TRYING TO "Play the GSR" -- HORRIBLE IDEA

Discussion in 'Bullion Investing' started by goldcollector, Apr 17, 2017.

  1. goldcollector

    goldcollector Member

    Thread started with GSR 68.93. Currently 81. And the silver crowd maintains its perfect record of always being wrong.

    How is that GSR of 40-45 working out for you guys ???

    Like I said in OP, GSR of 55 NEVER again.
     
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  3. baseball21

    baseball21 Well-Known Member

  4. desertgem

    desertgem MODERATOR Senior Errer Collecktor Moderator

    Caution folks, we know.
     
  5. hchcoin

    hchcoin Member

    As far as the GSR, gold is the end goal for me. What that means is I convert silver into gold when the ratio falls into a favorable range but I WILL NOT exchange gold for silver because I am trying to accumulate more gold in the long run. Silver and the GSR are just a means to an end for me. I use the silver to help get more gold when the ratio goes down. Right now, I am buying a lot more silver because I think it is a relative value compared to gold and it is priced below $20 an ounce which I can afford. If I am wrong, who cares. I am just going to turn it into gold at some point in the future.

    So why don't I just buy gold in the first place? Because it is expensive and the premiums on the 1/10 ounce gold suck. I can buy singles or a roll of silver eagles when they go on sale and convert it to 1 ounce gold when I get enough ounces. I can't swing buying an ounce of gold every month but I can swing buying silver here and there when it goes on sale.

    The other reason I like gold long term is that it takes up way less space and weighs so much less. Silver is really tough to carry around in large quantities where as a backpack full of gold is worth a lot of money. My safe deposit box gets really heavy when I fill it with silver. I just traded a bunch of silver for gold at a show because I was sick of how heavy it was and I ran out of room in my safe deposit box.
     
  6. -jeffB

    -jeffB Greshams LEO Supporter

    But... but... why are you buying silver (and paying whatever premium that entails), and then swapping it later for gold (again at a premium), instead of just saving your money and buying gold when you've accumulated enough?

    Any dealer, on any transaction, will insist on collecting a premium. That's how they make a profit. If you buy silver, then swap that silver for gold, you're paying double.

    If the dollar were on a constant, predictable decline against precious metals, I could see buying whatever PM you can, and then shuffling the distribution later. But that "constant, predictable decline" is pretty much the opposite of what we've seen since 2011.
     
  7. V. Kurt Bellman

    V. Kurt Bellman Guardian of The Farce, & Dead-Eye Master

    Now now Jeff, you don't want to confuse a PM true believer with facts. It just weirds them out and they can't "deal". After all, gold is a religion.

    The story is told of the power of gold
    And its lure on the unsuspecting
    It glitters and shines, it badgers and blinds
    And constantly needs protecting
    Balance the cost of the soul you lost
    With the dreams you lightly sold
    Are you under the power of gold?
     
  8. longnine009

    longnine009 Hammer of the gods

    Maybe he does it that way because he knows it will annoy the guru/philosopher-kings?
     
  9. -jeffB

    -jeffB Greshams LEO Supporter

    I'm just trying to follow along. If the fundamental assumption is just that you'll generally get more PM for your dollar today than next month, and that the difference overwhelms any silver-for-gold swap premium, that's fine; I don't agree with that assumption, but it's not anything I can disprove (except in hindsight).
     
  10. hchcoin

    hchcoin Member

    Here is my purchase from this weekend from an online seller.

    upload_2018-4-2_17-51-14.png
    This comes out to $14.63 an ounce with the discount. I also bought it with my credit card so I get cash back as well and brings it down to $14.48 an ounce on generic silver. I have no problem trading this for spot with the dealers I work with. Right now the Kitco bid is at $16.60 which means I am going to make about $2 on this deal. I can't find a deal this good on gold anywhere especially on the 1/10 ounce. If I could, I would just buy the 1/10 ounce gold right now.

    I work really hard to find great deals on silver where the premiums are not going to be an issue. The above example is not the norm. Normally, I can get silver deals on eBay or online from one of the big sellers and then take them to a show and actually don't lose on the premiums at all.

    The Saint Gaudens I have in my avatar was a trade a few weeks ago at a show. I traded silver for that gold coin and got a great deal. It was silver that I had accumulated over the past year or so when I could buy it on sale. I had a 10 ounce bar, a 5 ounce bar, a 5 ounce ATB, silver maple leafs, silver eagles, silver Britannia's, some 90%, Morgan dollars and even two 1 ounce Engelhard bars. They were all bought online when the premium was pretty much non-existent and on sale during the dips. I am guessing the average price was around $16 to $17 on the silver and I traded it when silver was around $16.70 an ounce. This keeps me interested in the hobby and I have fun searching for deals and I love trading at shows.

