Thinking about investing in gold or silver

[Minibear464]

I'm not sure I'll be doing it, but I am considering it. My thought is that it'll be there in case the economy fails. In case the US goes too far into debt (not terribly unlikely ), then some sort of precious metal would still be accepted in other places. And if the value does go up, then I can also make a little money, but if the value goes down, it will never be so low that my stash would be rendered useless. I have enough to invest a little bit to start off, and I'm trying to decide what to invest in. Or is it a bad idea overall? And also, where/what/when should I buy? Thanks for any help!

EDIT: I'm also trying to decide what kind of silver to invest in. Is there a preference for the manufacturer? It seems that the American Silver Eagle coins would be easier to trade, because they are made by the government, but Cutlerylover also suggested MPM silver rounds on his site... does it make a difference? I mean, an ounce is an ounce right? Or does the legitimacy come into question on the less well known brands?

 

[Gollnick]

My thought is that it'll be there in case the economy fails.

I've never understood this thinking. If the economy fails, what will be the value of gold and silver? You can't eat them. They won't protect you from the cold. They won't cure you of any disease. Gold and silver are valuable because they are used in making jewelry and in industrial processes and high-tech products. If the economy fails, ain't nobody gonna be buying jewelry, conducting industrial processes, or making high-tech products.

Let's say that the world as we know it ends and we find ourselves in some sort of barter-based economy. Aside from trying to find someone who whats your gold or silver, the question becomes how to "make change." Let's say that you go into the barter-based economy with 100 ounces of gold (something like $155,000 today). You've got 100 of these one-ounce gold coins. You are hungry. I have some bread that I made and would be willing to sell a loaf or two of and for some strange and impractical reason, I'd like some gold. Hopefully for you, a one-ounce gold coin is still worth more than two loaves of bread. If you went to the local boulangerie to buy two loaves of bread for $2.50 each and had only a $20 bill to offer, the clerk would give you the bread and $15 in smaller bills back. That's called "change." But how are we going to make change when all you have is a one-ounce gold coin and all I have are a few loaves of bread? Either you're going to settle for two very expensive loaves of bread, or you and I are not going to be able to reach a deal and I'll trade my bread to a guy who has something more equally-valued to trade and leave you to eat your gold coins; they aren't very nutritious.

If you want to stockpile value to use in such a situation, my suggestion is brass and lead... specifically in the form of 9mm and .45 ammo. It's a lower increment of value. And it's something that you'll easier find someone wanting to trade for because -- unlike gold or silver -- it has immediate practical value.

The basic rule in successful investing is: buy low and sell high. Gold is a historic highs right now. Now is not a good time to be buying gold for investment. Keep in mind that most home-owners and renters insurance policies have specific caps on coverage for precious metals; it's typically $2000... not even two ounces of gold these days. So, if your little stash is lost of stolen, you're not likely to be covered for that loss. You can, of course, increase that coverage... for a price. And given that precious metals are very attractive to thieves, very compact, very easy to fence, and very difficult to trace, insurance companies really don't like to write those policies so they are prohibitively expensive.

Precious metals in physical form have a lot of issues associated with them.

 

[Codger_64]

Sound advice Gollnick. On a small scale, and after a lot of study, rare precious metal coins can be a fun and rewarding hobby. And some people make a small sum from their hobby. The only people who are making money now in precious metals are dealers who bought lower and sell now at spot plus. And are willing to buy at a percentage below spot. I played the market years ago and made out well by acting contrary to the market. Now would be the time to sell, not buy.

 

[gregery s]

Minibear,

Your concerns are welll founded, as anyone who has been monitoring the unsustainable growth of government debt should know. Long before easily debased paper currencies flourished, gold and silver functioned as money, and will undoubedly resume that function when paper currencies fail.

As successive governments have proven that they cannot resist the temptation to try to spend their way out of unmanageable fiscal deficits by printing more and more money, it seems clear (at least to me) that the long term outlook for gold and silver very favorable.

I note with interest that the Russian and Chinese governents, now flush with cash, are steadily accumulating gold
as part of their strategy to rebalance their foreign exchange reserves...

