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<p>[QUOTE="EdThelorax, post: 3373070, member: 99854"]I believe on diversification. Metals have a totally different investment function than most normal asset classes. Bonds are seen as a guaranteed return, stocks as long term growth. I see precious metals as somewhat an insurance policy against those having a cyclical downturn which <b><span style="color: #0000b3"><u>always</u></span></b> happens and is long over due IMHO. </p><p><br /></p><p>Even the most stock bullish experts that are well seasoned will say to put 5-10% of one's portfolio in PM's. I believe that the 2008 banking crisis was a signal to those that understand economics that the debt burden in the US can not continue to grow to infinity as some may have you believe. There is only one way that the USGov't will ever be able to pay off, or continue to be able to make the interest payments on 22 TRILLION in debt (not to mention future obligations like SSI) is through inflation. </p><p><br /></p><p>The money supply has been growing exponentially, and has yet to be seen in a similar rate of growth in prices of goods. It is clearly evident in stock,real estate, and bond prices and has been for a decade at least. It is only a matter of time before it shows in commodities like it started to in the 2000's. Therefore a heavier weighting in commodities, specifically PM's is what I believe to be the prudent choice at this time. </p><p><br /></p><p>There are several reasons people give for advising against PM's. One is storage, it can be expensive to store a significant amount of bullion where someone can't steal it, especially silver. Another is that it doesn't pay interest of dividends. Bullion in my possession is no one else's liability, it is very liquid (I can have cash in hand with a trip to my dealer's within 17 hours maximum, they are open Sundays) and it will never go to zero. Every single stock and bond has that potential. </p><p><br /></p><p>I prefer to diversify my metal holdings beyond physical. Buying silver stocks (miners) means that I am getting way more than 1 oz of silver for my $16. Of course it is still in the ground, but I don't have to worry about someone stealing it. With some miners, I can get an ounce in the ground for a couple bucks. This gives me great leverage to the price of silver. There are companies like Wheaton Precious Metals (WPM) that pay a dividend even with today's super low gold and silver prices. It's only $.36/share or 1.7% right now, and the % return will most likely remain near that level as PM prices rise because the stock price will outpace metal prices. The thing is, if the stock price increase 5X and the dividend follows with a 5x increase, the dividend rate based on today's investment would increase to 8%/yr. A 5x increase in stock and dividend price is within the realm of possibility with a doubling of PM prices. A double from here in PM prices is easily achievable due to the increase of the money supply over the past 5 years and projected increase of the next 5 years. </p><p><br /></p><p>A small investment in silver stocks now could over-take a large one in "funds" if the reality of modern finance manifests itself in the next decade. In my honest opinion, I do not see much of a chance it won't.</p><p><br /></p><p>I apologize if that is difficult to understand, it was a lot to try and pack into one post.</p><p><br /></p><p>JMHO</p><p>Ed[/QUOTE]</p><p><br /></p>
[QUOTE="EdThelorax, post: 3373070, member: 99854"]I believe on diversification. Metals have a totally different investment function than most normal asset classes. Bonds are seen as a guaranteed return, stocks as long term growth. I see precious metals as somewhat an insurance policy against those having a cyclical downturn which [B][COLOR=#0000b3][U]always[/U][/COLOR][/B] happens and is long over due IMHO. Even the most stock bullish experts that are well seasoned will say to put 5-10% of one's portfolio in PM's. I believe that the 2008 banking crisis was a signal to those that understand economics that the debt burden in the US can not continue to grow to infinity as some may have you believe. There is only one way that the USGov't will ever be able to pay off, or continue to be able to make the interest payments on 22 TRILLION in debt (not to mention future obligations like SSI) is through inflation. The money supply has been growing exponentially, and has yet to be seen in a similar rate of growth in prices of goods. It is clearly evident in stock,real estate, and bond prices and has been for a decade at least. It is only a matter of time before it shows in commodities like it started to in the 2000's. Therefore a heavier weighting in commodities, specifically PM's is what I believe to be the prudent choice at this time. There are several reasons people give for advising against PM's. One is storage, it can be expensive to store a significant amount of bullion where someone can't steal it, especially silver. Another is that it doesn't pay interest of dividends. Bullion in my possession is no one else's liability, it is very liquid (I can have cash in hand with a trip to my dealer's within 17 hours maximum, they are open Sundays) and it will never go to zero. Every single stock and bond has that potential. I prefer to diversify my metal holdings beyond physical. Buying silver stocks (miners) means that I am getting way more than 1 oz of silver for my $16. Of course it is still in the ground, but I don't have to worry about someone stealing it. With some miners, I can get an ounce in the ground for a couple bucks. This gives me great leverage to the price of silver. There are companies like Wheaton Precious Metals (WPM) that pay a dividend even with today's super low gold and silver prices. It's only $.36/share or 1.7% right now, and the % return will most likely remain near that level as PM prices rise because the stock price will outpace metal prices. The thing is, if the stock price increase 5X and the dividend follows with a 5x increase, the dividend rate based on today's investment would increase to 8%/yr. A 5x increase in stock and dividend price is within the realm of possibility with a doubling of PM prices. A double from here in PM prices is easily achievable due to the increase of the money supply over the past 5 years and projected increase of the next 5 years. A small investment in silver stocks now could over-take a large one in "funds" if the reality of modern finance manifests itself in the next decade. In my honest opinion, I do not see much of a chance it won't. I apologize if that is difficult to understand, it was a lot to try and pack into one post. JMHO Ed[/QUOTE]
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