Buy and selling physical gold and silver

[pawa_k2001]

When would you guys buy and sell physical silver? I bought my silver at $18 oz and kitco is showing silver spot at $29.30 right now. Should I sell and hope for a pull back in the beginning of 2011?

I dont have much gold because of its price so for know I will just sit on it.

[NZTIGUAN]

The MOMENT you sell it you've lost the potential advantage it holds. Prices will fluctuate over time BUT the whole point with holding physical pm's is that you always covered regardless of what the dollar does. The second you turn it back into dollars you lose that. In my opinion you shouldn't see physical pm's as an "investment" to be converted at a given value but as a hedge against the possible catastrophic failure of the currency markets. If that happens, THEN you might look at redeeming small amounts of your pm's at a time in order to preserve your "savings".

[a_riot]

The MOMENT you sell it you've lost the potential advantage it holds. Prices will fluctuate over time BUT the whole point with holding physical pm's is that you always covered regardless of what the dollar does. The second you turn it back into dollars you lose that. In my opinion you shouldn't see physical pm's as an "investment" to be converted at a given value but as a hedge against the possible catastrophic failure of the currency markets. If that happens, THEN you might look at redeeming small amounts of your pm's at a time in order to preserve your "savings".

So let me see if I have this straight. You buy gold with dollars losing the opportunity to invest in an interest bearing account, pay a premium over the spot price, plus handling fees and monthly storage/insurance fees. It pays no interest, no dividend and has no intrinsic value or usefulness outside of being pretty if formed into jewelry. You then keep it until such time that there is complete economic melt down, when you hope to convince someone else to take your useless, heavy hunk of rock in trade for something useful like food, shelter or clothing. If you try to cash it in before that, the gov't taxes you at 30% of any profit, and you can only sell it for whatever price the manipulators have decided to price it at. Sounds like a great investment!

[NZTIGUAN]

As I said "riot" it's NOT an investment it's a permanent hedge against inflation. Can you show me a single "investment" that guarantees it will be worth as much in REAL TERMS any time in the future, for ever ?? You're an idiot if you believe that any interesting bearing "account" is going to even keep up with inflation !!

[a_riot]

As I said "riot" it's NOT an investment it's a permanent hedge against inflation.

Except it isn't. In 1980 10 oz of gold would have bought a nice car. It won't now and hasn't since. So much for an inflation hedge. If you invest in gold you are betting a bigger fool will come along, who thinks gold is worth more than you do.

[NZTIGUAN]

Except it isn't. In 1980 10 oz of gold would have bought a nice car. It won't now and hasn't since. So much for an inflation hedge. If you invest in gold you are betting a bigger fool will come along, who thinks gold is worth more than you do.

Are you suggesting that if you'd invested the value of this mythical car in a bank account it would now be enough to buy a new car ????

[TTrabbit]

So let me see if I have this straight. You buy gold with dollars losing the opportunity to invest in an interest bearing account, pay a premium over the spot price, plus handling fees and monthly storage/insurance fees. It pays no interest, no dividend and has no intrinsic value or usefulness outside of being pretty if formed into jewelry. You then keep it until such time that there is complete economic melt down, when you hope to convince someone else to take your useless, heavy hunk of rock in trade for something useful like food, shelter or clothing. If you try to cash it in before that, the gov't taxes you at 30% of any profit, and you can only sell it for whatever price the manipulators have decided to price it at. Sounds like a great investment!

you make a good case against....

[winstonsmith84]

Anyone want to hear about the near 100lbs of scrap 80% pure silver I sold for $5.50oz several years ago. Na, I don't want to either.

[pawa_k2001]

I sold some of my silver today. $11 an oz increase since I bought it is good enough for me. At the rate silver is going it looks like it will get a pull back sometime soon. Usually silver to gold ratio is 55:1, know its more like 47:1. Once it goes to 60:1 I will jump back in, for know I will just hold on some of the gold.

[rdubtheislander]

I sold some of my silver today. $11 an oz increase since I bought it is good enough for me. At the rate silver is going it looks like it will get a pull back sometime soon. Usually silver to gold ratio is 55:1, know its more like 47:1. Once it goes to 60:1 I will jump back in, for know I will just hold on some of the gold.

