it will average out.

 

No offense taken Chris. A part of me is always looking to expand my collection. More than anything, I don't want my money tied up in all stocks (which most is right now) and I would like to diversify. I'm also not quite sure we've seen PM's hit their peak yet.

 

This is a very good alternative to modern bullion if the OP can do it. I agree that the plan seems to be sell low and buy high, so the OP should probably expect the financial results typical of that sort of plan. I like gold and think it has a place in a portfolio, but it's harder to make the case that now is a good time to switch out of stocks and into gold.

 

Talk about selective memory! :rollling:

 

People were saying gold was overpriced when gold was $350, when it was $500, when it hit $600 they went through the roof about an impending bubble about to collapse, they busted their bags about the gold bubble when it crossed $1000, they said it could never reach $1200, we heard it last year at $1500, and so forth and so on. I laugh at people who say gold is overbought and over priced. LOL

The problem with these proclamations is there are so many people that have been brainwashed to accept the system, i.e. stock market is always good, big house, debt, etc etc. is that gold shatters this view of the universe and until they take an honest look at it, they will do anything and everything to defend the status quo. Never mind that the status quo only serves a very small portion of people today.

When pressed for technical reasons for why they feel as they do the answer is always either. "Someone important put money here or there" or more commonly "it's always been this way". i.e. Tradition. Tradition is when you do something for no other reason because this is what you have always done. Nice for weddings and christmas, however, it's not an investing strategy.

You don't have to believe me. Go read back some of the history on this forum and other PM investing forums. Go back 1 year, go back 5 years, go back 10 years. It's always the same regardless of the results. There is no such thing as a stock market anymore. It's been rigged to guarantee failure by anyone silly enough to put money in it unless you are one of those making the rules. When people running banks can literally break laws, steal money and gold, and simply get away with it, then this isn't a place where you want to be doing business.

 

I agree some people are always pessimists. However, I would also point out the opposite. For 30 years or longer I have heard every single year about how PM was going to have a breakout year, the world is crashing and burning, the only valuable thing in the world is PM, etc. Every single year they would say this, and now they are right they cannot stop bragging about how "if you listened to them", and now you should give them money to hear their future "reports". Good gig. I remember a classic scam that had a person get a list of wealthy investors, and mail out letters predicting the market. Half he would mail the market is going up, the other half its going down. Those that accidentally got a correct prediction, he would again mail to, again half up half down. THis went on until for 4 weeks straight there was a group that had received correct "predictions". He then sent a letter sayign I have proven my track record, now pay me for next weeks prediction!

In other words a dead clock is right twice a day. This goes for the naysayers as well as the pundits. Almost all of the PM pundits I see have been predicting PM rise for many years where it didn't rise. Do they know something or were they a stuck clock who happen to be right now? That is the question for either group, right?

Btw nothing I am saying here is applying to you personally Fatima, I am referring to paid PM pundits out there.

Chris