Bought on the Dip

Put in an order at APMEX this morning for some gold and silver eagles. After checking Kitco this afternoon it looks like I am already profitable. Anyone else buy recently? I'd love some platinum but it's too rich for me right now.

 

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You'll only know what your profit may be after you've sold what you just bought but don't yet have in hand.

 

You're right about that. I guess everytime I buy I always fear I'll end up like one of those people that bought gold at $850 in 1980. I guess if they still have their gold they are somewhat vindicated now. I just don't see metals coming down anytime soon with the presses running and the computers fabricating more electronic credits.

 

I put an order in the shopping cart but the V was so quick that I decided to wait a few days. With the dollar just screamin', I just don't know what will happen with Silver.

My cost basis for my physical silver is $13.94 (10 years worth) and didnt like how high the dip stopped at. Would have rather it dipped below $17.

I did pick up a bit of SLV. Been playing that for a few years., on and off.

 

I also wanted to take advantage of this dip but didn't want to go in for a lot due to the various factors causing this current volatility. I've also wanted to try Provident Metals at the recommendation of some CT members. I usually use Apmex myself and really admire their customer service and reliability, but since I wasn't placing a big order I didn't want to pay their high s/h charges. Anyway, I put in a small order of ASE with Provident. Check them out as an alternative. Not as slick of a web site but they do seem customer service oriented and send a lot of confirmations and updates on orders.

 

I think the most useful way to think about gains and losses is to consider them as the difference between what you paid and what you could probably sell for today[including expenses]. The idea that there is no gain or loss until a sale frequently leads people to hold onto losing investments way too long because of the mental trick they play on themselves that there is no loss as long as there is no sale. It is more useful and realistic to continuously mark-to-market in your mind to avoid self-deception about whether your are gaining or losing money.

 

I never suggested there was no gain or loss while holding physical PMs, only what the profit 'may' be in terms of a 'cash value' realized after selling (plus calculating/subtracting expenses as you added). I'm not fooling myself about there being no loss, nor the risks of holding too long and loosing potential profits that you might realize in cash by selling. Certainly, what you say is prudent thinking and advice, but what 'cash' profit does one physically have in hand after having just traded their cash for physical bullion and immediately thinking of their current profit in terms of cash that they don't physically have at their disposal? They have not cash but bullion with the potential loss/gain, which changes almost constantly and which they must first liquidate for cash to use.

 

I bought the dip...... 100 ASE's from Provident.... way better than AMPEX in my mind.......

 

We should keep this thread going and have all DIP buyers chime in.....


BTW, I am owner of a very expensive domain waiting to sell to someone...I am "virtually" wealthier than what my bank account shows...been holding onto this domain for over 10 years...will someone please buy it?

 

Please let us know how you receive your ASE's. Well packaged? In a timely manner? All the little details we could use to compare with APMEX....

 

My order with Provident placed mid-day yesterday was in transit via USPS this morning with a tracking number. Payment via electronic funds transfer. It almost always takes Apmex four days to get an electric funds transfer order on its way (ten days holding a check after they receive it and funds clear), and Apmex never provides tracking information for the parcel which they really should do, making it available online.

 

Is that the same as a wire transfer? My wires have always been pretty fast, usually within a 24 hour period....

 

The term "profit" is normally used in connection with business ventures, such as running a coin shop. The terms gain and loss are typically used in the investment sense. I think it leads to bad decision making if you only think in terms of cash profit [or cash gain] as occurring upon exit. The profit/loss [or gain/loss] exists whether you decide to end the investment by converting back to cash or not.

 

I seem to recall reading you and Doug kicking around these points about profit in the past and it sort of unwinds without certainty or mutually acknowledging philosophical takes aligned with legal terms and conditions.

I'd like to know how one proves that profit/loss [or gain/loss] exists before one acts upon it, say in exiting the investment, returning in this case, to cash? Is entering into the investment in the first place the only way to suggest it exists, as you must enter before you can exit?

 

There are many people who believe that no investment has a gain or loss until the moment they sell it, and that the entire gain or loss appears instantaneously. Perhaps it comes from filling out tax returns, where realized gains are taxed but unrealized gains are not recognized as income. Perhaps it bothers people that the gain or loss today can vary from the gain or loss tomorrow unless you sell, but it is illogical to translate this into the opinion that no gain or loss exists at all. It's easy to prove that a gain exists by looking at market prices. A coin dealer near me is paying $1 over spot for ASEs. If I have an ASE that I paid $5 for, it doesn't take any complex math or a business degree to calculate the gain, whether I sell or not.

 

Thank you for explaining this plainly for me. I suppose I find it confusing to conceptualize gain virtually(?) (before you sell, but for something which has attained a value greater than your original investment) and what you would realize as profit if you sold the investment and were holding the physical cash in hand, comparing that to the amount you paid originally, less any expenses.

 

Of course this depends upon your definition of gain. If the worth of the coin fell to $4 did you have a loss? Most people in that position then would say, "no not utill I sell it". Sure you don't need a business degree to figure this out, but holding bullion is nothing more than a business transaction. In a business transaction gain or loss is not calculated until the transaction has completed.

For this example lets assume your silver bullion is more valuable than when you bought it. Is it a gain? That depends upon if you use the silver in some sort of business transaction. If not, then you are actually in the loss category due to the opportunity cost of acquiring and holding that silver over the period. This is splitting hairs, but technically you have not gained anything until you use the silver for it's purpose. For bullion this means that you most likely sell it for more than it cost you to acquire it and hold it.

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In general, holding physical PMs from a pure financial standpoint is not something that the small fry, like most of us, should be concerned about for the short term. Gold, and to a lesser extent silver are hedges against government financial abuses and policies revolving around fiat currency that punish anyone who is a saver. (IMO, silver isn't quite the same as gold in this regard mostly due to how the central bankers view gold but that is a different subject.) This means if you are buying bullion you can't be concerned with day to day pricing because with the kinds of access we have for buying and selling, the fees will quickly eat you up if you try to day trade it.

This is a conversation purely from the bullion perspective. If of course you get caught up in the fun of the numismatic aspects of this activity then your objectives will be a little different. e.g. It's no longer just a business transaction because your "gain" then becomes the pleasure of owning a certain coin even though you could only sell it for a financial loss at the moment.

 

Holding physical silver is not a "transaction" unless you are in the business of buying and selling. It is an investment. If cost basis is $5 and the price is $4, that's a loss. It might be an unrealized loss for tax purposes, but it's a loss all the same. Everyone can define gain or loss for themselves in any way they choose, and if your personal definition is that you don't have a gain or loss until you cash out and use the proceeds for something else, it's your choice. I believe it leads to sloppy thinking and poor investment decisions. In my case, I mentally compare the current market value of all of my investments to the alternatives in making asset allocation decisions. So I agree with you that opportunity cost is important and can only be measured properly by marking to market and mentally knowing your approximate gain or loss at all time. Cost is a historical accident. Your silver is currently worth $17 per ounce [plus or minus the bid/ask spread and tax effect] and the market doesn't care whether you paid $5, $10 or $20 for it. It is ridiculous for someone who bought at $20 to deny the loss, just as it is for someone who bought at $5 to ignore the gain.

But it's been pointed out that this has all been discussed before, so everyone has all of the information they need to decide for themselves how they wish to think about the subject.

 

Rec'd ASE from Provident Thursday... very tight package no rattle... order confirm and ship e-mails... arrived in mint tubes...... will be using them in future rather than APMEX..... Z

 

Wow, Provident has some great prices and reasonable shipping!

I will give them a try next time. Anyone have any good/bad experiences with them?

(is irritated he hesitated and missed the dip)