Buy silver or gold with $5000?

This is the correct answer. Nobody should buy something like silver or gold as an investment if they aren't sure about their decision and finances in general.

 

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Are you suggesting not investing in PMs? Currently interest rate on CDs is measly 1%, it doesn't make sense to hoard cash.

 

I'm a little late to this party, but here's my 2 cents. I agree that silver is a more profitable bet as SteveM1320 mentioned due to the G/S Ratio, but gold is a safer bet due to it's stability so this is what I would recommend, not what I would do since I'm more of a risk taker. Although if I were to go even on the two metals then this is what I would do. I prefer denominations that are liquid as opposed to large sums of money tied into a single piece of metal.

4: 1/4 oz gold maples (99.99% pure)
12: 5 oz silver bars
25: 1 oz silver bars/rounds

Not that I have anything against 10 oz bars, but I would personally focus on smaller denominations first. 5 oz has the same cost per oz as 10 oz in most cases anyway.

 

assuming you already have an emergency fund.

1 toz gold, your choice
$150 face junk silver.

 

The OP said he struggled with the decision and that $5K was a lot of money to him. I'm of the old school opinion that everyone should have adequate cash reserves before they invest. After that they should put the excess first into things like stocks, bonds and mutual funds, and only after their financial condition is established should they invest in PMs. In this situation, it seemed that the OP could be seriously hurt financially by the decision that was made.

 

For cash reserves, buy I-bonds. They let you buy up to $5000/year (2X) for a total of $10,000 year. They can be purchased in as low as $25 increments. Currently they are paying $3.06% interest and this interest is exempt from state and local taxes. You would be hard pressed to find any deal like this in a bank without significant balance and time requirements. I've got a few that are paying over 6%.

 

I realize I may be the minority, and I'm not an investment advisor or a professional trader, but I would definitely put at least some portion of my wealth into precious metals off the bat even if it's just a small amount, because they are the only liquid investment that you can hold in your hand that constitutes the definition of money (fungible, divisible, durable, finite supply) that will preserve your wealth in a worst case scenario, in any scenario really. Boy Scout Motto: Always be prepared.

 

well part of it depends on your situation. If you won't need your cash reserves right away, then treasuries or bonds may be a decent option. If there's a possibility that you need it within a week or so, then money market or cds or savings account is probably the better option. At the least, one should have maybe 2 months of living expense in cash, then another 4 months (at least) in relatively liquid investments like bonds or cd.

For me personally, I hold quite a bit of money as strictly cash. But that is because there's times during the year where I need the extra cash for business purposes. Most of the year, I can handle the volume of transactions with money normally used for business, but sometimes, volume explodes and I'd lose out on good opportunities without an influx of additional money. And sometimes it comes up with little warning. Any interest I lose from leaving the money in these accounts is negligible compared to the return it earns during the short time it's in play. Again, to each his own.

You just need to step back and evaluate your needs. If you're single and live with your parents, probably don't need that big of a fund. If you're married with 2 kids and a mortgage, wouldn't hurt to have a family emergency fund in the 10k- 20k range.

 

Nothing wrong with that advice at all Inflexion. Not all investment advisors only advocate stocks and bonds. For investments, the most important trait is putting money away in an orderly function for future use. PM fits fine, and should be in every portfolio, its just what percent that the debate begins.

And boy how we debate that.....

Chris

 

You can think of your investment finances [excluding insurance] as a pyramid...

The bottom layer would be your savings for emergencies. The layer on top of that could be bonds - I Bonds or others. The third layer might be a stock mutual fund. The top of the pyramid is your lottery tickets. Somewhere in between silver and gold fit nicely.

 

A Wise Suggestion!!

I found your suggestion refreshing, as I've assisted younger individuals to avoid the "conventional" approaches for asset accumulation/protection, and always advise a secure position for liquid/invisible assets. This position can be readily achieved through acquisition of Series EE and I bonds, dependent upon various personal criteria. See: http://www.journalofaccountancy.com/issues/2004/sep/eevsibondswhicharebetter.htm
I would generally recommend a 25% of portfolio allotment for these securities which can be acquired without a premium.

Dependent upon personal criteria, in the current market I would have recommended a majority acquisition of Fine-VF Mercury Dimes and Walking Liberty Halves, preferably purchased at melt value, with a maximum premium not to exceed 15% of melt value. I would generally recommend a 55% of portfolio allotment for these commodities.

Again, dependent upon personal criteria, in the current market I would have recommended a remainder investment of Proof 1/10 ounce $5 Gold AGE, preferably encapsulated PCGS or NGC PR69. These can be patiently acquired for a maximum premium not to exceed 20% of melt value. This 20% portfolio allotment for these commodities should result in a relatively stable assemblage of secure assets.

Just my humble opinion, as I would, and have personally successfully invested. :thumb:

 

maybe I'm reading silvertips post wrong but i think hes asking what you would do if you had an extra 5k not what you think he should do. which i would buy 2 first spouse coins and use the rest to get as many proof ASEs as I can since I dont see a points in bars since they only go up as much as silver goes up.

 

Mercury dimes are the best buy if junk silver is your thing, for numismatic and survivalist reasons.

 

. The nail has been driven home! But the answers here are priceless. I just wanted unbiased opinions of the best way to divide $5000 into PM's. As stated, I will continue to buy PM's only with some better knowledge.

 

If you have a good bank, ask the head teller to order you some boxes of half dollars. They are $500.00 per box. Go through them, and find the silver one for face. Then hold on to them till you feel that they are at you price. The rest, what I do is to take them when I go on trips and buy things, or leave them as tips. Just watch and see how the people react. It's fun to watch. On the other hand find the best key coins and buy them for the future. They will go up faster than some raw metals. You will have fun too. Good luck. I do not invest in raw metals. Only in high grade coins and currency, (Small size, Fractional, and MPC).

 

I had no idea you can do this at a bank. So when you buy things with them, are you buying them at face value?

 

I do not use the good [silver (90%) or the (40%)] just the clad ones. Yes, just for face value of the clad ones. I buy anything that you would buy normally.

 

between eagles & maples, eagles are the better buy... unless you plan on encapsulating the maple as soon as you buy it since they scratch & ding so easily. An impaired maple will probably net you spot price of gold at the best when you sell. If you can get them at the same price, you should go with eagles since they tend to carry a higher premium.

Kruggerands at low/no premium is probably a better buy though.

For junk silver, mercuries are probably ok if it's your first couple hundred dollars worth. After that, halves are probably a better bet. Dimes tend to be a nuisance to count and roll. You should be able to pick this up pretty close to spot.

For normal silver bullion, try to get it close to spot, maybe $.50 over. If eagles or other govt. minted coins, try not to pay more than $3 over spot.

To me, it really doesn't matter that much the form you're buying, as long as you're not overpaying.

 

The thing I like about maples is the 99.99% purity, both gold and silver. That's the purity needed for silver used in solar panels which are projected to increase in demand quite a bit in the next few years. There are plenty of other reasons to like ASE's (legal tender being key), but I'm throwing a dart out there that purity could become a price factor in the future.

 

That's a good point. However, gold coins were .900 or .917 for probably the past 500 years (at least). I do not think it'll be an issue in the future. If you can get them for $30 cheaper than an ASE, in BU condition, and can ensure it won't get scratched or dinged up, they're a good buy.

Silver maples are not a good investment because of the milk spotting issue. A picky buyer will likely not want to pay the premium for that. I've gotten entire rolls of BU coins that are milk spotted, and that stuff does not come out. I think it's actually in the metal somehow. I've tried whizzing the coins for a good 30 seconds and it will not come out.