The price of silver and gold goes up, time to buy Generic bullion

I have been buying bullion now for about 6 months and when silver came down, I was buying some of the higher premium bullion. Now that it appears that silver and gold are heading back up again, I am thinking Generic is the way to go to get the best bang for the buck. I am always keeping my eyes open for those sellers who are looking to unload their nicer silver still for close to spot, found a few of them. Time to be smart and make a good buy.

 

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I am not sure a rising market makes generics a better buy. It still will depend on who you sell them to, right? Generics usually have an "end user" being the smelter. Smelters pay discounts versus spot for their silver. If you buy ASE or similar, most purchasers of them will be other collectors, who will pay a premium versus spot.

Just saying I am not sure market conditions change purchase decisions. If you only want the most ounces per $ generics have always been cheaper.

 

The problem you have is recovering your premiums if you do buy higher end bullion. I paid on average around $25 for the nicer bullion during the down trend. But to pay $30 and up when the ceiling for silver to date has been no higher then $48 leaves little room for profit when it comes time to sell. This is speaking strictly non numismatic. Numismatic bullion is a different story.

 

You may never see 40.00, let alone 48.00 again in your lifetime. If your looking for bigger returns invest in something else.

 

And you might see $500, or $5,000.

If you bought around 2001, and sold at the high in 2011 you could of made a 1,000% return on investment in 10 years. That is pretty good in my book.

Will it happen again? Nobody knows for sure, but it could.

 

If you buy rare old coins you are much safer against price drops.

 

Gold and silver will spike when the first Tomahawk lands in Syria.

 

I think soldiers these days have more advanced weapons, then spears and tomahawks.

 

If it doesn't , the converse would be to sell the stacks?

 

This thread is all over the place!

 

Bad advice. Not long ago some bears were asserting silver would drop into the single digits. Silver can easily break past its previous high of $50 because of the massive liquidity in the markets. Also, some of the members here assume the markets are rational -- the reality is that markets can get extremely distorted based on trends, mass psychology and charts taking on a life of their own. Fundamentally, though, there is a real problem when most U.S. Treasuries are bought by the Fed. I mean, I don't get why this point is so controversial here.

I did suggest silver could pop back to about $25 over the late summer, so I was off by a month or two. The only thing I'd change in my forecast is that the dollar is not as strong and its future not as bright as I thought, since the tapering issue the Fed is faced with is a lose-lose. It's bad if it tapers and bad if it doesn't.

 

I'd add that both silver bears and bulls will be correct, though at different times, due to the volatility of silver. Silver can have its moonshot moment within the next few years -- yes, yes, I am "one of those" -- but I also think there can be a subsequent crash so that 10 years from now, if this forum still exists, we will see "I told you so" here. However, I see silver as an indirect investment in oil and energy, and so with depleting resources generally, silver will generally trend higher.

 

So what is your guesstamation of silver hitting the moon, what number should I be looking for, and when do I sell after to retain that profit?

 

I am not a financial adviser so my statements should be taken with a grain of salt. I am just some poster, like all of us. But I will tell what I think. Again, we must all do our own due diligence and decide for ourselves what investments we will make.

I believe there will be a systemic crisis, or meltdown, in a 2-4 year timeframe from today. If the bond market collapses, we can see a dollar collapse. Under this scenario, I believe we will see silver in the triple digits. Also, the global use of solar energy may add to tightening silver supplies, since solar panels require plenty of silver. A crash of the global reserve currency alone will wreak havoc, nevermind the need for new sources of energy.

I could be wrong, and at times I hope I am wrong. I really do wish the bears here well with their investments in stocks and bonds. I don't want to see anyone getting wiped out, except for evildoers.

 

I think all commodities were up on the Syria situation, but they have now cooled a bit. Silver's under $24, which is ok by me, since I feel better about buying it at say 18 times face value lately. When it was swooning I kept questioning myself, but now that we have seen that silver can rally it seems like an acceptable risk again. Please don't hate me when silver crashes back down under $20 or something. I really have no idea what it will do. I started buying in 2001, and have always been uncertain as to where it's going.

 

Just my 2 cents, but I look at things reverse. Buy generic when the price is low, because when prices go back up it will eat into the premiums on the more expensive coins.

For example, eagles are typically between $2-4 over spot, and up to $8 in the recent bottom. Generics are typically $1-2 over spot, and up to $5 in the recent bottom.

Either way you are saving around $2-3/oz by buying generics vs. eagles. At $20/oz that means you get an extra ounce for say every 10 ounces you buy.

Now say hypothetically the spot price doubles up to $40/oz. If you bought eagles you will need their premiums to also double in order for generics not to have been the better play.

Sure if the price goes down then those eagles will have better resale value, but if your concern is downside then you want gold more so than silver, and if you think it's going down then why buy any at all?

 

They're also much safer from profit, but you are right. Risk vs. reward.

 

I am a big fan of the way you articulate things Jolumoga.

I just want to add that I find triple digit silver questionable, because that implies dollar denominated pricing. If the bond market is not sustained and US debt becomes unserviceable thus causing a dollar crisis (remember treasuries ARE dollars, one of their many forms) then it could be possible that the price of gold and silver stops there.

While it is unclear what may play out after that, I would generally agree that the buying power of gold and silver should approach the buying power equivalency of triple digit silver today and 5 digit gold today, but that the price of gold and silver may become extinct as Antal Fekete is anticipating since instead of measuring things in terms of dollars it may be necessitated to measure everything else in grains of gold and/or silver or have a gold and/or silver backed currency in which case the price of silver would simply be an ounce of silver. This is what historical monetary cycles have done which are well covered by Mike Maloney. I also find this a likely inevitability due to exchanges running out of metals faster than ever before, and if they have no metal they can't set the price. If they can't set the price then the physical market will do so, and in the face of fair value there would be no confidence in the dollar.

I have heard of alternatives to silver for solar panels although to date they are sub-par, but with over 10,000 industrial applications silver's technological demand does not hinge upon solar. I would even go as far as to say that while the technological demand for silver is substantial, that this bull market is not even dependent on that. Investment demand is still very small comparative to intangible IOU assets, and if there is any crisis of confidence in the dollar that could explode, and could result in a virtuous cycle as the higher the price goes the more people who start looking to invest in it.

The amount of silver demand as it currently stands is sufficient to exceed mining supply each year in the absence of these other potential factors. Were they to come into play the supply/demand picture would be quiet different, and there is no wiggle room as it is.

 

I too have heard of alternatives to silver in solar panels. Even though they are subpar, they are not subpar by much and quite a bit cheaper. Copper wiring in our homes is also subpar compared to silver, and how much silver wiring is in homes today?

Btw, I just have to again disagree with your assertion that silver "demand" exceeds mining production Inflexion. Commercial disappearance is WAY lower than newly mined silver. It is only from "demand" from coins, jewelry, silverware, etc that total "demand" exceeds mining. I do not view ASEs and silverware as long term disappearance, more like warehousing of silver that can, (and will, we saw this when silver popped up over $40), come back onto the market at any time.

 

Supposedly:

http://ausbullion.blogspot.com/2011/03/1650kg-of-silver-fired-at-libya-to.html