No, the historical ratio for silver to gold is 16:1. Not 60:1 or 47:1. It has only been this high in the past couple decades because the price has been manipulated.

Investing in precious metals is not about making money, it's about preserving purchasing power. There will be pullbacks in the price, but even if it gets shorted back down to $18 or even lower, it will only be maybe 2-3 months before the price shoots back up, and premiums on coins will keep the price at higher levels than spot.

The price of silver is rising now due to continued buying from people in China and India, QE2, the failing economy, and industrial aspects. The price of silver will not go down until the Fed stops printing money and interest rates rise (the only legitimate reason to create money). Since this is not going to stop, it is difficult to say how high the price is going to go.

Selling for paper dollars is a foolish move unless you have an emergency and need the cash. Silver is like black gold, it has many industrial applications and more are being found all the time. Like black gold, when it is used in certain applications it is destroyed and can never be recovered. There is a chance in the not too distant future (20 to 30 years) that it could become rarer than gold or the ratio could become inversed. In that event, each ounce would become one hell of a retirement piece.

[pawa_k2001]

I dont believe in the 16:1 ratio for gold and silver. That was a set ratio by the government when both were used as money and with the free market. On the market silver was never that close to gold and I believe it never will. I dont buy and sell silver and gold to make money. I sell when the price goes up and use that same money to buy more once there is a pull back.

[a_riot]

Are you suggesting that if you'd invested the value of this mythical car in a bank account it would now be enough to buy a new car ????

Putting 8.5k away in 1980 would have doubled every 7 years. It would theoretically be worth over 24k at this point. Your gold investment is now worth 13.5k and that is using today's overinflated price. Not much of an inflation hedge. You have to forget this theory that gold is an inflation hedge. It isn't. If anything its a crisis hedge. And in my mind, if a crisis of that magnitude happens, no one will want a heavy useless metal with no intrinsic value.

[rdubtheislander]

I sell when the price goes up and use that same money to buy more once there is a pull back.

Here's hoping, for the two of us, that there is a half-way decent pull back in the future. IE: $15 an ounce like in February 2010, instead of what is basically double the price now.

With how dramatically the price broke past $19 in September, the fact that JPMorgan will never be able to cover their short position, and the Federal Reserve continuining to destroy the dollar, I am not counting on it. It will continually get difficult to obtain commodities of any time with this worthless dollar, regardless of their price.

We need deflation, not inflation. Bernanke knows what he is doing. He is intentionally destroying the US economy and the standard of living of Americans.

[rdubtheislander]

Putting 8.5k away in 1980 would have doubled every 7 years. It would theoretically be worth over 24k at this point. Your gold investment is now worth 13.5k and that is using today's overinflated price. Not much of an inflation hedge. You have to forget this theory that gold is an inflation hedge. It isn't. If anything its a crisis hedge. And in my mind, if a crisis of that magnitude happens, no one will want a heavy useless metal with no intrinsic value.

[pops]

Marzen has been trying to unload his gold recently:

[a_riot]

The price of silver is rising now due to continued buying from people in China and India...

Omg, pulling out that old saw again? Oil is supposed to be $200 a barrel for the same reason. When will people learn?

[NZTIGUAN]

Putting 8.5k away in 1980 would have doubled every 7 years. It would theoretically be worth over 24k at this point. Your gold investment is now worth 13.5k and that is using today's overinflated price. Not much of an inflation hedge. You have to forget this theory that gold is an inflation hedge. It isn't. If anything its a crisis hedge. And in my mind, if a crisis of that magnitude happens, no one will want a heavy useless metal with no intrinsic value.

Man your maths is DIABOLICAL. Can you explain to me how IF your mythical 8.5K doubled in value every 7 years (this would require over 10% average net gain) it would ONLY be worth 24k in 30 years, my calcs show 179k !! Not that it matters, you're talking bulldust as usual.

You just keep saving up them dollar bills, you're gonna need them. To wipe the bullmuck off your chin.

