Discussion in 'Bullion Investing' started by papermoney54, Sep 13, 2011.
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Jim Rogers always advises to keep your money in the bank until you find something that you completely understand and know to be a bargain. Then buy it.
Warren Buffett reminds everyone that there are no called strikes in investing, so waiting for the perfect pitch is not a mistake.
If you are uncertain about what to buy, then don't do anything. You are correct that prices are historically high. It sounds like you should do more research. If you buy something because someone here tells you to, you won't be comfortable, won't know how to react to price changes, and most importantly, won't know when to sell everything and find another investment vehicle.
What you're asserting here is that a metal which, despite 2 world wars, a Civil War, a depression, and multiple recessions has spent over 200 of the last 220 years below $10/oz, will never return there because it's been solidly above it for the last 5.
No, but since the total cost of production for silver has risen to a level of approximately $20+, the only way we can have $10 silver is if the world decided that it has enough above ground inventory and will never require more. Of course, the price could spike down or up to just about any price you can name in a wild market, but the days of $10 silver for any sustained period of time are probably over. And yes I know that most silver is produced as a byproduct, but primary silver mines are the marginal production factor that sets the price, and they need $30+ silver to operate.
Just saying its not impossible by any means, not likely maybe, but economically not impossible.
The monetary supply would have to go back to the level it was at 5 years ago $10 silver to be a realistic possibility. It could happen, but it looks like the monetary supply is about to be expanded yet again in a few days when the Fed reconvenes for a 2 day meeting on 9/20 - 9/21. Goldman Sachs has been pretty open about the need for QE3, but we'll see.
I agree with this to an extent, however I could easily see it dip to the $20-25 and establish a new base right there. After seeing the stock market, real estate market, oil/ng over the past decade I am hesitant to never say never about anything.
To the OP you and I are roughly in the same boat....that being said I have bought silver in the past 2 months, but I am in it for a 20-25 year timeframe. If silver stays here then I will be buying here...if it drops my monthly allocation for silver will buy me more..if it goes up I will be buying on the rise. Never go full in to any market, if you have $5000.00 allocated towards silver then pick a time frame and allocate monthly/quarterly over that period of time...it is no different then dollar cost averaging into any investment. I always follow the credo of no more than 15-20% of my portfolio should go into 'alternative' type investments and everything I do is done on a long time horizon.
For every one person that makes the quick buck on any type of investment I am pretty sure there are 20 that lose they're shirts. The steady player that goes in eye's wide open with a plan and time frame will normally come out ahead of the quick buck lay it all on the line type of investor.
As far as gold goes I am following the rules of silver before gold until I am more knowledgeable...much easier to make a $42/ounce mistake then a $1800/ounce mistake.
Not at all. Admittedly, that's one way it might happen. (And is pretty darn unlikely *heh*)
But the cost of production could easily change. The production costs of a great many industrial resources have changed...often very quickly and by large amounts...over the years.
Andrew Carnegie "perfected" the Bessemer process for mass production of steel, and radically changed not only its price, but the uses to which it could be put.
If you prefer to deal with a "natural resource" like silver is, then consider the changes in the cost and uses of petroleum products from laborers in hot fields to offshore rigs to, more modernly, shelf drilling.
Or perhaps new methods of reclaiming existing silver will be developed that are more efficient, less expensive, or both.
I'm certainly not suggesting such things WILL happen...merely that a "sudden" radical change in the cost or method of producing, reclaiming, or distributing silver is not out of the question, and could easily impact the price.
Why? The money supply expanded and contracted by multiples of itself from the 1790's until the 1990's, several times. The money supply was radically different before and after the Depression...or before, during, and after World War II.
Those events did not make even a dent in the average silver price.
Again..I'm not arguing silver won't go up. I'm not arguing it won't go down. It may, or may not, ever hit $10 again, or it may be $100 by the end of the year.
I'm simply suggesting that a vast majority of arguments advanced..particularly in "biased" groups such as a silver forum or coin forum...either for OR against silver as an investment tend to be over simplified. Since this thread was started by the OP asking for advice on PM investing, it's appropriate to discuss the counter-arguments, I think.
Great post sir. I agree that forums like this are biased.
I would think a more likely reason why all PM's and other commodities could go down would simply be a better place to stick money. There is a tremendous non-hostoric demand for PM right now. Why? Fear and lack of other investments. Get the economy going again, have some better investment area, and don't be shocked by a giant sucking sound as non-traditional buyers of PM sell their stock.
PM simply would not be as high as it is if there were a roaring bull market somewhere in the world, in something, that investors could trust. I do not count Chinese stocks or other dangerous investments as that, but tech stocks, European stocks, real estate, junk bonds, SOMETHING. Basically everyone around the world are getting no returns on their money and are scared. Put bond yields to 10% and improve their mood, and that will have an effect.
Just my opinion.
Absolutely..."safe havens" are, by their very definition, fear based. Nobody seeks safety from sunshine and kittens...we seek safety from nasty storms and Godzilla. We flee to safety out of fear.
All it takes is either a reduction in fear...which doesn't even have to make logical sense, it just has to "be"...OR the perception that another investment is safer.
Once again...not a prediction that it WILL happen...simply that it COULD.
Maybe you just like silver cuz it's shiny, and you want to leave as much of it as you can to your kids when you die.
The counter to this is "how many seek an unsafe place to put their money?" In otherwords, both statements are irrelevant. An overwhelming number of people who are looking to protect their wealth out of fear put it in an insured bank savings type account.
Anyone contemplating silver and gold are not acting on irrational acts of fear because they have already educated themselves at least enough to bet beyond all the naysayers against holding PM.
It's a forum for bullion buyers to discuss the buying and selling of PM. Of course it is biased. Did you think we are talking about cooking recipes here?
I am sure there would be some that would suggest to own nothing but PM, and that PM's are the end all be all, I believe that is the type of bias Medoraman is speaking of.
You want to he sure you understand the market completely before buying in. It's kind of like buying a stock because someone told you instead of you doing research.
Also keep in kind proportion is good, your a kid your holdings don't all have to be silver or gold, they can be a mix and keep sone cash for other enjoyable things.
Do you seriously believe this?
Given the regularity with which numerous people make poor, uninformed, panicked, fear based, greedy, ill conceived, or downright dumb decisions every day...ESPECIALLY in the area of personal finance...do you truly believe those who invest in PMs are somehow immune? There are some extremely educated and well informed people investing in silver. There are some extremely educated and well informed people who are not. There are idiots repeating the hype from both sides.
Some will make their PM decisions out of fear, some out of ignorance, some out of carefully considered thought and research. Some will be right, some will be wrong...just like always.
Rule of thumb with any "investment" go against what the public is doing and you will probably come out ahead...all the mistakes that a stock investor could make could be made by a real estate/PM/bond investor. None of the investment categories have cornered the market on stupid, they all have equal shares.
So what, exactly, is "the public" doing? Only a small fraction of the 300 million+ people of the United Sates are actually buying precious metals. In this economy, people working by the hour often don't have enough money left over to even consider making investments. Others who are fortunate enough to be working for a company that will make matching contributions to a 401k plan prefer to put their investment money there. Still others who have discretionary funds prefer to have them in bank CDs or Treasury/Savings bonds.
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