Investment/Portfolio

So let me start off by saying I am very new to bullion collecting/investing. I have done tons of research and read through numerous threads on this site. I got to a point where I was comfortable with my portfolio and ready to start adding some metals.

When investing in stocks you hear the concept of dollar cost averaging and how it is beneficial for your portfolio. Silver and gold buyers mostly seem to be geared towards holding off and waiting until it drops to buy more. If you look at a silver chart and a S&P 500 chart side by side it makes some sense why dollar cost averaging doesn’t work as well for silver buyers.

So long story short. Are any of you dollar cost averaging and buying silver at all times no matter cost? Or do you have a wait until it drops strategy?

 

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IMO, bullion is not a viable investment vehicle. Why tie up money in bullion? Over time compare the price of bullion to the S&P index.
I stopped buying bulk bullion years ago and continue to search out equity investment opportunities.
A few of my investments:

Digital Turbine APPS bought 5/1/20 up 935%
QuantumScape QS bought 11/27/20 up 595%
(bought Kensington @ $16.50/ps that merged
w/ QS)
DMTK bought 9/30/20 up 101%
I've owned Apple and Microsoft for decades.
At this point, I own stock in twenty different companies.

Have only added a few bullion coins that I find interesting.

 

I think maybe you missed the point of my question. I completely agree with everything you said and do agree the stock market is the best investment one can make with their money. Was really looking for people’s opinions and theories on adding silver/gold and if they dollar cost average or wait for market drop.

 

No, I didn't miss the point of your question.
Good luck w/ your bullion investing.
2021 is shaping up to be a financially turbulent year which may enhance the price of bullion.

 

I would say the dollar cost averaging makes sense with bullion as well, to a point. If you perceive that the current prices are driven by excessive speculation, then it's best to hold off on your purchases.

The classic example was the Hunt Brothers who drove silver up to $55 an ounce with their excessively leveraged purchases. When gold looked like it might might make it to $2,000 an ounce that might have been a time to make you pause.

When you invest in stocks, especially in funds that contain many stocks, you are dealing with a broader spectrum of the economy. When you looking at metals, it's limited to gold, silver, platinum and maybe a couple others. That is a really narrow focus. The reason that the current market levels should limit you buying when the prices seem to be too high.

 

Thank you sir. Good luck with your investments also.

 

I do the dollar cost averaging and buying silver at all times.. but since the rise in Silver I have slowed the roll of buying.. Buying now really brings the average up, but if the market continues up probably might weather it out... or get lucky and buy on dips like I learned on here.. and its 10* here and got to go jump start neighbors' vehicle that cold weather finds weak batteries..

 

I'm not against dollar cost averaging in or out of a bullion position. However, what I try to do is to look at the 200 day moving averages for gold/silver and make purchases when the current price is below that line, then consider selling when it is above the 200 day average. On a very long term basis, I was accumulating during the 90's, selling in 2012, accumulating in '14, '15, then recently selling. I think you already understand that stocks are a better long term investment, and for inflation protection and a good return, residential apartment rentals are very good.

 

We do have a handful of rental properties under our belt and I agree. Love the monthly cash flow. Bullion investing will always be a very small portion of our portfolio. Just like learning and hearing new thoughts and theories.

 

I am a strong proponent of DCA if only to force investment action and overcome human failings. However, I am always hesitant on CT because the only times we get anyone wishing to DCA in PM is when it has spiked. We had many such posts in 2011-2012. I wonder how many of them actually continued to follow my advice when prices declined considerably. I bet few to none. That is the problem. If you start, (especially in a period they are historically high), you MUST MUST MUST continue for years after in order for DCA to be effective.

This is what DCA is trying to prevent, (and it doesn't if you abandon it).

1. PM really looks attractive at $1900. Its scary out here in the economy, and I am concerned for my future. Maybe I should buy PM. I am smart though, so I will DCA and not buy all at once.

2. PM has eased, economy is doing better, I think PM is going down some more so I will just buy a little.

3.. Economy is great. No one talking about pm at all, in fact its down below $1200 today. What a loser, it will go down further. I won't buy any now, knowing I can buy cheaper later.

4. Hmm, a economic shock and PM jumped to $1500. Well, I think it will pass and I will remember to buy more when it drops back to $1200

5. Major shock, pm spikes to near $2000. Man, it would be a good time to have to PM in case things really turn bad.

This is basically 2011-2020. Most people starting in 2011 I am guessing do not own what they wanted to own, and what they do own is way above the average for the period. DCA forces you to buy at $1500 and $1200 when your own mind is talking you out of it. Someone truly doing DCA over this period would own the position they wanted, at maybe a $1400 average. Today that would look good, no?

