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HOT TOPIC Buying precious metals?

EasyMoney_in_NC

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Just curious to know if anyone is buying precious metals, not trading Forex or anything but actually buying hard pieces of gold, silver etc....as a hedge against an ever declining dollar.

If so or not, why or why not?
 

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6.0_bull

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Gold is always a good bet when the dollar is in decline and the economy is suffering , good time to put some of your assets in Gold with prices possibly reaching $2,500-$3,000 an ounce in the Future...You might also want to look at your Euro-Bonds since most of Europe is not as indebted like the US is currently , there for the Euro should remain out performing the US dollar for a long time ......
 

Jonleehacker

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Yes, a friend and I went on a buying spree about 2 years ago and bought a bunch of sterling silver items off of ebay. Our average price was 10.50 and today it sits at $17.18.

It was clear there is a nice trend on metals and also I know that if things get really bad, I can pull out an old candle holder and head to the grocery store and still buy a few things to eat!

:)

In the 80s peak gold was over $800 for only 5 trading days and the inflation adjusted price for that would be over $2000. Seems clear that we are headed back to the same place, if not higher.

Silver, many including myself believe, has significantly higher upside, due to the fact that it is not only a precious metal, but is also "consumed" (meaning is used up, never to be recovered) by many industrial processes.
 

PEERless

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I am not a metals trader, but I can offer you one piece of advice: buy coins and stamped bars only. Jewelry, silverware, ingots, and other knick-knacks can only grow in value according metal prices. Coins also grow in value as collector's items and antiques. Now, how 'bout some rep.speed? :smxB:
 
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EasyMoney_in_NC

EasyMoney_in_NC

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I've started buying the hard asset, figure it can't hurt. History always repeats and with the information age the way it is, I would venture to guess that values (for everything really) will increase and decrease rapidly. I too have been watching fleabay and can't understand why it is that people are regularly spending $20 + an ounce even before ship'g for something only worth $17 and change. Now I know there's the "the market is what someone is willing to pay" but come on, what do all these people know that they're willing to pay a huge premium?
 

andviv

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what do all these people know that they're willing to pay a huge premium?
Maybe the question is, "what do these people DON'T know" and may be overpaying? (i.e. speculation)

But yes, I do believe there is some room for the price to go up. But it is just what I believe, it is not a fact.
 

Diane Kennedy

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We just moved and in the process of moving, there was this VERY heavy box in our closet that I kept tripping over. I couldn't even budge it.

I complained to my husband and then he opened it to show me it was full of freshly minted silver and gold coins that he'd held on to for something like 40 years.

They're now in our safe. I wonder, though, how much is really in there (it is just one box full) and although I know they've gone up in value, how much would we have made if he had taken that money and just bought a piece of real estate 40 years ago. On the other hand, it's a hedge in case something happens to our businesses, real estate and the economy, all at once and in one fell swoop. We know we've got precious metals. But I suspect we'd need more than just one box full.

So, that's my only story as an unintentional and unaware precious metal investor.
 

Bilgefisher

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A friend of ours use to go to Montgomery Wards and buy gold. (They use to sell it right at the store). She would spend half her paycheck at times. It use to drive her husband nuts. Long story short, she paid for their retirement. I kinda laugh when I hear the story and she got the last laugh.
 
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EasyMoney_in_NC

EasyMoney_in_NC

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Well you may be better off with that box than you think Dianne. I know I'm preaching to the quire when it come to discussing money with you, but keeping in mind that our dollars are no longer backed by gold, think of what precious metals will be worth in the event the dollar takes a real dump! Could it be worth thousands an ounce if the dollar collapses? 10's of thousands? who knows?
When people talk about long term stock investment, the old adage is "if you had invested XX back in XX it would have become XX today" so I figured since the commonly used value is either 1000 or 10,000 I figure if I go 10,000, who knows what'll happen in time. Good bet it doesn't go to $0, and although its value isn't a compounding one, if the dollar goes south, we'll be all be back to caveman days bartering and trading for what we need and want..........sort of like what I think will happen if the "fair tax" ever gets enacted :D
 

Diane Kennedy

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Well you may be better off with that box than you think Dianne. I know I'm preaching to the quire when it come to discussing money with you, but keeping in mind that our dollars are no longer backed by gold, think of what precious metals will be worth in the event the dollar takes a real dump! Could it be worth thousands an ounce if the dollar collapses? 10's of thousands? who knows?
When people talk about long term stock investment, the old adage is "if you had invested XX back in XX it would have become XX today" so I figured since the commonly used value is either 1000 or 10,000 I figure if I go 10,000, who knows what'll happen in time. Good bet it doesn't go to $0, and although its value isn't a compounding one, if the dollar goes south, we'll be all be back to caveman days bartering and trading for what we need and want..........sort of like what I think will happen if the "fair tax" ever gets enacted :D
Easy, you and I have a tendency to hijack threads. But, you started this one, so maybe it's okay.