If you are interested in purchasing precious metals, I recommend Kitco (www.kitco.com). I have dealt with them for
more than 15 years with no problems. Their website contains a massive amount of useful information regarding precious metals investments and related subjects.

Greg

 

[Gollnick]

I note with interest that the Russian and Chinese governents, now flush with cash, are steadily accumulating gold
as part of their strategy to rebalance their foreign exchange reserves...

Or are they just accumulating it for military strategic purposes? Gold is an essential ingredient in much of the electronics which has become so much a part of today's weapons systems.

The biggest holder of gold is, by far, the US Government.

George Soros and Louis Moore Bacon are both selling gold right now.

According to the analysts at Credit Suisse (Feb. 21 report), "An inevitable unwind of the 12-year gold bull market has begun... Gold will probably peak in 2013 and keep declining the following year as U.S. growth accelerates."

 

[killgar]

I've never understood this thinking. If the economy fails, what will be the value of gold and silver? You can't eat them. They won't protect you from the cold. They won't cure you of any disease. Gold and silver are valuable because they are used in making jewelry and in industrial processes and high-tech products. If the economy fails, ain't nobody gonna be buying jewelry, conducting industrial processes, or making high-tech products.

Let's say that the world as we know it ends and we find ourselves in some sort of barter-based economy. Aside from trying to find someone who whats your gold or silver, the question becomes how to "make change." Let's say that you go into the barter-based economy with 100 ounces of gold (something like $155,000 today). You've got 100 of these one-ounce gold coins. You are hungry. I have some bread that I made and would be willing to sell a loaf or two of and for some strange and impractical reason, I'd like some gold. Hopefully for you, a one-ounce gold coin is still worth more than two loaves of bread. If you went to the local boulangerie to buy two loaves of bread for $2.50 each and had only a $20 bill to offer, the clerk would give you the bread and $15 in smaller bills back. That's called "change." But how are we going to make change when all you have is a one-ounce gold coin and all I have are a few loaves of bread? Either you're going to settle for two very expensive loaves of bread, or you and I are not going to be able to reach a deal and I'll trade my bread to a guy who has something more equally-valued to trade and leave you to eat your gold coins; they aren't very nutritious.

If you want to stockpile value to use in such a situation, my suggestion is brass and lead... specifically in the form of 9mm and .45 ammo. It's a lower increment of value. And it's something that you'll easier find someone wanting to trade for because -- unlike gold or silver -- it has immediate practical value.

The basic rule in successful investing is: buy low and sell high. Gold is a historic highs right now. Now is not a good time to be buying gold for investment. Keep in mind that most home-owners and renters insurance policies have specific caps on coverage for precious metals; it's typically $2000... not even two ounces of gold these days. So, if your little stash is lost of stolen, you're not likely to be covered for that loss. You can, of course, increase that coverage... for a price. And given that precious metals are very attractive to thieves, very compact, very easy to fence, and very difficult to trace, insurance companies really don't like to write those policies so they are prohibitively expensive.

Precious metals in physical form have a lot of issues associated with them.

Well said. My thoughts exactly.

I will also add that using gold and silver as currency only works if it is the basis of a widely accepted monetary system (like cash and credit cards are today). If civilization were to collapse, people want gas, food, ammo, toilet paper, etc, etc. Things they can actually use to fullfill their basic immediate needs. Pieces of gold and siver (or diamonds) may look pretty but you can't eat them. And I doubt that most people could accurately identify gold and silver. Even pawn shops use a chemical test to prove the authenticity of precious metals, they don't just trust people. In an end-of-civilization scenario, people with food or gas to barter would look at gold and silver and say "What am I supposed to do with that?"

 

[Bob W]

If I were investing in gold or silver, I'd want to use ETFs. Low-cost transactions; very low ERs; and no security, insurance, or storage issues.

Seems like a bad time to buy too. If there's a correcting coming, it could be severe.

 

[Gollnick]

If I were investing in gold or silver, I'd want to use ETFs. Low-cost transactions; very low ERs; and no security, insurance, or storage issues.

Seems like a bad time to buy too. If there's a correcting coming, it could be severe.