If you are serious, DCA into PM over a decade or longer is a good strategy. I just fear most abandon it when the PM starts to drop.

Btw, for those who say PM is not a good investment, I would say to consider this, it is also an insurance program. All of the while, besides economic returns, you also have the security of having a hard asset should you need it. When Venezuela melted down, so did their stock markets. Anyone with 100% stocks in Venezuela had no assets. At least by having silver and gold physically owned that can never happen to my family.

Of course stocks historically outperform other asset classes, but can be very risky. I simply prefer to not have all assets in one class, since I never know what could happen. I prefer to own all asset classes, in case only one is worth owning when I need it most.

 

Great post. Everything very well stated.

 

I follow dollar cost averaging with my mutual fund investments with the exception of some passive, tax-free income producing municipal bond funds. One of my tech heavy funds where I have a large position has returned 47.7% YTD. I also own various private equity positions in emerging companies, but those are mostly reserved for accredited investors so not for everyone. I am not in metals but agree that they can, at times, be an effective hedge, but not enough for me to get involved with bullion. I suppose one could consider coins an illiquid investment with some upside, but mostly I collect ancients just for the fun of owning historically interesting artifacts.

 

Another pragmatic approach. I agree coins are not an "investment" except in oneself mostly. I consider my bullion, (all in the form of coins but bullion priced), to be my "blank is hitting the fan, I grab this bag and have a good chance of getting out of Dodge with my family" asset. However, if I had more than an hour, I probably would bring ancients like Cleo VII, JC, Roman and Byzantine gold, etc that more than likely wherever I go would still have some value to the family. However, I only ever invest hobby money for coins, most investment money goes to stocks, land, and a little for PM. Overall, not counting coins or my house, I am around 5% PM.

 

"medoraman, post: 5301172,
Of course stocks historically outperform other asset classes, but can be very risky. I simply prefer to not have all assets in one class, since I never know what could happen. I prefer to own all asset classes, in case only one is worth owning when I need it most."

medorama, we've had this discussion before. You have a well rounded portfolio of investments. Good fortune to you. Me? I've got, among other savings, two years of living expenses in the bank and a technology/medical portfolio that has increased in value to the point it's unbelievable and I'm embarrassed to state my returns this year and over the long haul.
Numismatics and bullion I don't consider as investments, however, it's good to know they are there if I ever need them.
OTOH, if the apocalypse ever rears its ugly head bullion may be marketable early on. After that, it's weapons, ammunition, food, potable water, clothing & secure shelter, and transportation.

A final thought - it's not just the investment it's how you manage them.
Appx 70% of my investments are held in a ROTH acct. ROTH, starting investing in technology at an early age and dividend reinvesting are three of the best investment strategies I have used.

Seasons Greetings to all finally 2020 is over. Looking forward to a challenging and hopefully prosperous 2021

 

"JustSomeDude, Just like learning and hearing new thoughts and theories."

I agree. OTOH, I've been investing for decades and have tried several different strategies. I keep returning to the same techniques. buy what you know, dividend reinvesting, keep abreast of new technologies, buy when others are panicking. Keep an open mind and courage.
I haven't worked in eleven years. I will only go back to work if I get bored which probably will not happen.

 

Man! You guys are talking deep stuff. I collect coins because I like them, whether they be gold, silver, of just plain copper. I'm buying, but I ain't selling. Best of luck on you guys buying. I don't own 1 share of any stock. My wife and I are retired state employees and get state retirement and social security. We do have a few annuities, but stocks? I would have to have started buying stocks after the crash of the 1980's and I'm not sure it would be safe then.

 

Agree. Another point: a wise man told me years ago to get some gold, put it away in a safe spot and hope it goes DOWN in value.
Because...when gold goes down, things are good in the world, inflation is under control and we will likely be living more prosperously. Those who wish gold to jump higher forget that this means chaos.

 

Your retirement income from your state jobs is probably equivalent to someone without a pension having saved $2 million in retirement assets.

 

Dollar cost averaging is a good tool to use but like all investors, you've got to know when and how to use it.

 

I agree. However, do you want to be in a situation where this came to pass and you DON'T have gold? I am simply pragmatic and wish to spread it around. My goal is not to be 100% right, but to not be 100% wrong. Sure, you minimize potential gains, but I sleep better at night.