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 Replies: 18 / Views: 3,117 |
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Valued Member
 United States
425 Posts |
Quote: " I guess that you would have to ask yourself if bullion is really all that liquid?"
And this is my big fear, I discovered it is not a few months back trying to trade Silver for Gold.
Thanks to Vinnycoin for your suggestion, I see what you mean. But I think that PM will start to cap out soon,(then again I bought Gold at $300/oz. and sold for $750-$800/oz. thinking there was no way it could go higher!).
Quote: "Must be good to have a few grand laying around" Yes, it is! I had put away 20K but went through half of it for a few family emergencies about 2-3 years ago. Sure saved us.
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Pillar of the Community
United States
2049 Posts |
Quote:
When he tries to sell, most buyers offer only 60-70% of spot This is pretty standard in this area for gold scrap like jewelry and maybe for sterling silver scrap, but not for gold bullion or coins or silver bullion or coins. Dealers in this area typically pay about $1.00-$1.50 under spot for silver which is well over 90% based on today's spot price. The biggest dealer in town pays a flat 93% of silver spot for generic silver up to 100 ounce bars. For gold, they seem to pay around $50-$75 under spot for gold bars or coins which is well over 90%. Online dealers seem to be pretty similar, so your statement is a bit misleading. |
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Pillar of the Community
United States
759 Posts |
Gold will be extremely liquid if the price is stable or increasing. Much less so if it's declining. That's for conversion into cash. Metal for metal trading I would not consider particularly easy or quick.
Figure out your in and out transaction costs as part of your analysis. If you're talking 6 gold coins for example and you have to buy each at $50 over spot and sell at $50 under, that may be significant even in the most liquid of markets.
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Valued Member
United States
312 Posts |
As Jack mentions, if you're looking for a short-term PM buy, an ETF (exchange traded fund) might be your best choice. I'm on Scottrade, so trades are only costing $7/each. That means I can buy and sell $6K of GLD (a gold ETF) for $14 total, vs the maybe $160 I might have to spend to do the same thing with a few $50 gold eagles (diff. of dealer buy/sell per coin times # of coins). Just be aware that the ETFs will not track the metals perfectly. (Also just a note, but the expense ratio will affect performance overtime too - but still should be much cheaper short-term. GLD has an annual expense ratio of 0.40% for example).
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New Member
United States
23 Posts |
I recently went through this. I had a large amount of cash and I am hesitant to put more into a stock market which does not seem to correlate with reality. Continuous rising of the stocks due to Fed stimulus which must end at some point was a little too good to be true in my mind. I waffled for a while but in the end the though of having so much cash making about 1% year and realizing you are actually losing money due to inflation and dollar depreciation was the kicker for me.
Of course I'd save some cash for emergencies, but I'd get the bulk out of the dollar. Whether you turn it into metals or equities is your choice. If you absolutely needed to sell the metals in an emergency, you should always be able to. You might take a percentage loss, but that's a risk you take on any investment, not just PMs.
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Pillar of the Community
United States
759 Posts |
Just to throw something out for all to ponder...if PM prices do start to fall, fall hard and for a period of time, who is going to buy what you want to sell? Sure, there will be some fishing for a bottom, but if gold is dropping $10-$20 a day and has done so 10 out of 12 days, for example, I don't think it's going to be easy to sell anywhere near spot.
I was around in 1980. Saw lines 50-60 people deep at the mall waiting to sell their silver. When the price dropped, many buyers went out of business. Buy offers were well under spot if you could find any. Long time coin dealers went out of business. They could not sell or hedge. PMs were not easy to get rid of at perceived "fair" prices, spot in other words. Food for thought. You should examine all angles.
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Pillar of the Community
United States
592 Posts |
Quote:
I was around in 1980. Me Too.  This is 2011. The situation is Much Different. $1.00 in 1980 had the same buying power as $2.82 in 2010. IMHO, a large part of the pm price is a correction from being under valued: That & the fact that we do have inflation right now even if the government currently in power says we do not. |
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Pillar of the Community
United States
3670 Posts |
Yes, I agree to compare 1980 to now 32 years later plus is like comparing apples to oranges....
Many different factors in play now that were not then. First example off of the top of my head, those folks in 1980 did not have the selling/advertising power of the internet....
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Pillar of the Community
United States
505 Posts |
I think the time to get into PMs has past,but if you really insist on getting in,then buy a little each month and cost average....
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Valued Member
Canada
442 Posts |
No problem oden. I too hope that the PM's slow down. Much rather my bullion be worth less than to have the US in complete chaos. Although I'm from up north, our economies are closely knit, like it or not.
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Pillar of the Community
United States
759 Posts |
I never said today's market was like 1980. Never said a thing about buying power. Never said a thing about valuation or inflation or the government. The point was about liquidity and selling prices in a falling market IF prices fall, market mechanics, if you will. Like I don't know it's not 1980 anymore.
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Pillar of the Community
United States
1064 Posts |
Again, diversify! Get into a fund that covers all these areas, so maybe PM goes down (I doubt that, myself), but your other investment choices keep you afloat. Long term, the stock market has proven to be a good investment. You don't mention how old you are, or what lifestyle you're looking to have later in life. Go to a financial advisor / investment company, get yourself a plan tailored to your situation.
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Valued Member
United States
425 Posts |
I think we all understand that this is not 1980 and most all the rules have changed. The hard part is understanding what the rules are NOW!
I think the big problem we have here and now in 2011 will be IF Silver/Gold drop there is alot more in private hands now then there was then, and it is a bigger part of our total assets. Also back in the 80's when prices were dropping, I would say it was mostly the US and Europe......... now you will have the WORLD trying to drop their PM's.
OneBowl, Thank you for your post, I understood what you were trying to say and agree with you. Ofcourse the big question we all want answered.......when will it drop and how low will it go?
From what I have heard here I think my 10k will stay tucked away in the safe for now!
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Pillar of the Community
United States
1064 Posts |
Don't keep your money in the safe! Buy a 6-month or less CD, even a money market account, or put it in an on-line account, like ING or Ally - might as well make SOMETHING, even though it's rock-bottom. I sympathize: I'm retired, don't really owe anything so I'm not getting any loan-type advantage from low interest rates, but what money I have is not making much!
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Pillar of the Community
United States
4008 Posts |
Collecting coins and PM articles is a great hobby and it is also one that a person can make a bit of money doing.  That said, if a person wanted to invest in PMs, strictly as an investment, and wanted it to be extremely liquid, it would be difficult to beat a PM ETF. These are available for both gold and silver and perhaps even platinum and palladium as well. They can be bought and sold at any time of the day that the market is open with a few mouse clicks. On top of that, one can use "trailing stops" on most (all?) ETFs such that good down-side protection of your investment is possible. A TS of about 2% for gold or 10% for silver should work well. As the PM rises, the stop resets to a higher dollar value. If the PM declines less than the TS, you still own it. If it declines more than the TS, it is sold automatically, locking in the bulk of your profit. Note that in a market that is bouncing up and down, a larger TS will be needed so as to not get stopped out of the market sooner than you might want. If I were to make a substantial investment in gold or silver, this is the method I would consider. |
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Posted 04/06/2011 11:19 am
