Strategy for the beginner/intermediate investor?

I've been lurking here on the forum for over a year. I've been investing in silver off and on for about three years. I want to invest $100/month. My question is, what should I be buying? I've bought AE's, Maple leaf's as well as 1 and 5 oz. bars already. Some I've kept, some I've sold when I needed cash and the market was right.

I've heard people make the case for buying only numismatics, and I've read the benefits of buying bars and rounds. What should I be looking at? Should I buy a certain ratio of both?

If it helps, I buy a lot from Apmex and some from a local dealer.

Thanks in advance.

 

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At $100/month, some don't mind dollar cost averaging. I would rather save my money up and buy more at once, though it depends what you are buying. If ASE or ML, you can buy about five now for $100. If bars, I'd rather buy a ten or hundred ounce with a lower premium than multiple one ounce bars with a higher one.

If you are not a collector, I wouldn't buy any coins for "investment" (aka, speculation). You are more likely to lose money if you don't know what you are doing.

Lastly, if you have actually had to sell the silver you previously bought for liquidity purposes, I wouldn't buy anything. You need to build up some emergency savings first. Selling when you have to under financial duress will only increase your chances of losing money because of the transaction churn (between buy and sell spread) and possible unfavorable timing (buying high and selling low) will work against you.

 

Collectable coins -- not bullion coins -- should not be considered "investments." And I second the motion to build up emergency savings so you don't have to suddenly liquidate during unfavorable market conditions.

One other suggestion: Don't buy graded/slabbed bullion coins such as ASEs. You vastly decrease your chance of ever getting your money back from them.

 

I should clarify, I never sold because I needed to bail myself out of an emergency. I was able to buy low and sell when prices were up. I didn't make a killing obviously, but I did okay.

So if I understand right, a collector buys coins, but an investor (speculator?) buys bullion? Please expound on this. I was of the impression that ASE's were the do all, end all of silver investments.

Thanks for the replies.

 

Since SAE's are more apt to track the rise and fall of the spot price of silver, consider them bullion rather than a numismatic collectible.

Chris

 

ASE are primarily bought and sold as bullion but the collector base for those in Third Party Grading (TPG) service holders such as NGC and PCGS is also very large and in the aggregate, consists of at least hundreds of thousands of buyers. These are issued "business strikes" which are the equivalent of circulating coinage (except ASE never circulated) sold at spot price + a markup and proofs which are sold as collector coins with a much larger proportional collector premium.

The ASE is the most widely bought bullion coin and the most liquid, along with a few others.

The collectible coins bought as "investments" are those graded "70" by NGC and PCGS and a low number of others such as the 1995-W proof which is the "rarest" with a mintage of about 30,000.

 

So basically, for my intentions, I should stick with the basics, eh?

I was reading older threads on silver bars and such. Unless I misunderstood, I am better off buying either 1oz bars or 10oz bars. Are 5oz'ers harder to move if need be? I always thought 5's were that perfect balance when it came to premiums & affordability.

 

Nothing wrong with a 5 ounce bar.....I don't like one once bars unless we're talking gold.

 

5oz. are not a problem to sell. My advise, which will be impossible to follow, is to buy silver for 6 months and never look at current selling values, only to buy. Afterwards, then sell and buy as you see fit. You will have some meaningful decisions that way. 20 or 30 ounces of silver will not make or break you financially. If it does, you are the small fish in the big pond. You therefor will ignore the doomsayers yet have control of your investment. Don't let daily market fluctuations play on your mind. The rules of market volatility aren't followed as they were before. The UK decision to leave the European Union should have cause a major spike in silver as a safe haven. Instead it was flat. Is 60 cents worth an ulcer? If you get into silver today, I would say to let it ride for awhile before taking any selling action.

 

Silver is more of an industrial metal than a monetary one and is viewed that way. This is the best explanation for the current gold/silver ratio and the performance on the day of the Brexit vote. Gold outpaced silver substantially because it is viewed as the "safe haven" far more than silver.

Those with "big money" almost always take large positions in gold.

 

Metals did go up from that, what exactly it was supposed to be a safe haven from I cannot figure out since we are more than two years away before anything actually changes.
It's a slow news cycle right now leading the media to hound that far to much. I would say metals did exactly what they were expected to do having a bounce up, expectations of them running to the moon price wise from that were unrealistic.

