anyone into investments? Buying Silver

[tigger]

I'm considering buying some silver as an investment as apparently its low right now and basically I want to invest my cash somewhere where it may stand a chance of seeing growth

Anyone else investing cash in silver? any tips ? I'm not looking for anything risky just something that will give me a return as its a big chunk of my safety net I'll be putting into this its just I don't fancy leaving the cash in the bank and watch it vanish

[incrediBILL]

I always thought gold was a better investment than silver.

[Leosghost]

me too ..

[vik_c]

Gold is a good investment for times of uncertainty and as a hedge against inflation. You'll hear a lot of noise against it in the mainstream media from finance guys but that's partly because selling you a mutual fund or some exotic investment scheme gets them fat commissions while their brokerage on gold is tiny. With the amount of currency that's been printed in the US in the last five years, I'd say buy gold. It's also a hedge against the dollar decline. That said, sometimes gold won't move for years, so don't buy too much. It should be 5-10% of your portfolio, ideally.

[tigger]

I always thought gold was a better investment than silver.

TBH I'm playing catch up as a friend has just bought some silver rather than leaving his cash in the bank and seeing it drop in real value

He seemed to be under the impression buy silver had a better chance of stable growth? but this is all very new and in the past my money when in the bank and stayed there for when I retire LOL fat chance on that

But what would be nice is some type of growth and at least holding inflation off as so far like most people with saving I'm seeing it going backwards

I was considering buying another house - but the advantage over silver or gold is I can get the money out in 24 hrs should I need it

[tigger]

It should be 5-10% of your portfolio, ideally.

what portfolio, this is guy that never takes risks and has 4 year safety net in the bank "just in case" but what I'm considering is putting 25% of that into something that will offer a return - I don't do stocks / shares or as in this case buying metal

any advice is very welcome

[tigger]

anyone know anything about buying into gold coins ?

[piatkow]

Location is important. In the UK VAT (sales tax) is payable which makes that you loose a significant chunk of your investment up front.

[wheel]

what I'm considering is putting 25% of that into something that will offer a return - I don't do stocks / shares or as in this case buying metal

Do some research on what earns the best returns over the long term. Statistically, it's index funds.

There's already well known splits that you should have your investments in. Some brief reading on modern portfolio theory will get you started.

But buying gold and silver right now? I'm seeing TV ads about people who will buy your gold and silver from you at top dollar prices. And when everyone is buying it, you know it's time to sell right? Because you can follow the hysteria and buy when everyone else is and sell when everyone else is, or you can do what statistics show you to do (and not the sales reps,or people with ideas that sound good, like 'gold is a good investment').

These tough times are only temporary. Stocks crashed, gold rises. Wait 2-5 years, things will go back to normal.

[topr8]

... as you're in the uk tigger at the risk of being boring have you got premium bonds - maximum 30k

- they pay no interest but 'prizes' instead .... the huge benefit of which is tax free, also with a decent amount you should be winning prizes all the time.

ditto ISA accounts, use your annual allowance ... again interest is tax free.

also register with national savings and get their emails, as soon as they issue an index linked certificate buy into it - the last one sold out very quickly.

[mark_roach]

The average rate of return on Premium Bonds is only just over 1% at the moment so there are better alternatives.

I don't have any concrete examples (I don't have any money to invest !) but a friend has mentioned he can 3-4% tax free. However that is still losing money since annual inflation is running at over 5%.

[tigger]

... as you're in the uk tigger at the risk of being boring have you got premium bonds - maximum 30k

Oop's I really should have updated my profile I moved to Spain 5 years ago - but thanks for the advice

However that is still losing money since annual inflation is running at over 5%.

I'm not looking for a silly return just something better than the banks are offering as right now your better off spending the cash now rather than saving - but this cash is my lifeline should anything go wrong with my G rankings which we all know can happen anytime

Still looking around but buying silver is looking like a safer bet

[piatkow]

also register with national savings and get their emails, as soon as they issue an index linked certificate buy into it - the last one sold out very quickly.

Tell me about it - I blinked and missed the last one.

[lucy24]

You have to be in the right time and place. For silver, that time and place appears to have been medieval China. (This is really true.) Unless someone finds a new industrial application for silver, gold (or platinum) seems a better long-term bet. That's looking at the intrinsic value of the material, independent of investment mood swings.

[Leosghost]

The long term market for platinum is going to be less large than was anticipated..( or at least will "plateau" for a while soon ) with the move to electrical powered or hybrid vehicles .less platinum will be needed for catalytics ( as in catalytic converters in car exhaust systems ) than was thought as there will be less need for car exhaust systems anyway..and as "scrubbing systems" improve less platinum will be "lost"..

The jewelery market for platinum is always lower than for gold..and will stay that way..gold "shows" what it is ( which is the point of jewelery ) ..platinum jewelry is "meh" to look at..

Silver is ( unless as Lucy says some new application comes along ..unlikely to be the case ) IMO just another vehicle to sucker first time investors into..