I totally agree with the issue of the shrinking dollar. I've been thinking of doing some investments in Europe for that reason. One of the things that really sticks in my mind is that if I'd taken $1 mill US over to Europe and just put it in Euros, with no interest, nothing...and took it back to the US in 2005, it would then be worth $2 mill. Whew!

What do you think of that strategy? I'm not as much into currency trading, but more thinking of just buying a rental property. Let it pay for itself and just see what happens.

A friend of mine bought rental property in Mongolia 2 years ago. He rents it out to ex-pats.

Oh, one more gold bar story. I grew up in Oregon. In the winter, the roads got really icy. My dad would always put weight in the trunk of the car to help with traction. One time I borrowed the car and Dad told me not to open the trunk. That seemed weird and being a typical (at least for me) teenager, had to then open it to see what was in it. It was full of gold bars! That was back in the day when gold was hitting its highs. Dad ended up selling near the top and did very well. He didn't do it as a hedge, more as an investment, figuring gold would cycle.
 

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EasyMoney_in_NC

EasyMoney_in_NC

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Starting from the end of your post, I think everything cycles. I applaud your ol' man, that's forward thinking. I am trying to do the same as I grow older (think forward).

As for your strategy, we apparently think alike. I recently started looking at doing the same thing, although my wife is not keen on the idea of sending money to ANY foreign country, hell she won't even let me send it to other banks in THIS country without a fight :)
I went to the UK a few years ago when the pound was 1.73 to 1. Had I been a forward thinker, I may have seen or even understood a shrinking dollar and had I sent 100K over there somehow then, I would have gained as much (recently) as 40 cents on each dollar in currency price differential not to mention any interest on the initial money.........if I had only been a forward thinker :bgh:

I'm not sure what the best way to send money over seas is, so I can't help there. I realized the other day that I had a 5 pound note still from when I was there. Realizing it was worth almost 10 dollars, the reverse bothered me. If I had just brought back British currency...........

I was just trying to provoke discussion about hard assets, this is a great so far. I would like to get opinions on why or why not to buy metals. Someone here must have experience or know someone.
 

Jonleehacker

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I would like to get opinions on why or why not to buy metals. Someone here must have experience or know someone.
The reason is simple: Inflation.

Every time the US gov pours money into the system to keep all the consumers spending, the result is inflation.

Inflation = greater amount of money chasing after the same number of goods and services...therefore everything is worth less. With the exception of hard assets which historically rise in value in times of inflation...makes sense due to limited supply.

During the Clinton period the US changed the way inflation was reported, so that it no longer includes items like food and fuel. This was so they can report that inflation is low and continue to pump money.

But in 2003 total US money supply was about 10 trillion...in 2006, 13 trillion and that means a 30% increase in total money supply in 3 years, which is about 10% inflation per year.

Or put another way, if you are investing with US dollars and you aren't earning 10% a year on your investments, then your real buying power is eroding.

Any hard assets should do well under inflation...have you looked at the price of wheat for the past year?

 
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EasyMoney_in_NC

EasyMoney_in_NC

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I can't say I've specifically for wheat, but I do know I've heard its up huge like all the other agri-commodities these days (corn, wheat, etc....) But I can't buy a wheat field (locally). I can buy metals though. I don't want to get into the discussion of stock, etf and spider markets, I don't do those and don't want to. I'm an old school guy, just shy of money in the mattress. I like investments I can roll in ( or on :) ) touch, smell, whatever you want to call it.
hmmmm.....to listen to the noise box, we aren't in an inflationary or recessionary period, yet the costs of everything is going up, what do we call that?
 

JScott

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I mentioned in another thread that I had the opportunity to speak with the CEO of Domino's Pizza the other day, and one of the things he mentioned is that, while the gov't is claiming inflation is low, the pizza business is indicating otherwise. Specifically, he mentioned that for the past 9 years that he's run the company, the average price of wheat has been about $3 per bushel, yet in the past year, it's run up to over $15 per bushel.

And, no, it's not just wheat...but considering the discussion above, I thought that statistic was most relevant...
 

PEERless

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have you looked at the price of wheat for the past year?
My girlfriend's family owns 4,400 acres of wheat in Washington. Any other year, agriculture is a tough biz, but DAMN! They've just bought another house and more land! Quintupling your average annual profits is an astounding change in income.
 

Jonleehacker

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we aren't in an inflationary or recessionary period,
The only reason we aren't, is like I mentioned, they just changed the inflation reporting criteria to make it look like inflation is low (by not reporting things like food & gas), but in reality (take away the government spin) we are in a period of HUGE inflation.
 

Diane Kennedy

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I mentioned in another thread that I had the opportunity to speak with the CEO of Domino's Pizza the other day, and one of the things he mentioned is that, while the gov't is claiming inflation is low, the pizza business is indicating otherwise. Specifically, he mentioned that for the past 9 years that he's run the company, the average price of wheat has been about $3 per bushel, yet in the past year, it's run up to over $15 per bushel.

