impulse buy

Impulse buys often aren't good buys. My input: avoid graded bullion coins like the plague.

 

Log in or Sign up to hide this ad.

Two days ago I sold some AU 1921 for $16 ea.

 

...in addition that it's really hard to get your money back out. Coin dealers are in business to make money, and they don't do that by selling a coin for $65 and then buying it back for $65. If you're lucky, buy prices will be 70-80% of sell prices; if you're unlucky, you'll get "this is a gem BU coin" when you buy, and "this is cleaned, I'll give you 90% of melt" when you sell.

I fight this by prowling eBay aggressively for stuff that's selling well below its actual value. As a result, I can go for weeks without buying anything at all, and when I do buy, I sometimes find someone's trying to scam me (eBay has my back every time) or that I've made a mistake. It's certainly no way to build a nest-egg, never mind make a living.

Sure, you might be able to buy lots of silver near melt while it's at $15/oz, and then sell it when it's $40/oz. Or you might do as I did, buy lots of silver near (or even below!) melt when it's $40/oz, and then sit on it while it's $15/oz. Or $8/oz.

If you're buying stuff and counting on its price going up later, you're speculating. This can be entertaining, and profitable if you're lucky. But it's also a good way to fool yourself -- into thinking that you're smart when you're actually lucky, or into thinking that you're investing when you're actually gambling. (And, calling back to my first paragraph, the house's cut is pretty hefty.)

 

+1 to what @-jeffB said. Silver stacking is not a good way to save money, if only because you're typically going to pay at least a small premium above spot when buying and take a small discount from spot when selling. That's how metals dealers make money is on transactions.

Just as a hypothetical example, assuming a $17 spot price, say you pay $1 over spot and get $1 under spot when selling. That means spot price has to rise almost 6% to $18 before you're even covering your cost basis. And, buying at $1 over spot would be a really good deal to begin with! (You'd probably have to go to generic bars and/or buy in huge quantity to get something like that.) You'd do far, far better just setting up a high yield savings account with automatic deposits and stashing the debit card away.

As for investing, IMO, you shouldn't invest at all until you have a minimum of 3 months expenses saved in the bank (and possibly more, depending on if you're part of a dual-income household and how stable your income stream is -- 1 year worth of expenses is not outrageous for people who are self-employed).

 

May I also suggest that before you start investing, pay off all credit card debt. Today's investment returns cannot keep up with the interest rate you pay on your cards.

 

I don't have any credit card debt. Well, I guess Ill just sell all my precious metal, take my loss now, and just save cash.

Thanks, Joe.

 

No credit card debt? Right on!

 

Not sure you need to go that far. If I were in your shoes, I'd keep what I have, and just not buy a bunch more. After all, silver might go up. At least, that's what I keep telling myself...

Also, as @Santinidollar said, good job on avoiding CC debt! That's the first and very biggest step.