It has very little worth compared to it's weight and bulk..Emeralds however..( although they have little industrial application compared to Diamonds and Rubies ) are very much in demand..just don't buy them at the "non production end" of the chain..the mark ups at each stage are very high..the nearer you get to where they come from..the better your purchase price will be for you..

Personally ..in Spain ..I'd wait 6 months to a year, for the second wave of the property crash there ( it will come )..and buy small to medium sized properties, to then rent ..this will give an income ..but it will not be portable assets..

[cmendla]

Given the insanity around us, it is possible for EXTREME changes in the economy. IF you want to see examples, look at

The WEimar Republic
Argentina 2000 (there was an excellent essay about the conditions at the time but I can't seem to locate it. A guy described how you survived)
Zimbabwe

Consider that our US currency is backed by ... uhm, err, uh, hmmmm, ug.. "The full faith and credit of the US" or something like that....

If, GOD forbid, we end up like the scenarios below, paper money becomes worthless overnight. How do you pay the doc for your kid's office visit? How do you buy a cord of wood for your fireplace? Barter will work but the wood guy might not want my circa 1900 scale or matchbox collection

Ergo.. you can have some precious metals, pasta, rice, ammo, etc that would be good for barter.

some random thoughts here

1. one advantage to silver is that you have a lesser 'dollar amount'. ie. an ounce of gold might = $2,000. I don't want to buy a car from my dentist, I want a tooth filled. SO, smaller amounts of silver coin might be useful.

2. The government can suddenly declare all gold and silver contraband.. FDR did just that.

3. You can make yourself a target. In other words, there might be people coming for your gold and silver. You have to be ready to supply them copper and lead in 7.62 or OO containers first.

4. Holding precious metals as paper might be worthless. You need to phyisically hold the assets which can create a serious security issue.

Now, I'm not thinking investment wise in terms of being able to pay my mortgage etc with precious metals. I'm thinking more in terms of the ability to obtain essential services and goods for 3-6 months.

/tinfoil hat

[viggen]

I'm considering is putting 25% of that into something that will offer a return

precious metal offer no return at all, you gamble that its base price will increase in value. While it goes up at the moment it is no guarantee it wont fall by 30 or more percent within a few months.

I was in 1996 in South Africa and they were closing down gold mines left right and center as it was not viable (gold price was below 200 dollar). No one could back than imagine it will be where it is now, and it can go down just as fast as it went up, just saying if you play with your livelyhood, precious metal is cool to have as an additional extra...

and to go with @cmendla`s end time scenario, gold coins will be easier to use in times of crisis, you wont go with a barren of gold to get some pasta and supplies , but a 1/10 maple leaf, golden eagle, kruger rand etc.. might do the trick...

[cmendla]

Viggen - Correct me if I'm wrong... I believe that the price of gold today in US dollars is not that the gold has become more valuable per se, but that the dollar has become less valuable.

My understanding is that gold has been a consistent store of value. ie. the amount of gold that bought a fine suit in 1850 is pretty much the same amount of gold today.

One of the problems with investments, as I see it, is that inflation will kill your wealth. In the US we have had a pretty consistent attack on corporations. Now, if things go screwy and we have 20 percent inflation (we had about 18 or so under carter) that would be OK if you could get a 15-18 percent return on your investments.

However, if the corporations are attacked and taxed to death, then you probably won't get a high rate of return. A nightmare would be a 25 % spread between inflation and available rates return. In that case, your entire net worth would evaporate in about 5 years.

[Rugles]

/tinfoil hat

Not a moment too soon.

[viggen]

No, a suit wasnt 10 times as cheap in 1996 than it was today, gold is only increasing the last 5 years so dramatically, usually bubble start to happen when everyone seems to think the only way is up, a good rule to remember is;

...when the main stream media starts to talk about buying the rush is more or less over...

In that case, your entire net worth would evaporate in about 5 years.

Thats why a mix can protect you a bit, but you know you cant have it all, a high yield low risk has not been invented yet, so you have to make compromises... either the one or the other way...

[wheel]

a high yield low risk has not been invented yet

Yes, there is, there's lots of math around this. Nobody listens to it (other than some of the extremely large pension investment firms, which in fact DO follow the math). Because rather than a dry technical mix of investments, doing things like 'buy silver because it's better than gold' sounds so much better. Or get in on Apple. Or whatever. All these ideas have been shown to less than optimal strategies, but there's no emotional fun or commission in them, so nobody sells them and nobody buys them. And the other problem is, strategies are only higher yield and lower risk over the long term. So as soon as things get tough, people bail. Most folks can't see that to get a long term 6%, you're going to get 8% some years (not the 12$ others are getting) and you're going to eat 2% some years (but not get the -15% others are getting). When you're earning 8% and everyone around you is earning 12%,it's natural to want to jump ship.

There are investments that are inversely correlated, and others that are not correlated. The right mix means that when something drops, part of your investments drop - but other parts will rise, and other parts are unaffected.

