Gold/Silver bullion question.

I just happen to think it is a highly overrated tool that doesn't do what many financial planner claim it can do. And that sets up people for investment disappointment if they don't realize the limitations, and the danger of using it. Few financial planners will explain that to their clients. But if someone understands that and determines that the tool will do the job they require, by all means use it.

 

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Good point.

 

And what does? Are you saying you know when the perfect time to sell a security is? I would love to know that. Since it is unknowable, I assumed it would not be acted upon. Future prices are by definition unknowable, because if they were known the market would act and make those prices the current prices. Knowing this, you have to just worry about how you buy into a market, knowing at some certain point you will have to sell based upon personal circumstances. Given this, DCA I believe is good advice for most investors since it will overcome some bad habits they historically have. DCA is NOT a decision mechanism to pick stocks or decide when to sell. It is ONLY a mechanism to try to get a position on a security at an advantageous price ONCE those decisions have been made. I have been halfway into a security using DCA and sold them all because I changed my mind on owning it. DCA has nothing to do with that decision.

Cloud painted some pretty specific market circumstances. How about a normal one? Most items go up and down every month, with the long term going up. DCA will enable a person to buy more shares on the lows and fewer on the highs. Cloud admits that the technique will do this. Therefor, for most normal markets DCA is preferable to any other purchase method.

Of course, by all means if someone KNOWS todays price is low and will go up, buy all you can. If someone KNOWS that the item will go down sell today. Nothing either of you said applies if a person does not KNOW these things, which to me is the nature of investment. If I knew for certain any investment idea I sure wouldn't be working, I sure would not be telling anyone about it, and I probably wouldn't bother posting here trying to help small investors. I would buy me an island somewhere, (or a few thousand acres of land), and be having a **** of a time with all of the nice coins I just bought.

 

The perfect time is when you need the money. I'm not trying to sound trite which that comment could easily be taken that way but people end up selling when they feel they have to, and this rarely coincides with gains or losses. Either they must have the money, or they feel they must sell to protect what assets they have left, or some circumstance changes that forces them to sell.

There is nothing wrong with setting aside a bit of money to buy investments each month. In fact this should be encouraged, however this isn't an investment strategy. i.e. It makes no sense to buy a particular asset because 1. it's getting more expensive and hence you own less risk, or hence 2. it's getting cheaper so you can get more of it. This is the DCA strategy. You should only buy an investment once you have done the research and then evaluate each purchase when you make it.

 

I understand Fatima, but I think you are missing the point. I do what you say, determine which asset I wish to own, but then use DCA to get into the position since I do not know if today's price will be the best price. DCA is a purchase mechanism, not a decision mechanism.

Btw, I find small investors sell when they get paniced more than any other reason. The get scared and then sell on lows, they get excited and buy on highs. Small investors have ALWAYS had the worst record when it comes to timing, this is where DCA can help by putting discipline around their purchase decisions. One of my primary statistics I look at is small investor activity, if they are buying I am looking to sell, and vice versa. This pattern is about the most reliable statistic I know of for investing. I bought a ton of stocks a couple years ago when it dropped and I saw small investors running.

Right now I am seeing quite a few small investors jumping into PM, especially silver. At some point I am going to use that knowledge.

 

This is the type of misstatement I'm talking about. Nothing could be further from the truth. I know of two other mechanical monthly investment methods that give results that are superior to DCA, and I'm sure there are others. And all of the mechanical methods are probably inferior to a well executed value investment strategy [there are many variations] or to any one of a number of trend following systems that have been successfully used for decades by both professional and amateur traders.

To be clear, DCA does one and only one thing. It buys stock in a manner that results in an average cost per share that is lower than buying a fixed number of shares each month. This is an improvement for sure, but that is all it does. To say more than that is the type of hype that leads people into making serious investment mistakes because they believe they have a degree of safety that just isn't present in the system.

But I think enough has been said about DCA [at least by me] so I'll stop posting about it and let everyone do their own research and decide what fits their personal need. Good luck to all.

 

And we agree. If anyone says DCA has anything in the world to do with choosing what to buy or what to sell they are wrong. Those decisions are always made separately. You are correct, if people try to just DCA into a market and not evaluate why they are buying, they are doing it wrong.

We usually agree Cloud.

Btw, sorry not a big believer in technical training. Other Finance professors I worked with taught those classes, and I have taken them, but I do not put much weight in them. I guess I am more of a classical financial analysis investor. If you like the technicals that is good for you. To me, they are more oversold and misunderstood by the general public than DCA is.