[a_riot]

Man your maths is DIABOLICAL. Can you explain to me how IF your mythical 8.5K doubled in value every 7 years (this would require over 10% average net gain) it would ONLY be worth 24k in 30 years, my calcs show 179k !! Not that it matters, you're talking bulldust as usual.

You just keep saving up them dollar bills, you're gonna need them. To wipe the bullmuck off your chin.

Sorry, I forgot to add the compounding. So even without compounding interest you would still make out better (I think 179k is wrong though. I get $148,319.92). With compounding you make out better. Using the rule of 72 with say 5% interest it would take 14.4 years to double your money. In 28 years it would double twice netting 34k with very low risk. Still better than $13.5k that you would get for gold if you sold it today. How is that a hedge against inflation? I don't see how calling me names changes the obvious facts.

[NZTIGUAN]

Sorry, I forgot to add the compounding. So even without compounding interest you would still make out better (I think 179k is wrong though). With compounding you make out better. Using the rule of 72 with say 5% interest it would take 14.4 years to double your money. In 28 years it would double twice netting 34k with very low risk. Still better than $13.5k that you would get for gold if you sold it today. How is that a hedge against inflation? I don't see how calling me names changes the obvious facts.

Take your start date 2 years either way and THEN calculate !!

[a_riot]

Take your start date 2 years either way and THEN calculate !!

It shouldn't really matter that much. If you have to precisely time when you buy and sell gold to be better off, then its really just another investment and not a hedge against anything. If you want to hedge against inflation like you say, why not buy TIPS? Very low risk and inflation protected. Paying many, many times what a substance costs to find is not a hedge, its just silly. If the price of gold goes to 50k an oz like some maintain, then we will all be instant gold prospectors, since there wouldn't be much point in going in to the office and earning a salary paid in dollars when a few hours in the river panning for gold or walking on the beach with your metal detector would pay so much more. The huge amount of time and effort put into the mining, processing, storing, protecting, accounting, buying and selling of this ruddy yellow metal, just to have most of it sit around getting dusty in underground vaults is a real human tragedy. You'd think the stuff cured cancer.

[rdubtheislander]

It shouldn't really matter that much. If you have to precisely time when you buy and sell gold to be better off, then its really just another investment and not a hedge against anything. If you want to hedge against inflation like you say, why not buy TIPS? Very low risk and inflation protected. Paying many, many times what a substance costs to find is not a hedge, its just silly. If the price of gold goes to 50k an oz like some maintain, then we will all be instant gold prospectors, since there wouldn't be much point in going in to the office and earning a salary paid in dollars when a few hours in the river panning for gold or walking on the beach with your metal detector would pay so much more. The huge amount of time and effort put into the mining, processing, storing, protecting, accounting, buying and selling of this ruddy yellow metal, just to have most of it sit around getting dusty in underground vaults is a real human tragedy. You'd think the stuff cured cancer.

If you have to precisely time when you buy and sell gold to be better off, then its really just another investment and not a hedge against anything.

There would be no need to sell unless there were an emergency. It is a better unit of account/store of value than paper money.

If you want to hedge against inflation like you say, why not buy TIPS? Very low risk and inflation protected.

China is not buying as many securities as it used to.. same with Japan. Since they know they we will never be able to pay it back, why bother with securities?

Paying many, many times what a substance costs to find is not a hedge, its just silly. If the price of gold goes to 50k an oz like some maintain, then we will all be instant gold prospectors, since there wouldn't be much point in going in to the office and earning a salary paid in dollars when a few hours in the river panning for gold or walking on the beach with your metal detector would pay so much more.

I don't think you understand at all. Gold is no better than Federal Reserve Notes and most other units of account. The only reason gold has gone up in price is because whatever you are comparing it to has gone down in value. If we found an assload of gold in Antarctica, then it too would become inflated and would go down in value. This happened to silver in the 1800's when an assload was found in the West. It supressed silver prices for decades. Good searching for such a find with gold, it is rarer (for now).

If gold was $50,000 an ounce, some bread would be something like $600 a loaf. If you fractionalized the ounce to pay for the bread. You fail to realize that people aren't actually making money with PMs, all they are doing is keeping up with rising prices. In the future when silver becomes rarer than gold (if it already is) then that is one instance in which you can actually "make" money. "Dramatically increase purchasing power" is far more appropriate, because gold and silver ARE money.