[vik_c]

a high yield low risk has not been invented yet

Risk is perceived and subjective. It's not cast in stone. People who perceive risk are often victims of recency bias. They place too much emphasis on recent events, extrapolate them into the future thinking it will last forever. This is why when a metal goes up four years in a row suddenly everyone wants to have a piece of it assuming it will keep rising. When the stock market crashes and stocks hit new lows month after month, suddenly no one wants to own stocks perceiving them as very risky. Ironically they're really far safer than they were at four times the current price when people made a mad scramble for them. They could rise 2-3 fold from the low levels. This makes it a high yield low risk opportunity for patient investors, the downward risk being limited where some stocks are selling for less than cash value.

[tangor]

While investments in market can produce higher yields... when the market falls/crashes, silver, gold, platinum and gems hold their value. Some diversification into metals or gems is recommended. What percentage of intrinsic valued items will depend on the markets...

Witness recent real estate busts... while gold and silver keep rising. (Example in USA)...

It wasn't that many years ago that gold was $300 troy ounce and is now $1720... I remember when it was $35 :)

[lucy24]

I'm still kicking myself for not buying Apple during one of the few periods in my life when I had money* and they were in the basement.


* In 1997. Kick. Kick. Kick.

[wheel]

Risk is perceived and subjective. It's not cast in stone

No, risk is quantifiable and can be calculated. You can't calculate whether gold is going up or down tomorrow or over the next 10 years - but you CAN calculate the probability (the risk) of that happening as well as the error of your calculation.

Believing this is all heeby-jeepy witchcraft is why investment salespeople can sell such garbage to so many people and people are shocked when they crash. Because they start with things like 'how would you feel if your investments crashed, would you be OK with that because you're in it for the long term? Or would you want to switch to a different investment'. And people buy into that voodoo.

Worse, most people confuse risk with volatility - they are not the same thing. The stock market goes up and down in the short term, but it always goes up in the long term. So longterm, what's the risk of failure? Not much, not in an investment that's been going up for 100 years for any long-term measurement. But again, people look at the short term, over 6 months, or 3 years.

[mark_roach]

How long is longterm though ?

The FTSE 100 index is today at around the same level it was in 1998. 13 years seems like a pretty long time to me.

Taking inflation into account investing in shares over that time period wouldn't have been the wisest move.

Despite the economic climate my wife has been spending money like it has been going out of fashion. After reading this thread I am now encouraging her to continue, I can't see the point in saving or investing :)

[wheel]

The FTSE 100 index is today at around the same level it was in 1998. 13 years seems like a pretty long time to me.

25 years is long term. 13 years is not long term.

You've shown another error in people's emotions. People take snapshots and use it to prove their point. Clearly worldwide stock markets are crashed - and may not be coming back anytime soon. Or they may come back tomorrow. But when the do come back, it's been shown they come back fast - they will recover substantial portions of their losses in one day. People don't believe that. They'll believe that markets are low so they'll go elsewhere for now. Then they believe that they'll see the rebound coming and get in then. Except it'll be too late - the markets will return all in one day, or in 3 specific days over a year or two. It'll happen on a Tuesday and when you wake up on Wednesday it's already too late. the academics have shown this, few actually choose to believe it. Instead, they'll use stuff like what you've just done to counter it.

Frankly I'm not in a position to defend this, but there's lots of academics that have shown repeatedly what I'm suggesting - it's there for the reading. And it's not as easy as just stocks, it's as easy as a very specific, diverse range of investments. If you were all in in stocks (like many people), yes, things suck now but will be better long term. But the correct way is to have a diverse investment strategy (and diverse is not what most people would define as diverse, there's again a specific mix) so that while the stock portion overall is low right now, the overall investment mix right now is doing reasonably well. And when the stock returns, other aspects won't do as hot - but overall there's consistent returns over the long term.

If you want to have the highest returns and lowest risk over the next 25-30 years, what you need to do is clearly defined already, the information is readily available for anyone willing to spend some time reading. But it does not involve taking 13 year snapshots and saying 'see! I could've made more money doing something else'. It involves NOT doing that.

[vik_c]

No, risk is quantifiable and can be calculated.

Risk is often calculated taking the benchmark of a so-called 'risk-free' return on capital which is usually putting money in banks and 10 year government bonds. When governments start defaulting on their debt and banks start going bankrupt, this 'risk quantification' becomes a delusion. Besides if calculation and math was the only thing that mattered mathematicians would be the richest people in the world. Investing is an art as much as a science. If all these finance guys who come up with these risk quantification theories were as smart as that we wouldn't have this mess.

[lucy24]

13 years is not long term.

It's a long time to go between meals, though. Sure, the US recovered from 1929, but...

[akmac]

Owning gold and silver is more about protecting value than "investing" in the traditional sense. That said, both investing and protecting are less about IF you're right, and more about WHEN you're right. Fundamentally (and this is an oversimplification) both silver and gold can represent fantastic wealth preservation methods in an inflationary environment, which is what we are in right now (US government supplied inflation figures are laughable). I wouldn't be surprised to see gold hit $2500/oz in 2012, and Silver hit $75/oz. Silver is more volatile, so if you're into regular trading some money can be made (and lost) with silver ETFs.

If you suspect that a collapse of western monetary systems and their fiat currencies is imminent, (I don't) then silver coin is probably your best bet. Otherwise, ETFs are very simple and inexpensive.