 

I started as a diehard value investor for many years and like it a lot. But after closely examining technical analysis, I realized that trend following is just as good and is actually based on the same principle as value investing. Some of the other technical techniques aren't clearly good or bad, or at least I can't understand them well enough to use with confidence. I'm also a fan of some mechanical investing systems, [as was Ben Graham], which work better than either value investing or trend following in some markets [particularly in rigged markets] and remove some of the emotion from investing [but DCA isn't one of them].

If someone has the time to do it, it might be best to use value investing, trend following, and a mechanical system at the same time for different parts of the portfolio. Diversification of investment techniques isn't something you read about very much, but IMO can be even more useful than diversification among investments because different methods work at different times.

 

I agree diversification of techniques is always, at the very least, prudent to make sure you aren't locked into a certain market outlook. I just find most technical trading to work BECAUSE people use technical trading. Most "resistance points", "floors", and "ceilings" have nothing to do with the actual security, but because other traders use the same methodology. A self fulfilling prophecy as it were. People who are very good at it can make money short term, but its really, (to me), at the expense of other less skilled technical traders. This aspect of trading, (again to me), is a zero sum game and you are competing with real pros at it, and a bunch of amateurs.

I just like bigger picture investing, value investing, and having timelines measured in years rather than hours or minute, maybe days. To each his own, and if someone is good at it and enjoys it, more power to them. I just find lots of amateurs losing their shirt trying to compete at a game that they do not know the rules very well. This is why I preach long term, DCA into markets and out of markets, and not short term trading that ill informed investors get excited about.

Having said that, I am not above short term trades when I think I know something, I just don't recommend it to most.

 

Investing is like every other human activity -- the more skilled people will beat the less skilled people over the long run. But I don't think that invalidates any particular technique, and I don't nessessarily believe that professionals will beat amateurs. Professionals are subject to many pressures that amatuers can ignore. Ben Graham's book was called the INTELLIGENT investor, not the professional investor, and I think that's an important distinction.

And just to be clear, I don't advise anyone to use trend following with a timeline of minutes, hours or days in mind. Jesse Livermore was a technical trader who could not succeed with short term trading, and probably nobody else can either.

 

Think about buying some investment grade key date coins also. NGC OR PCGS slabbed coins only. I don't like to see new collectors buy raw rare coins. For more information on this try kaminski.com. This guy is very sharp when it comes to investing in coins or bullion.

 

I often wonder when the "MS-70 Sucker label" by PCGS and NCG Bubble will break, just before PM or just after. :devil:

 

I would be careful about investing in key dates. Another self fulfilling prophecy. People only "invest" in the keys because they are keys. NN had a article recently how the 14d cent is much more common than the 14s in 65, but the 14d is like 10 times the price. Why? Because the 14d is "key". I view key dates extremely overvalued right now. Remember, they are only "key" if someone needs to put together a complete date/mm set. the 01s quarter is over 10k, how many people "need" to assemble a barber quarter collection? Same with most other "keys". Prices are out of line with rarity, and if people are not assembling sets, the only demand for "keys" are people wanting to only invest in "key" dates. Sounds a lot like a pyramid scheme.

 

I like coins in the old ANACS holders because they never seemed to give out 70s. It seemed more honest. I also wonder if the MS70 coins will still command the MS70 price after they start toning. Will anybody really be able to distinguish between a toned 69 and a toned 70?

 

Not trying to start a fight with toned coin fans here, but I always thougth there should be an upper limit to a MS grade if a coin is toned. Toning is oxidation, the coin was not that way when it left the mint, so at a certain level should be evaluated as damage.

The answer will be of course "market grading". I agree with both of you though that this will be a big burst someday. I just wish there was a way to short modern 70's and golong on something like older commems.

 

silver is up $1.13 an ounce today ... very close to $42 now ...
clearly there is still a lot of demand for silver

 

It is nice to see PM doing well today, but I am still cautious with silver until Monday. The increases have been relatively small amounts of shares/contracts, and are susceptible to manipulation for option expiration in SLV tomorrow. It is easy to sucker some investors if they go by the price only on low volume. IMO.

Jim

 

made my first purchase early this morning so i am now an official gold and silver stacker i can already tell i am going to be addicted lol. feels great to have that security where you can physically hold it.

also wanted to note that, this, my first thread ever on these boards, is a 5 *****

 

Awsome! What did you end up getting?

 

(1) 1 oz AGE
(21) 1 oz ASE's (18-2011's, 2-2010's, and 1-1986 because its the year i was born)

solid first purchase IMO