    Call me crazy but it works for me and it is fun.
     
    -jeffB likes this.
  11. TheFinn

    TheFinn Well-Known Member

    That isn't necessarily true. I remember in 1980 there were car dealers that would sell a brand new car for $250. 250 Morgan or Peace dollars would buy a brand new car. Ikes and SBAs wouldn't work, and neither would FRNs. And no need to transfer from Silver to FRNs was necessary.
     
  12. -jeffB

    -jeffB Greshams LEO Supporter

    Buying on sale, using promotions to get a final price well under spot -- now you're speaking my language. :)

    I still think that in general it would be more difficult to come out ahead by buying silver first and then swapping it for gold -- but if you've got the promotions and cooperative dealers to make it work, more power to you!
     
  13. desertgem

    desertgem MODERATOR Senior Errer Collecktor Moderator

    The 1980s was when the Hunt brothers were running silver, so I can see why the dealers might do that.....But I do bet many dealers lost significantly on that exchange in the long run.
     
  14. Sam Carter

    Sam Carter Active Member

    GSR trading does work, but it's not a daily trade activity, it's a longer play than most want to make or commit to. Swapping Au for Ag and visa a versa can work. The play right now is not to purchase gold because the ratio is the so high (+\- 1oz of gold buys 80oz of silver) if you are playing the ratio then you should be selling gold and buying silver. Waiting a long time for the ratio to drop to below 1:50. I haven't swapped in a long time but I have improved my Silver holdings by 2x with just ratio swapping. So it can work but you have to look at the ROI not from a US dollar perspective but from a AuAg perspective.
     
  15. mikem2000

    mikem2000 Lost Cause

    Looking at it from the $ perspective is really the only thing that counts. You cannot pay your rent with Au/Ag
     
  16. Sam Carter

    Sam Carter Active Member

    True in a sense, but my intentions are not short term as a means to pay my mortgage, any more than pulling money from my 401K would be to pay my mortgage. That's why I said it is a long term play to bounce back and forth to increasing my AuAg ounce holdings. My last swap was December of 2014. Since then I haven't swapped because the ratio has been so high. It will never go to 1:16 as pundits will try and tell you. But a 1:45-50 is may be possible in the next couple of years. And I'll swap my silver for gold then, if it doesn't, oh well my position with Silver is still in my hands.

    But Silver and gold purchases should never be your primary investment tool, you need a well balanced portfolio for whatever your goals are.

    Maybe I am just one of the lucky ones were it has worked to my advantage, and swapped both ways at the right time.
     
  17. V. Kurt Bellman

    V. Kurt Bellman Guardian of The Farce, & Dead-Eye Master

    Here's the thing, though - the GSR needs to get closer to normal by gold going DOWN, rather than silver going UP.
     
  18. Bman33

    Bman33 Well-Known Member

    Short Gold Kurt!
     
  19. V. Kurt Bellman

    V. Kurt Bellman Guardian of The Farce, & Dead-Eye Master

    Since I never use credit to invest, I'm about as "short" on gold as I can get.
     
  20. sakata

    sakata Devil's Advocate

    So, here is a challenge for all of you who belittle trading the GSR.

    And before the moderators remove this because it is an offer to trade, let me assure you it really is not. It is an attempt to call the bluff of those GSR naysayers. However, if someone is inclined to take me up on it I will accept, simply because I offered.

    I will trade one or more 1 oz AGEs for ASEs at the going GSR at the time it is accepted. That means I will trade you a one ounce AGE for 82 one ounce ASEs (at the rate when I posted this). As the rate changes the offer is open as long as the GSR is above 75.
     
  21. goldcollector

    goldcollector Member

    Nearly 1 year later and the GSR has increased from 68.93 to almost 82. At this rate by next Easter we will be at 100 and the silver crowd will all be claiming they traded all their gold for silver at 100. ( Same as they claimed at 35,40,50,60,70, and now 80).

    I doubt that the silver trouncing will continue at the amazing rate it has during the year this thread has been up though so I wouldn't expect 100 until 2020 or 2021 though. But the GSR will continue to expand just as it always has over any reasonable period of time.

    To think it was about 16 in 1980 then around 35-40 from 1990-2000 then 50 then 60 then 70 now 80. The silver crowd are just experts at being wrong.

    We are almost at 82 now. Good luck waiting for the GSR to return to 55. If you live to be 250 years old you will never see it.
     
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