How I got into bullion investing.

It's not true. Real wealth is created only by 3 things. It's grown, it's dug up, it's manufactured. Technology, software, etc are simply tools to achieve one of those three things. Nothing more, nothing less. A party can create the best piece of software in the world, but if said software is not used to accomplish one of the three, then no wealth is created. (don't confuse the transfer of wealth with the creation of wealth. many have an issue with this)

 

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Valid point....Things like services do just transfer wealth.

 

coins in my opinion should only be cleaned if absolutely necessary and cleaning should be done by a expert.once you start cleaning coins you must continue to repeat the process as time goes on.i am only passing info on from what i have read.

 

You are correct, of course. But it's a waste of time to try to convince certain people. The loss is their's, which I don't care about. However, the misinformation may damage others who don't understand that they are playing a game, and that bothers me.

 

^If you are a bullion investor who invests for bullion value, then IMO there is no difference between a cleaned coin and one that isn't. In fact you might be able to find a deal bullion wise on otherwise numismatic coins that have been foolishly cleaned.

 

Yes, my feelings exactly. I really should just stay on the numismatic side of CT, since I always just get ticked off when I come to the bullion section.

 

I don't think there is anything wrong with owning bullion either because one believes it will rise in price or as an addition to a well established investment portfolio. What bothers me is when the high priesthood of bullion start telling folks that bullion is the only real money, wealth is only composed of dirt, metal and machines, and that a 100% allocation to bullion is advised. There are many young investors and collectors who come here looking for information, and I don't want to see them harmed by the priesthood. The priesthood, on the other hand, doesn't really care.

 

Just for clarification, I'm not expecting to get rich for collecting bullion. Not that I wouldn't mind, but that isn't the goal. Really, more than anything I'm using it like a "savings account." In my house hold we have tried to regularly put money in a savings account at the bank, but something always seems to come up and the account is drained after a few months. With the bullion, the money appears out of sight. It isn't quite as easy to get to it or to just transfer it to the checking account and pay a repair bill or something with it. However, in a serious emergency, it is considerably more liquid than say a 401K which I cannot access at all until I am no longer employed at my current company.

Another issue is, of course, inflation. Even if we did manage to keep money in a savings account for 30 years, the money would be worth a lot less than it is now. In the event we have hyper-inflation then it could evaporate completely, as would my 401K. So as long as the value of precious metals keeps up with the rate of inflation, then I'd say I'll be doing just fine and my bullion will do exactly as it was intended.

As for the cleaning issue that many have brought up. I can assure you I have nothing in my bullion collection that has any numismatic value. Or if it does, the numismatic value is far less than its bullion value so the value of silver would have to drop dramatically before it would ever be an issue. And I think if that happened we'd all have bigger problems to worry about. At this point I collect:

• 90% Half Dollars
• 40% Half Dollars
• 90% Quarters
• 90% dimes
• 35% nickels
• 40% eisenhowers
• American Silver Eagles
• Scottsdale 1/4 oz rounds
• German 5-mark coins

I buy most of it from eBay so I would suspect if anything I bid on had any huge numismatic value, other bidders would probably get it instead. I only bid what I consider to be fair bullion value for the coins. And I bid very low. So I probably loose 30 auctions for every one I win. I clean all of them except the scottsdale since those are brand new, or if i happen to get a brand-new silver eagle. Anything that is not shiny silver gets cleaned.

 

If this is the only way you can save, then there is nothing wrong with doing so. But I wouldn't have cut down the 401k contribution to do it except as a last resort. When you get to retirment, you may wish you had not cut the savings rate because it may be all you have to live on. Hyperinflation is a low probability event in my opinion [although some inflation seems close to a sure thing], and it makes more sense to save for what is likely than what is unlikely.

 

Just curious, how do you believe the dollar will survive when the United States has 16 trillion in debt, 121 trillion in unfunded liabilities, yearly 1+ trillion deficits (so its only getting worse) and there is absolutely no effort to rectify the situation? The only way out I see is printing the money, which considering how much has to be printed to get out from under this things are gonna get real bad.

A very serious devaluation of the U.S. dollar appears inevitable in my opinion. Its just math really, when someone logically explains to me how this situation will rectify itself then perhaps I will re-consider going into hard assets that will survive hyperinflation.

