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 Replies: 21 / Views: 2,575 |
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Pillar of the Community
United States
5858 Posts |
Just a little theoretical exercise here...
For those of us who missed the opportunity to buy silver and gold when it was cheap, we would love to have a time machine to go back ten years or so and pick some up at bargain prices. Well, that's obviously not going to happen, but what if you woke up tomorrow and discovered the price of gold and silver had suddenly plummeted back down to where it was ten years ago? We're talking about around $350 for gold and $5 for silver. Is it a temporary dip or a major market correction? Who knows?
Assuming you could actually find some place that would sell to you at the new prices (without tacking on ridiculously high premiums), how much would you buy?
For me, I think my first thought would be to cash in my son's college fund, take out a second mortgage on the house and get something like $100K of gold and $100K of silver. But then I'd start worrying about the possible reasons why the prices dropped so low and worry that perhaps the bubble had burst and we were in for another 20-30 period of flat prices. On the other hand, the odds would be pretty good that the prices wouldn't get much lower, so maybe investing more would be a good idea since it would at least be likely to maintain value.
I dunno, in the end I'd probably hedge my bets and invest no more than $100K total -- a good chunk of my son's college fund, but no need for a second mortgage. And then I'd kick myself a year later when prices went back through the roof...
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Valued Member
Canada
442 Posts |
I have access to about 10k almost interest free loan for 12 months. I'd probably use at least 5k of that. All of it if the general consensus was that it was the paper market crashing, and that physical bullion was being hoarded away by the big boys.
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Valued Member
United States
103 Posts |
At least I know I'm not the only one that wishes they had a time machine lol.
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Pillar of the Community
United States
1454 Posts |
Second mortgage, for sure. I'd be all-in if prices ever dipped that low. Silver went from $21 to $9 and gold fell over 30% during the crash of 2008. With the economy where it is, today, I could see similar PM declines in the future. But the backstop, I believe would be something like silver at $8-10 and and gold at $500-800. Will they ever get that low in the next 5-10 years? Debatable. But if so, I'd be buying everything up like a carpetbagger.
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Pillar of the Community
United States
5832 Posts |
Quote:
You're traveling through another dimension, a dimension not only of sight and sound but of mind. A journey into a wondrous land whose boundaries are that of imagination. That's the signpost up ahead - your next stop, the Twilight Zone! And the year is 2012. Barryg will wake up one morning from the other side of his bed... He has given a chance to do the unthinkable! |
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Pillar of the Community
United States
2661 Posts |
I would hit up my favorite haunts where I can buy "junk" silver for a few percentage points over melt and clean them out. I would rather have the coin than just plain bullion. At least then I have the numismatic value as well because I may not live long enough to see the price rise again if it were the same scenario as what happened with the PM market crash of 79-80.
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Pillar of the Community
 United States
5858 Posts |
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At least then I have the numismatic value as well because I may not live long enough to see the price rise again if it were the same scenario as what happened with the PM market crash of 79-80 Yeah, that's what I would be afraid of as well. I'm not sure buying "junk" silver would make much of a difference though since, in my experience, anything you can get at or near spot isn't going to really have much numismatic value in the first place. I mean, if silver were to get stuck at $5/ounce for the next 20 years, how much would an extremely worn Mercury dime or an average condition 1964 Kennedy half dollar be worth? I think that if you want to preserve numismatic value, you need to buy rare coins and/or ones that are in really nice condition, and I don't know where you can get either for spot prices. Of course, maybe I just don't know the right dealers... |
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Pillar of the Community
United States
808 Posts |
The temptation to literally go all in would be overwhelming, wouldn't it? Personally, seeing a PM price drop like that, as exciting as it would be, would also be pretty scary. Part of what we're talking about here could actually happen in a deflationary spiral. Ugly, ugly, ugly.   Yeah, the wife would never go for bringing a mortgage back into our lives. Asset reallocation would have to be the way to go. And, you know? I'd probably still only allocate 20% of whatever I had into PMs. Who knows, but even with the risk, that's some crazy amazing appreciation potential. Easily enough to get you started financing your future fiefdom.  |
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Pillar of the Community
United States
4008 Posts |
That sounds to me like a "back up the truck" scenario. Yeah, I would be VERY tempted to buy at least $250k worth of gold and another $50k of silver at those prices. The basic fiat paradigm has not changed a bit, so what's not to like about converting a lot of it into REAL money?  OTOH, if I had access to that time machine, I would be very tempted to turn the dial on the flux capacitor back a few turns to around 1900 when gold was $21.67 an oz. Not sure what I would take with me as payment, though. Zircons? lol |
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Pillar of the Community
United States
1454 Posts |
I know what you're saying, CW. But I honestly don't think I could help myself. I'd be thinking long-term investment, of course. As long as I got a decent interest rate on the Re-Fi, I believe I'd make out well... eventually. How much one "bets" would depend more on one's age and financial status, I think. At 43, I figure I'd have enough time to recoup my investment, even if it took two decades. Funny that Barry brought it up, actually. In 2008, when the PM market tanked, I took out a home loan for $18K and invested it all in silver. I easily doubled, if not tripled, my money in under three years. I'd take the same risk again, no doubt.
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Pillar of the Community
United States
808 Posts |
Quote:
I easily doubled, if not tripled, my money in under three years. Outstanding, traevin! You know, it all comes down to having the knowledge to recognize an opportunity and the guts to seize the moment. If conditions shape up to ever let you to try that again, go for it! I have a couple of years on you, but I too feel I could safely weather some risk in a larger PM play and hopefully come out ahead before things are said and done. We'll see what the future holds. |
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Pillar of the Community
United States
648 Posts |
100 oz's of Gold @ $350 & 5,000 oz's of Silver @ $5. I would back the truck up on Gold...to me and at this point in my non-married/no children life... 5,000 oz's of silver is enough for me to play with...I would then watch closely before stacking some more.
100k? Hmmm - I would realistically be 60k PM, 40k in powder waiting to stack away.
Edited by tripncoins
08/14/2012 7:14 pm
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Pillar of the Community
United States
2661 Posts |
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40k in powder  You are speaking of Rhodium Sponge...............aren't you? |
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Pillar of the Community
United States
648 Posts |
Maybe if the price is right! ;-)
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Pillar of the Community
United States
1195 Posts |
My grandpa has in trust for me $85K in CD's. I would ask if I could take $42K of that out to invest $21k in gold, $7k in modern bullion silver, and $14k in junk silver halves and quarters.
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Pillar of the Community
United States
3294 Posts |
about 4k face value of 90% sounds good
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Replies: 21 / Views: 2,575 |
Posted 08/14/2012 2:26 pm
