Dollar Cost Averaging

If you think 1070 and 1000 are the prices you want to buy at, then you've answered your own question. Decide how much you want to buy at each level, then do it if the prices are reached. If the price never reaches those levels, then don't buy. If you plan to either wait for those prices, or failing in that, chase the price upward if it continues to rise, I can almost guarantee you will end up losing money.

Welcome to CoinTalk!

 

Log in or Sign up to hide this ad.

Thanks! But I wouldn't lose money if it kept on going up . Anyway, anyone buying here is buying into a rising market IMO, and what goes up always comes down. I guess it really depends on why we are buying. Since I'm buying to hedge other assets, and as insurance, if I "lose", all the better.

Buying on dips makes me feel better, but is it really? I guess I'll have to let you know when I'm done. Obviously, buying more than enough in the 90s, or the 70s would have been a lot better.

 

A few things here to consider. Buying at 16....sell at 18? I'm guessing you mean spot price. So, spot is $16, and you go to buy. And when you get to the coin shop you find out that the dealer wants $2.5 over spot to sell. So, you buy ASE for $18.50. Then, the spot hits $18, and you go to sell. And you find that same dealer is only buying for $1 less than spot for ASE. So, you sell for $17. You just lost $1.50, even though you bought at a lower spot price and sold at a higher one.

So, you get fed up and notice that the spread is less on line at a national dealer. So, you buy when silver is at $16, and pay a $3 shipping charge to get it. You paid $19, to get a ASE. Now you wait till the price gets to $18, and decide to sell. Who's paying the shipping charge? Again? Forget it...you decided to sell to a local dealer to save the shipping charge, but find out that he is only buying for $1 less than spot. You sell for $17 and are out $2.

The point being, unless you are an inside trader, you aren't going to make quick money on bullion investing. You need to buy when the price is down, yes. But, you also need a substantial price increase before you sell, to compensate for the premium or shipping charge that you paid.

 

silver surfer i have confession i like to take my ASE out and to touch them and stake them does that really make value go down?

 

If they aren't slabbed as MS69-70 and you practice a normal amount of care in handling the coins with clean hands by the edges, it won't hurt the value.

 

Thankyou sweeper99! I would think for the short term if silver was down say @$16.50 like now and you had $10000 to invest you can get it @ maybe .50-$1 over spot then when it goes up to $20 sell and you got a nice profit! One problem most on here do not have $10000 just lying around (me included) so buy alittle at a time all the time would make sense? Am i way off on this?

 

I've asked the same thing, seems I don't agree with the answer I was given. Consider this.

You go to a coin shop and find the dealer selling ASEs. He has spanking brand new ones, and some that are older. You ask to see some that are older, and he shows you ASE that have been fingered up, and are horribly tarnished. You ask the price, and he says they cost the same as the brand spanking new ASEs. What are you going to buy?

Now consider if you are the coin dealer, and someone comes in with ASEs that are horribly tarnished up. What do you think he will offer you for them, considering how you answered the first question?

 

Best laid plans...LOL

 

I think that if you plan to trade silver, it might be easier with an ETF. If all you can afford is a little at a time, then 1 ounce bullion coins are probably your best choice, but you won't be able to flip them for a quick profit.

 

What in the hell is this??? Yes its flawed and your def. missing something(s). Any other questions? Your POS assumptions are illogical. I hope this post was a joke...but i don't think it is...

 

Calling something flawed and illogical without presenting qualifying statements and/or supporting information for your position is IMHO easy.

 

I have a question here. When you have a mutual fund it is easy to dollar cost average. The price of the stocks within the mutual go up and down directly with the market reacting daily. I know the market can have a down day while a certain few funds go up and visa-vera, but what I previously stated is the norm.

The OP asked about dollar cost averaging bullion coins. They don't really react enough as stocks enough day to day or even week to week unless you have major swings do they? To really try to successfully dollar cost average bullion coins wouldn't one almost have to try to also do at least a little market timing which is whole other game in itself?

If someone would have bought 10 ASE's each month in '09 on the 3rd Thursday of each month I'm wondering what would have been the profit or loss for the year?

Realize I'm asking all this, and I truly don't know. But, historically doesn't silver have a month or two where the price tends to be down? Would it make more sense dollar +/- to purchase 100 to 120 ASE's all at one time each year during the historical down period? As far as S & H, which is cheaper to buy ten of these ten times or a hundred one time?

 

I think the assumption is that silver is in a bull market. Sure, the cost/price goes up and down, but in the long term, people are expecting the price to go up. So, you buy for all different prices. When it comes time to sell, do you look and say, "Hmmm, I bought this one first, so I will sell it first. I bought it for $9, and now I'm selling it for $26. I made $17 profit." Or do you say, "I bought 130 ASE and the average cost for all of them was $15, now I'm selling half of them from $26, so my profit is $11 an ASE."

I think the math would be easier the second way. I also think the taxes would be easier on you as well. But, what do I know???

 

Farmer

Your right, it was quite easy to call that post flawed and illogial since he just made up all these POS numbers that had no rhyme or reason. The qualifying words are that he MADE UP these prices and then asked us what we thought. Official winner of the best space shot post ive ever seen here on cointalk! Congratulations, son!

 

I think you will see cost averaging at work now. I hear APMEX has stopped selling ASE....is it because they have bought them for more than what they can sell them for and still make a profit? So, if APMEX can buy more now at the current price, they will effectively have lowered the average cost of the ASE to make them profitable again. When they buy enough to actually make them profitable again, they won't seperate the ones they bought earlier and say, "Hmmmm, we paid too much for these, so they stay in the vault until the price is reasonable." They simply put all of them up for sale again, considering an ASE bought now is no different then one they bought earlier. I'm not saying that they might not hold out on a few of them to increase profits, but to consider that they'd keep all of them in a vault, probably not.

 

In a retail type business - replacement cost of inventory, not the actual acquisition cost or weighted average thereof, is what determines profit. As long as replacement cost is lower than the selling price then holding inventory and/or not replacing sold inventory are speculative. If you paid $20.00 for inventory, can only sell it for $15.00 but can replace the inventroy for $10.00 then you made a $5.00 profit.

 

Many people do time the market in both gold and silver. The market is volatile, so you will get plenty of ups and downs, and IMO it pays to try to buy on dips.

And although it doesn't always work, historically, spring and summer often bring some lows in the market, while price run ups are associated with fall and winter. (One big exception being the stock market crash in fall 2008 which brought gold down with it.)

You would save on shipping if you bought once a year. But that assumes that you know what you want to buy, when you want to buy, and how. If you buy over a period of time you will learn without risking all your money at once.

Although I buy gold and silver, I agree there is hype from what cloudsweeper calls Internet gold gurus. One protection in my opinion is to learn from others like yourself, rather than people who are trying to sell you something.

 

That's a valuable insight that many people in business never quite get.:thumb:

 

I find it helpful to read many market expert opinions. After reading them for some time, you start to figure out on your own what is hype and what isn't. I think the biggest hype is the predictions of golds value like $2000, or $4000, or even $10,000 an ounce. Sure, but they never give a date when that will happen. So, like in the year 2269, they might be able to say "see, I was right." But they will obviously be dead by then.

 

Rob McEwen knows as much about the gold business as anybody on the planet. He believes that gold will be $2,000 by the end of 2010, and $5,000 three or four years later at the peak of this gold cycle. This has been his forecast for several years. All of his earlier predictions were correct. Since he has nothing to sell and doesn't get paid for this forecast, I use that as a guide, recognizing that nothing about the future is guaranteed.