Transfer of Silver Based Wealth

So if any of you remember my thread about 2 BU rolls of Silver Washington Quarters
I have made considerations about transferring the value to a different form of bullion or investment. Or perhaps diversify the value.
What do you think?

 

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Silver's doing well these days, but it'll never pay a quarterly dividend, and it'll never split. On the other hand, it'll never go bankrupt, either.

If you're serious about investment, put all the money you can spare into an index fund, or a good mutual fund. Or, at your age, educational opportunities.

 

I should consider a mutual fund
Educational opportunities? I got that covered a plenty.

 

I sold a bunch of silver to load up a Roth acct, and bought an Income Fund just as a test. The IF is paying about .247 per share per month, which i also picked whilst it was coming off of low of the share price. I'll be comparing it to MM, Index Funds etc. I'm always comparing "exploratory investments" (this a safe exploratory/comparison investment) to compare for best wealth mgt and growth.

Also since these funds are "open" and more safe in times of market dismay (and slower moving valuations) the institutions actually move $ over very quickly to other open accts (at the time of request, not the end of the day clearance ... at least for me they've done it), versus putting in a new fund which you don't have open yet.

I'm actually glad I dispensed of some of my silver assets especially in my Roth.

Transferring your silver to a different silver depends upon your strategy. I've always maintained gov't bullion, not 3rd party. It was easy to sell no problem and can be used as part of your wealth if you ever need to leverage it for anything (wholly dependent upon the loan comp, etc though). But I've used it successfully in the past.

So it depends upon your long term goals the answer can vary.

 

I think the most viable option is that it is a medium growth/ risk investment and also a way to have emergency money in case of any problems arise.

 

I have funds across the spectrum from like FBSOX to SP500/Nasdaq index funds, med to high International Growth/ Domestic Growth, etc etc. Putting heavy amounts into the ones moving more when warranted or making them really light when warranted.

Until higher interest rates came about I've never really played around with an Income Fund ... minimal risk, and a good comparison.

It really comes down to how much you track everything, how much you have to invest into various funds, any fees/ restrictions to change investments and what your investment strategy is.

 

For sure alot to consider

Slightly switching lanes here, what would you think of transferring the value into other precious metals? ie other silver or even gold?

 

None of them grow or pay dividends. Gambling that one will go up more than another is just that -- gambling.

Metals are for fun, and (sometimes, eventually) for diversification. Or for hiding. Not for "investment".

 

If I do decide to get out of the silver I currently posses, I most likely will set a target goal. A value to reach before I sell.

 

Plus one!!..... I have purchased silver at $5.00 an ounce.... I have bought silver at $29.00 an ounce in all my years of playing. Only reason I can say that without my backside puckering up is because each and every PM purchase was done with my "fun" money. Fun and investment funds should NEVER mix. I very nearly did invest some of my business funds in PM's once when silver slid from $29.00 down to $20.00. That would have been a disaster had I made that move at the time.

 

Just hang onto it, you're young.

 

Always go with physical holdings, have you watched any episodes of American
Greed ? or a bird in the hand is worth two in the bush

 

I believe on diversification. Metals have a totally different investment function than most normal asset classes. Bonds are seen as a guaranteed return, stocks as long term growth. I see precious metals as somewhat an insurance policy against those having a cyclical downturn which always happens and is long over due IMHO.

Even the most stock bullish experts that are well seasoned will say to put 5-10% of one's portfolio in PM's. I believe that the 2008 banking crisis was a signal to those that understand economics that the debt burden in the US can not continue to grow to infinity as some may have you believe. There is only one way that the USGov't will ever be able to pay off, or continue to be able to make the interest payments on 22 TRILLION in debt (not to mention future obligations like SSI) is through inflation.

The money supply has been growing exponentially, and has yet to be seen in a similar rate of growth in prices of goods. It is clearly evident in stock,real estate, and bond prices and has been for a decade at least. It is only a matter of time before it shows in commodities like it started to in the 2000's. Therefore a heavier weighting in commodities, specifically PM's is what I believe to be the prudent choice at this time.

There are several reasons people give for advising against PM's. One is storage, it can be expensive to store a significant amount of bullion where someone can't steal it, especially silver. Another is that it doesn't pay interest of dividends. Bullion in my possession is no one else's liability, it is very liquid (I can have cash in hand with a trip to my dealer's within 17 hours maximum, they are open Sundays) and it will never go to zero. Every single stock and bond has that potential.

I prefer to diversify my metal holdings beyond physical. Buying silver stocks (miners) means that I am getting way more than 1 oz of silver for my $16. Of course it is still in the ground, but I don't have to worry about someone stealing it. With some miners, I can get an ounce in the ground for a couple bucks. This gives me great leverage to the price of silver. There are companies like Wheaton Precious Metals (WPM) that pay a dividend even with today's super low gold and silver prices. It's only $.36/share or 1.7% right now, and the % return will most likely remain near that level as PM prices rise because the stock price will outpace metal prices. The thing is, if the stock price increase 5X and the dividend follows with a 5x increase, the dividend rate based on today's investment would increase to 8%/yr. A 5x increase in stock and dividend price is within the realm of possibility with a doubling of PM prices. A double from here in PM prices is easily achievable due to the increase of the money supply over the past 5 years and projected increase of the next 5 years.

A small investment in silver stocks now could over-take a large one in "funds" if the reality of modern finance manifests itself in the next decade. In my honest opinion, I do not see much of a chance it won't.

I apologize if that is difficult to understand, it was a lot to try and pack into one post.

JMHO
Ed

 

So you would say that a mining stock, is per say, the best of both worlds? Since PMs will affect the price? What are the cons to a mining stock?

 

There are many cons as with any stock. Management issues, governmental regulations in the countries that they operate mines, mine life, mining accidents,environmental concerns, wage and energy cost and extended low metal prices are the ones that come to mid first. The majority of silver is a bi-product of either gold or base metal mining. This works two ways. When silver prices rise, they supply is fairly inelastic. They don't mine more copper,lead or zinc to get extra silver. When base metals are low, it hurts many miners regardless of silver prices.

With PM prices being low for the past 6 years, it has led to low margins for many miners. If the cost of mining one ounce of gold is $1100/ oz. then they only make $150/oz. with gold at $1250. If gold goes to $1400, a 15% increase, their profit would be $300/oz. or double. There are many silver miners with cost at or above the price of silver. They can go from a loss to a profit with small moves in silver. A decent move can mean huge change in profitability to a company that is a primary silver producer. There aren't many of them though. Pan American comes to mind.

There is risk with any stock. Once again, diversification is a good way to protect against a company having problems. Wheaton Precious Metals is a streamer, they buy silver from many other companies before it's mined, for locked in lower prices. This gives diversification and leverage to thee upside, without many of the cons of mining. A smaller miner will have more risks, but will yield higher share price appreciation during a PM rally.

 

That,s the rub, risk vs reward, i like steady reasonable returns not
In to things that are unconventional.

 

Have you read the latest? Gold is at $1344., the highest in the last 10 months. All projections are for it to move higher. Gold mining stocks are going up. It is being said that gold is in the beginning stages of a new gold bull market. Only time will tell.

With all that positive outlook now would be the time to buy, not sell.

 

good for me i guess...LOL