 

The majority of traders react to bad news by getting out of the market as fast as they can. So stocks of companies tied into the European market get sold off and these same individuals go to precious metals. It doesn't seem to make any difference when it happens. They react to negative news as soon as it hits the airways. IMHO.

 

I actually don't think it (Brexit) will ever happen, though it should.

 

That's exactly what my reference to "Is 60 cents worth an ulcer?" was about. I thought you would be sharp enough to catch that. That made no one rich and no one poor. It might as well stayed flat. A major shift would have been $2.00 or more. It's so cheap now, your in it for the experience, not to make a fortune. Unless your buying very large quantities of silver, it did not affect your life.

 

Money certainly left and shorts certainly came into play, but just because money leaves the market does not mean it has to go into metals. Some of it usually ends up moving to metals but most usually moves to shorting things or just sitting on the sidelines.

As we see time and time again most people are very reactionary when it comes to markets and the same goes for metals. Once they start significantly moving up the money rolls in just like it rolls out when they move significantly downward.

I am not convinced it will ever happen either and that this isn't anything more than a power play. That said if it does nothing has really changed and people will realize that. Everyone is acting like they're picking up their island and moving it across the world, if anything I think people were just making plays on the market to profit off the news while they could.

I agree with that, people sweat small prices way to much. I was referring to how predictable the reaction was once the vote was final. The vote itself may have been a bit of a surprise (though we put far to much faith into polling but that is a whole different issue) but I think pretty much all of us could have called the reaction that was going to take place from either outcome.

 

Thanks for all the great replies. You guys should teach an economics class for adults. I've been in the stock/bond market for many years and I always believed in Dollar Cost Averaging. Just buy a little on schedule and forget the daily/weekly ups and downs. Just roll with it.

 

Generic silver is really hard to sell over spot on anything like APMEX I seen a video of a guy complaining about it.

 

My preference is to collect pre-1965 U.S., silver coins but that probably would not work for you since you seem ready to buy and sell quickly: this sounds like "day trading." You want to speculate on short-term silver prices moving up and down. I hope I am not kicked off of Coin Talk for saying what I am about to say but if I am correct, why would you buy physical silver? Why not save up a larger investment fund and buy a precious metals ETF and trade "paper" instead of physical metals? This is not investment advice but a query. (I am not sure stocks or ETFs are any different than gambling or playing the lottery.)

As we saw, the Brexit vote created a momentary bump up for precious metals but not the sustained climb PM buyers expected. This was because there are too many unanswered questions: Will the UK actually leave the EU? Even if it does, when? What does a Brexit practically mean?

Because these questions won't be answered for years, there was no imminent need to panic and the initial PM price surge slowed.

 

I don't pay as close attention to the financial markets as I did in the past, but when I did, I also read up on historical events and prices. The information available to me indicates that there is little correlation between prices and events such as the Brexit vote. It is or may be evident on a short term chart but not otherwise. In many if not most instances, someone could know the events in advance and not only would they not make money, they would lose it if they acted with the conventional wisdom.

To give you one example, there were two major bear markets in equities in the space of ten years, between 2000 and 2010. Looking at the long term charts available to me of the Dow and its predecessors, it last occurred roughly between 1919 and 1932, slightly more than 10 years. This was prior to "enlightened economic thinking" when this outcome was supposedly "impossible" and that's all I will say about it.

With metals, inflation supposedly is correlated with higher prices. Well, since 1980, that hasn't exactly worked out, has it? The RATE of inflation is lower but aggregate prices have increased by what, three times or more? This while silver is about 65% LOWER in nominal terms and gold only somewhat more than 50% higher. Despite this abysmal performance, gold remains historically overpriced versus all other commodities, many (if not most) other goods, many wages and many services. Silver much less so but I'm not aware that it is historically underpriced either.

 

I do not disagree with what you wrote. Most events cause short-term movement. The rest is mostly speculative.

But one factor that I have tried to research but cannot answer yet is the question: What impact does the rise of government mint coin production have on the price of gold and silver since the 1980s? Countries around the world are making coins for collectors (Eagles/Pandas/Superman). I imagine that these countries are consuming large quantities of silver and gold to meet the demand. Are these countries purchasing large quantities on the open market? Is that driving precious metal prices down? I ask because I surmise that any government purchasing large quantities of PMs would negotiate a competitive (lower) price, thereby driving the price of PMs down.

Maybe this is a topic for a new thread.