And, no, it's not just wheat...but considering the discussion above, I thought that statistic was most relevant...
Wheat prices are rising as a result of the increase in gas and oil - at least according to the local bread store where I get ciabatta.
 

Diane Kennedy

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Why not to invest in precious metal:

No cash flow. You have to sell the asset to get to the money.

So, if you're considering it to be your passive cash flow reserve, it won't work.

Just playing Devil's Advocate, Easy.
 
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EasyMoney_in_NC

EasyMoney_in_NC

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Yeah I understand, and appreciate that. Being one that has positive passive cashflow that provides a nice little income as well as my businesses that pay me in various ways, I think purchasing metals (lets say) is more of a hedge investment than a "now money maker". If the appreciation continues up, then I look at it like a piece of dirt, its value is increasing and unlike RE, I'm not spending more $$ on taxes etc, in the end the investment will pay for itself . And in the spirit of "diversification" if I may use a stock trader term, for me, the investment will most likely end up being a small % of my net worth. The idea of cash being worth less and less bothers me. My money in the bank will be worth (what) verses a non renewable commodity? Now I understand this could be many years down the road, but still......
Even our (collectively as RE investors) RE investments could be greatly reduced by a complete monetary fallout, no.....?
 

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EasyMoney_in_NC

EasyMoney_in_NC

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The only reason we aren't, is like I mentioned, they just changed the inflation reporting criteria to make it look like inflation is low (by not reporting things like food & gas), but in reality (take away the government spin) we are in a period of HUGE inflation.
Well sure, that's how "the man" keeps the peasants at bay. Could you imagine what these days would be like if the media was able to claim "the sky has fallen!". Its really no different than corporate mis-representation as it pertains to their balance sheet. Its the governments "Enron" way of pacifying the people.
 

andviv

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Please keep the thread away from politics. The topic is interesting, but we don't want to see posts about politics.
 
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EasyMoney_in_NC

EasyMoney_in_NC

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I agree, but I don't see "politics" here. The question is whether or not to buy hard assets. Part of the answer is whether or not we are in a recession or if inflation is here or not yet . And whether or not now would be the time to buy based on your idea of recession/inflation by hedging against the dollar.
My personal opinion as stated above may be a wee "jaded" but it is how I see things and is what is spurring my pursuit of both the asset and this thread. I'm looking for other opinions and validation or not, to buy. But I don't care to get into true politics, this is about making a solid (or not......no pun intended) investment.
 

kidgas

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I consider silver and gold to be stores of value. In 1989, when I bought a few ounces of silver for about $5/ounce, I could get about 4 gallons of gas or 1 large pizza with that ounce of silver. Low and behold, at about $16/ounce, I can get the same gallon of gas and same large pizza. I am sure many other comparisons can be made (ounces of gold vs houses, cars, etc). Bottom line is that throughout history paper money will come and go but the silver or gold you hold in your hand can be exchanged for a certain amount of that paper money and used to buy the necessities of life.
 
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TheGreatBear

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Any hard assets should do well under inflation...have you looked at the price of wheat for the past year?

But wheat is up due to droughts in Canada and Australia right? The whole biofuel mess is sending more acreages to corn and sending prices for both soybeans and corn up.
 

PEERless

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In 1989, when I bought a few ounces of silver for about $5/ounce, I could get about 4 gallons of gas or 1 large pizza with that ounce of silver. Low and behold, at about $16/ounce, I can get the same gallon of gas and same large pizza.
A VERY unique perspective. Great point. Rep.

The whole biofuel mess is sending more acreages to corn and sending prices for both soybeans and corn up.
Agreed: I'm not sure we should be fueling our wasteful lifestyles with the food of others.
 

andviv

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yes, the perspective of what you can buy in ounces of silver instead of dollars was very interesting for me. In this thread one of the videos talks about a prediction of being able to buy a SFH for 8000 ounces of silver, just like in the 80's (see the comments in the third post in that thread, about gold, silver and dollar).
What surprised me the most was the fact that silver reserves will last ten years at current level of consumption. Very eye-opening.
 

Edge

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With all the liquid markets of structured products out there (ETF, Futures, Forex, etc) I don't really understand the reasoning behind buying and storing the physical assets.


Why not to invest in precious metal:

No cash flow. You have to sell the asset to get to the money.

So, if you're considering it to be your passive cash flow reserve, it won't work.

Just playing Devil's Advocate, Easy.
Again, if you are using a liquid markets to trade these assets, you can generate cashflow by selling covered calls against the asset based on the risk:reward structure that best fits your goals.
 

AroundTheWorld

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With all the liquid markets of structured products out there (ETF, Futures, Forex, etc) I don't really understand the reasoning behind buying and storing the physical assets.
It depends upon your objective.

People buying as a protection for the all-hell-breaks-loose situation will often choose physical.

If people are buying it as a capital gain or trading for cashflow will probably choose one of the other methods you listed.
 

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