The huge amount of time and effort put into the mining, processing, storing, protecting, accounting, buying and selling of this ruddy yellow metal, just to have most of it sit around getting dusty in underground vaults is a real human tragedy. You'd think the stuff cured cancer.

Platinum, which is 20 times rarer than gold, can be used in chemotherapy.

Silver, while not useful against cancer or something like AIDS, is one of the most versatile antibiotics in the world and kills over 700 different types of bacteria and viruses. It also reduces pain similar to aloe vera and accelerates/asists the bodies natural healing process. The problem is that when it is used in applications like this, it is lost forever and cannot be recovered. It passes through the urinary tract and into the toilet, and is never seen again..

[a_riot]

There would be no need to sell unless there were an emergency. It is a better unit of account/store of value than paper money.

And the emergency will be falling gold prices. Then everyone will head for the exit at the same time to avoid having their life savings tied up for the next 30 years in a small lump of metal only jewelers and dentists will want to buy.

I don't think you understand at all.

You are quite right about that. How can gold "be a better unit of account than paper money" yet be "no better than Federal Reserve Notes and most other units of account" at the same time?

"Dramatically increase purchasing power" is far more appropriate, because gold and silver ARE money.

They are money because we all agree they are and for no other reason. Me and my buddies agree on poker night that cheap plastic poker chips are money. So what? Don't forget it was illegal for Americans to even own gold bullion, from 1933 to 1974 so its only over the last 35 years that gold could even be legally held. Did you read my posts above about buying a car in 1980 with gold? Where is that "dramatically increase purchasing power" that you speak of in that case? Please post an accurate chart backing up your claim rather than some lugubrious youtube video of poor people in Zimbabwe.

[rdubtheislander]

And the emergency will be falling gold prices. Then everyone will head for the exit at the same time to avoid having their life savings tied up for the next 30 years in a small lump of metal only jewelers and dentists will want to buy.

The American people have become so detached from gold and silver that probably less than 1% of the total population actually holds physical metal. It is the Constitution that says that gold and silver are tender in payments of debt. The third Central Bank has done a good job convincing the American people that their paper, promissary notes/bills of credit, have value.

You are quite right about that. How can gold "be a better unit of account than paper money" yet be "no better than Federal Reserve Notes and most other units of account" at the same time?

Do you have a hard time comprehending supply vs demand? Federal Reserve Notes can be made on a whim by bankers who are not beholden to Congress, in fact they own Congress. You have to spend a substantial amount of time to dig these metals out of the ground. Some of them, like silver, can only be found as a by product of mining metals like copper, zinc, and nickel. Gold is a better unit of account than the Federal Reserve Note because there is less gold than there are Federal Reserve Notes. I mean, if I worked hard enough I could probably pull pieces of paper with flamboyant coloring out of the ground too.

They are money because we all agree they are and for no other reason. Me and my buddies agree on poker night that cheap plastic poker chips are money. So what? Don't forget it was illegal for Americans to even own gold bullion, from 1933 to 1974 so its only over the last 35 years that gold could even be legally held. Did you read my posts above about buying a car in 1980 with gold? Where is that "dramatically increase purchasing power" that you speak of in that case? Please post an accurate chart backing up your claim rather than some lugubrious youtube video of poor people in Zimbabwe.

That's because the Federal Reserve Note was backed by a semi-gold standard with the Bretton Woods agreement. Quality money had to be taken out of the hands of the people, and replaced with ****ty paper. America only started going down the crapper with the advent of things like the Income Tax, Social Security, Medicare/Medicaid, and the decoupling of gold and silver from the dollar.

You do not understand. You cannot "dramatically increase purchasing power" with gold. Purchasing power remains the same with gold. You have an opportunity to "dramatically increase purchasing power" with silver because if the industrial applications for silver continue to grow like they have been there will not be enough in the future. This means that the silver to gold ratio could eventually one day be 1:1 or even something like 1:6, where you would need 6 ounces of gold (at whatever price it is) to buy 1 ounce of silver. In this type of situation, purchasing power would be "dramatically increased".