 

I've said many times that I think the probability for deflation or inflation is about 50/50 depending on policy decisions that haven't been made yet. The unfunded liabilities are irrelevant to the dollar. They are not debt, and most probably won't be paid. For the $16trillion in actual debt, the normal outcome of having more debt than can be serviced is default. Now, they won't call it default.

For example, it could be determined that all of the treasury debt held by the Federal Reserve and Social Security System is wiped out. Would that change anything? No. And a lot of the debt held overseas could be converted to perpetual trade credits. It is non-callable so there isn't much anyone can do about it. The normal outcome of debt default is deflation - falling markets - as folks scramble to acquire dollars to service the debt. This might result in a stronger dollar, not a weaker one. Remember, under the present system every dollar in circulation is backed by a dollar of debt. This provides a natural brake on inflation when the debt grows to the level where buyers disappear and move to other asset classes.

To be perfectly clear, none of the above are predictions. I don't know what will happen. But I think it is over-simplifed to believe the establishment will just print paper money to pay everything and watch the dollar go to zero. They are much smarter than most people give them credit for.

 

OP, these things got off on tangents liek they usually do, (and I am a culprit usually as well, so I am not throwing stones). For your personal situation, I would say this. Never forget the PRIMARY advantage of a retirement account is its tax deferral, something that will become more and more important. I read Wednesday morning the Speaker of the house welcomes the president's "new taxes" and wishes to "work with him". This is political code to your taxes are about to get jacked up.

Retirement accounts allow you to put more money to work for the same loss in your paycheck. This is HUGE. Please do not overlook that.

If I had a firm opinion of what to do, I would say keep your 401k where it was at, and every year when youa re scheduled to get a raise increase it. You will still get more money in your paycheck and eventually you can work your way up to 15%. This is very prudent regardless of what you choose to invest it in.

Any extra money feel free to put in silver bullion. If you wish to buy more, I would suggest a weekend job, and invest all of the proceeds in bullion.

Yes, I have all of the accounting and financial alphabet combination letters after my name, but those are just confirming my opinion on this subject I have had since I was 17. I was one of the "weirdos" working extra jobs in college and buying silver bullion when every financial guru in the world was proclaiming it a horrible idea. Its not, but it should never be done at the expense of tax defered account funding.

 

what makes you believe they won't change this? When the government gets backed into a corner, any small respect they once had for the people gets thrown out the window in a desperate attempt to save themselves.

 

A default would destroy the faith in the dollar and it's value would plummet. Inflate to oblivion or default, either way it's going to lose a lot of value in my opinion. Time will tell the sordid tale.....

 

You might consider slowing your roll with the name calling. I don't believe offering the exact opposite advise is solid either. The fact is, nobody here is that perfect or has the perfect advice for anybody that asks.

 

Time will tell. I think you are wrong. I just want to show that hyperinflation is by no means the only outcome, but I have allowed that hyperinflation might happen depending on policy decisions that haven't been made yet.

 

I think the title is accurate. And I've never offered the exact opposite advice. What I am against is the belief in an all PM portfolio.

 

Not to quibble, but as someone working in the biz decades, I'll dispute this. The primary advantage of 401k retirement account is DISCIPLINED SAVINGS.
You coin people are likely the EXCEPTION, but most workers aren't "saving" anything. Even the vast majority of workers who participate a 401k generally are setting aside too little, so I wonder even 'if it matters.' But I'm also unsure what 'tax savings' will have accrued when cash-outs eventually occur.

The 401k scheme has a been a boondoggle, a failure in so many ways.

For this, I suppose it's NOT A BAD THING to (also) encourage bullion hording - as a way to 'get it' somehow. Realistically. There will be times for stocks & bonds, bullion and even other commodities (via ETFs) but it's not getting easier and the Wall St myth that 'stocks return 6-8%' has been debunked now anyway. Not after taxes and factoring survivorship bias, they dont!

 

Good observations. The company match is the number one selling point for me. The rest is a bit of an illusion.

 

Yes, this is true, but the 401k is a tool, a very good tool. My observation is a lot of folks just don't use the tool correctly.

These are the biggest mistakes I see folks make.

1. Not contributing enough money, in a lot of cases, not even enough to get the full match
2. Not keeping a balanced portfolio
3. Borrowing against your 401k
4. Buying and selling funds too frequently in a lame attempt to time the market

If you use the tool correctly, your chances of success greatly increase.