Bingo. And better yet right now is not so much to invest in gold but to invest in gold mining companies. Their value is not so much based on the proce of gold but the demand for it which is high and likly to stay high. And there are ETFs for that too.

 

[Minibear464]

Sounds like now's not a good time to invest. I'm not trying to invest for end of the world scenarios, but less severe things. I have a little stash going if anything bad happens for that, but part of it would also be in precious metals. It's sort of an emergency thing, say if only United State's economy failed, or the government collapsed or something. It sounds extreme, but it worries me that if anything does happen, I'd have pieces of paper that would hardly last through one trip to the toilet. It's not like USD would be accepted anywhere else, and paper's worth nothing. My rational is that at the very least, I'd have stable "currency," which, even though it may drop in value, would still at least retain quite a bit of value. And if everything's all nice and happy, and I need the money, I can always sell the silver, maybe at a loss, but nothing extremely drastic.

 

[Chris Pierce]

As far as making change, that's what a chisel and a hammer are for. That's how it was done in the past.....

 

[Gollnick]

According to Bloomberg this morning, there are right now more short positions in gold than there ever have ever been. The pros are betting that gold is going to go down.

 

[Shaggy]

According to Bloomberg this morning, there are right now more short positions in gold than there ever have ever been. The pros are betting that gold is going to go down.

How are we to know it is the "pros" who hold the short position? And have the "pros" always been right? Seems they were largely responsible for creating the situation which we've been struggling through for the past several years. Gold and silver have been accepted as money for over 3000 years; I don't see that changing anytime soon. That is why the Chinese are accumulating gold, not for its miniscule industrial applications. The Chinese don't want to hold our debt, they don't want to hold our rapidly depreciating dollar and are exchanging it for anything of value (gold, silver, oil, and other resources). I have several friends who escaped the holocaust in SE Asia with nothing more than the clothes on their backs because they had a little gold to pay their way across the border. If society crashes here and no one wants gold any longer it will still be accepted outside these borders. I absolutely recommend investing in a little in gold and silver, as well as food rations, ammunition, tools, toilettries, and others things of value should scarcity become real. Investing in gold and silver should be considered a long term holding to PRESERVE the current value of your earnings, not a short term trade. Ignore the daily price fluctuations.

 

[sir_mike]

I have been buying selling gold and silver since the price of gold was $300 an ounce. I enjoy doing it and I keep some just because I call it an investment and can make some money off it. I also had some extra money that wasnt making me any money just sitting around so I decided to get some gold and silver. There is a very good chance you will make alittle money off it as even if it goes down, it always goes back up eventually. You need to hold onto it for awhile.

One of the pluses is that even though you can consider it is an investment it is one that you have direct access to so if you need some money, you can get it out of your safe and sell it, unlike an IRA or 401.

I would buy too much gold and focus on more silver. For gold I would get different sizes and not all one ounce coins, get some 1/10, 1/4, 1/2 as those would be easier to barter without expecting change as well as silver.

Some people has speculated that gold will get up to $2000 an ounce but right now it is almost $250-300 less than what it was awhile ago. The thing is, dont freak out if it drops by $100 or so cause eventually it does seem like it goes back up.

I guess the Prepper's love gold and silver but mainly silver as the cost is lower and more easily bartered than gold.

The coins are also sooooo pretty to look at! LOL If you have extra dollars sitting around buy a couple and see what you think!

 

[killgar]

Gold and silver have been accepted as money for over 3000 years; I don't see that changing anytime soon.

So have goats, chickens, rabbits, and eggs. But good luck walking into any gas station or grocery store here in the US today and paying with a gold coin or a chicken. And it wouldn't be any easier if civilization broke down (actually, the chicken would have more value than the gold. After all, a hungry person can eat the chicken).

It's been a long time since gold and silver were "street" currency here in the US. Our currency has been paper cash, checks, and credit cards for a long time. Societies don't change their monetary systems over night, it would take a long time for a post-collapse US to switch to a currency based on precious metals. Like I said before, most people don't know squat about precious metals, their weights, values, etc. And long before any new currency system based on precious metals became established enough to work, many people would have starved to death.

