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Precious metals investing

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  • #16
    Re: Precious metals investing

    Originally posted by saysflushable View Post
    Here is my plan. 3 times that I know of silver has gone up alot, once was when the hunt brothers tried to corner the market the other time was when gold went up huge in the early 1980's or maybe late 1970's. well when silver goes back down to single digits . I'm going to buy an ounce a week. I believe in my life I'll see another run up. I don't see any huge value in gold or silver. I don't think it is used that heavily in industry. I think it is pure speculation driving the price which is fine by me. if this plan works like most of my other investments......well lets just say I'm still working
    I know that at some small amount of gold alloys are used in electronics for contacts, because it won't corrode.

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    • #17
      Re: Precious metals investing

      Yep gold and silver have some industrial uses. but mostly they are shiney. The price is driven by speculators. nothing at all wrong with that. The price will drop huge.

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      • #18
        Re: Precious metals investing

        Silver and gold are very different animals.

        Silver was a monetary metal, but today it's primarily an industrial commodity. With the advent of digital photography, industrial demand for silver took a major hit. That's really why the price was low for these past years. But today, there are emerging uses for silver (batteries, solar energy, catalyst) that will increase industrial demand. The monetary value of silver today is largely based on legacy and emotion. Silver was money starting long before it had industrial value that resulted in its consumption (as opposed to tea sets and silverware that really don't consume the metal) at a time when the technological uses of silver didn't exist.

        Gold on the other hand has very limited industrial uses. Electrical contacts are plated, which uses very little of the metal. Gold also has very high extraction costs, is in scant supply in the earth's crust and doesn't corrode. Thus, the supply of gold is very stable. I have read estimates that over 95% of the gold ever mined is still available. Stability and rarity are the primary attributes one would want in a monetary base commodity.

        In contrast to gold, silver supply stability, once relatively good, isn't so much anymore. A lot of silver ends up in scrap, as it is too expensive to extract and recycle the metal to make it viable. As industrial demand increases, silver prices will be be determined not by any intrinsic measure of value but rather by the economic supply-and-demand dynamic of the products that use the silver.

        So, as a monetary standard, nothing compares to gold. When the price of gold goes up, it's not becasue the value of gold has changed. Its value isn't tied to industrial products and the supply doesn't really change. What price increases for gold mean is that the fiat currency- dollars, euros, whatever - are worth less. Again, the bottom line is, for a monetary standard, stability - *not* industrial usefulness - is the goal. We don't want to make stuff out of $100 bills, do we? Of course not. But as we're seeing, the supply of $100 bills is anything but stable. The Fed is printing them as fast as they can. Can't really do that with gold or with gold-backed currency. Which is why China is quietly buying gold with the dollars they've acquired from trade... amassing it, but slowly so as not to drive the price too high.

        The real benefit of fiat currency is that it can be manipulated to effect a transfer of wealth. This is good if you're a crook. The value of the dollar has dropped to about 20% of what it was when the US ended the last vestige of a gold standard. Shortly thereafter, we experienced large inflation and economic stagnation, and started to run a trade deficit. What happened to all that wealth that was held in dollars or dollar based assets in 1971 (or 1913 for that matter)? Wealth doesn't just evaporate... it simply changes hands. Those that understood money v. fiat currency were on the receiving end of the wealth. The average middle class working family was at the other end My point? Sticking with an inflating currency puts you on the wrong end of that deal.

        Silver is an industrial commodity. You can make money if you guess right, or play the swings right, just like any other commodity or speculative investment. You can also lose money. Commodities tend to swing wider and faster than othe investments. Just a couple weeks ago we saw silver lose 25% of its value in a couple of days. Not for the timid. Physical isn't the medium for trading swings - too slow. You need to be in futures contracts, and that requires money and time. You don't check the closing pice every day and hope to make money... got to sit there and watch it in real time.

        Personally, I like both. Silver will be a good go-to resource in the event of massive inflation, which could happen. I fail to see the value of large blocks of silver whatsoever. I would rather have pre-'65 dimes and quarters, which are denominations that will be useful if the dollar has serious trouble. Good luck negotiating a massive block of silver. People won't even trust that it's real. But everyone recognizes a '64 or earlier dime or quarter. That dime will buy you a gallon of gas or a couple loaves of bread.

        But in the end.... Gold will be the one to have. Government-minted coins definitely, not bars or rounds.... I like US Eagles as a first choice, but a little diversification is a good idea.

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        • #19
          Re: Precious metals investing

          If things get really bad, gold and silver will be worthless. Water, food and the things it takes to stay alive will be precious.
          sigpic

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          • #20
            Re: Precious metals investing

            Lead and copper - also precious commodities!
            When seconds count, the police are only minutes away.

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            • #21
              Re: Precious metals investing

              Originally posted by NHMaster3015 View Post
              If things get really bad, gold and silver will be worthless. Water, food and the things it takes to stay alive will be precious.
              Money (real money that is - gold and silver) has never been worthless. If things get really bad, there will be black markets. A wallet full of worthless paper fiat currency won't get you much, but I'm betting some silver will speak loudly. Hopefully it will never come to that. I am prepared, just in case. Unless the bottom drops out (I'm not seeing that with European Union in trouble, US in trouble, and China feeling big inflation) in the worst case I walk away with a nice fat profit.

              Ammo is a great idea, too. I keep quite a lot on hand. Besides coming in handy, it will also be useful for barter.

              I don't see big bars as a good think to have in any case. Counterfeiting bars is already an issue with gold, it will hit silver too. With larger gold bars you already have to pay for an assay when you go to sell. On the other hand It's quite hard to counterfeit pre-'65 US coins. They're easy to store and you can sell off as many or as few as you like. I never pay more than spot for coins. Hard to beat that. Except my dad had hundreds of pounds of pre-65 coins that he pulled out of circulation. So he paid face value. Smart guy, lot of foresight.

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              • #22
                Re: Precious metals investing

                I have been following gold with much anticipation for a number of years now and with the help of my financial advisor, I did purchase some at the $950. mark. If any of the supposed U.S. gold predictors are on target, don't be surprised if gold reaches $5000 per ounce. Yes I did say $5000. With the economy the way it is (in the toilet) this could become a reality in the not too distant future.

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