Besides being used as a unit of account, silver has many industrial applications, like oil. It is much better to own than some ****ty Federal Reserve Note, or any paper-based currency not backed by a legitimate commodity for that matter.

[pops]

This thread needs bigger pictures.

[a_riot]

Do you have a hard time comprehending supply vs demand?

No. I have a hard time comprehending someone who, in one post, completely contradicts themselves.

[rdubtheislander]

No. I have a hard time comprehending someone who, in one post, completely contradicts themselves.

Your problem is that you have a hard time comprehending what precious metals are used for.

Gold is for your age-old pension, silver is to trade the ratio. Gold as a store of value against a dollar that is continuing to lose value (since 1913), and silver as a industrial commodity that is also considered a monetary unit. You can preserve purchasing power with gold and silver. You have the ability to increase purchasing power with silver.

You also fail to realize that bubbles have not formed with these particular commodities. Their respective bullmarkets are just beginning. Will bubbles eventually form and pop? Yes. But you have a hard time understanding that the Federal Reserve Note note is the biggest bubble of them all. Therefore, those who associate themselves with it (besides using them to buy food or pay bills) and try to preserve their wealth in derivatives that are based off of the Federal Reserve Note (401k, Bonds, Mutual Funds, traditional savings account, etc) stand to lose the most when the dollar bubble pops. This is because the Federal Reserve Note has no value, and thus all derivatives of the Federal Reserve Note also have no value.

[spookygeek]

If you are looking for an inflation hedge there are alternative investments to Gold. Many portfolios are looking at hospitality reits since hotels can be a hedge against inflation.

BRENT

[rdubtheislander]

If you are looking for an inflation hedge there are alternative investments to Gold. Many portfolios are looking at hospitality reits since hotels can be a hedge against inflation.

BRENT

Anything is better than holding paper currency. Including properties, even though they will eventually deflate.

You should go further and explain how a hotel is a good inflation hedge.

[a_riot]

Anything is better than holding paper currency.

Since this paper you have is so worthless, if I send you a self-addressed stamped envelope can you send me all your worthless paper?

[rdubtheislander]

Since this paper you have is so worthless, if I send you a self-addressed stamped envelope can you send me all your worthless paper?

We'll continue this discussion later. I'm going to go buy some silver.

[titleist1976]

OMG, this thread is full of awesome on my screen... I can literally see three posts.

[SAPJetta]

OMG, this thread is full of awesome on my screen... I can literally see three posts.

LOL. I was just thinking the same thing....

[NZTIGUAN]

We'll continue this discussion later. I'm going to go buy some silver.

You're absolutely wasting your breath with Riot, he doesn't get it and never will (not until it's too late anyway). He simply believes what the Fed and the Govt tells him, that they can just print money for ever and there will never be a "judgement day". Not sure what he blames for the current World wide collapse of paper money and the subsequent increasing value of virtually all commodities including pm,s (inflation).

Let's face it, we all have our beliefs based on our understanding of the information we take in every day. I'm sure we all feel we have it figured out and all have our reasons for that. Truth is, none of us are "certain" of the future and this uncertainty is, in my view anyway, the biggest problem in the World's financial system. 50 years ago, interest rates were minimal, jobs were plentiful, everything was on the up and up, and our parents and grandparents were pretty happy and content with their lot.

Now, we are all full of doubts, paper money is no longer backed by "anything" except hope and goodwill, and those commodities (hope and goodwill) can no longer be relied on. Until the "system" is restructured and people and their labour valued over pieces of paper and "bling" we will all just blunder on in the dark, hoping that "we" have the answer to a question that has yet to be asked.

[a_riot]

He simply believes what the Fed and the Govt tells him, that they can just print money for ever and there will never be a "judgement day".

I'm afraid its far more nuanced than fed = bad, gold = good. But I have a feeling nuance isn't rdubislanders strong suit.

[a_riot]

Now, we are all full of doubts, paper money is no longer backed by "anything" except hope and goodwill, and those commodities (hope and goodwill) can no longer be relied on.

So I have to ask then. What is gold backed by?