Of course gold and silver have value today, because we live in a structured economy. But consider this- A person could sell a used Ipad today just as easily as a gold coin and get almost full retail value for it. But if civilization collapsed, good luck selling that Ipad. Just because something has value today, doesn't mean it will have value in the future.

 

[Minibear464]

The way I'm thinking is, gold/silver can be a universal currency today. Pretty much every country realizes the value of these items. While it is true that society can collapse, I really doubt a full scale world wide collapse will happen. In my opinion, while there are examples of governments collapsing, total collapse of society everywhere is far less plausible. Gold and silver would function as some sort of bug out cash. One can move to another area, and use the silver/gold to obtain passage, rooming, or restocking of materials. I don't prep so much that I have a concrete shelter stuffed to the brim with food, but instead, a more reasonable approach for my circumstances- a week's food, water, and such. After that, there's only so much I can store in my house. So I'm thinking about investing in gold/silver.

That said, does anyone have advice about how to invest? And what types to invest in- there're coins, rounds, bullion, bars, and more, all made by a myriad of companies. Even if I wanted to, I don't know where or what to buy.

Also, I'm not trying to ignore people who say I should not invest in silver, but I think what I'm trying to prepare for with this, the collapse of a few societies, is different from what they're explaining, a true end of the world possibility.

 

[Shaggy]

"actually, the chicken would have more value than the gold. After all, a hungry person can eat the chicken...."


Of course this is completely true in a post-apocalyptic world. However, there are many shades of gray between where we are now and that future possibility. Owning a little gold or silver would preserve the value of that investmet from inflationary erosion, especially as prices continue to rise (despite the govt claims to the contrary) and wages remain largely stagnant. The value of all resources and commodities should continue to increase in value as the govt prints paper "money" with reckless abandon. Precious metals is just another way not to put all your eggs in one basket preparing for an unknown future.

 

[whetrock]

For an individual who is well prepared for a collapse I feel that PMs could be a decent way to diversify their investments. I can't imagine gold or silver (heck even copper is traded around here in some capacity or another) as being totally worthless, and maybe a potential basis for trade. Still I'd rather have a small cache of precious metal than some fiat money like our FRNs. But only after certain goals are met with ammo, food , water, and other necessities. I personally see it as a way of opting out of an already unstable system of trade in our country at the moment, and potentially the future. I believe that inexpensive firearms, like a 91/30 Mosin Nagant and cheap bountiful surplus ammo, or clean purified water, maybe food with a long shelf life, would be excellent wampum, maybe even more so than precious metal, who knows, I don't. But it is interesting to think about nonetheless. I'm beginning to think that precious metal has some value, but not as much as a lot of people are led to believe. Still I'm thinking about buying a bit of silver as an entry into the world of precious metals, I don't have to sink a whole lot, maybe just enough to get a few cool coins, and larger bars. I'd like to eventually get into gold as well, maybe even copper bullion, people steal, and trade copper like crazy in this part of the world, so maybe it could have some regional appeal.

 

[texas gun person]

Silver is different than gold.

It is predicted that silver will be the first element that the human race extinguishes. Why? Because we throw away silver by the ton. Silver is used in over 10,000 different processes, and it is used in very small quantities during most of these. Now, it is not worth the money to go through and collect all the silver from every piece of electronics, clothing (yes clothing), etc. Yet, we use so much silver that eventually we are going to run into a problem. Silver is an extremely valuable metal when it comes to what can be done with it. Silver is even used in toxic waste sites because of its great antimicrobial characteristics.

As far as gold is concerned, it is estimated that 95% of the gold ever mined is still sitting around. Why? Because it's gold. No one throws the stuff away, and it's not going anywhere. It will be around as long as we are.

Because of the differences between the two medals, many people are starting to turn to silver as the medal of choice for buying for investing purposes or as a hedge against inflation. It is also much easier for the average person to buy silver. I have around 3 pounds of silver, and... 180 grams of gold. Gold is just too damn expensive.

Precious metals are better as a hedge against inflation in my opinion. The dollar will crash because it's the only mathematical possiblity. You can't keep making more of something and expect it's value to stay the same.