Thinking about making automatic monthly purchases of silver through silversaver(dot)com

[Darnell 8,479]

don't know squat about silver, i buy gold coin every quarter - krugeraands.. from a dealer - his hand to mine.

[SMR 368]

I have never bought precious metals but I have considered it. I have a question for those of you who are doing it. While Slim has a good point that if the lights go out you want it in your basement, how does it work out if you want to sell it (assuming the lights haven't gone out)? That is, say I buy some gold bouillon and want to sell it. Won't a potential buyer want proof of the purity, etc? If it's been sitting in my basement, how do I prove it? Even if I buy it with some sort of certificate, etc. there is no way to prove that I didn't switch it out for a coin that looks the same but is full of brass or lead and just gold plated (assume I work the weight out so it's the same). I suppose this same argument applies for if the lights do go out.

Also, if the lights go out, why would I sell my goat for your gold?

[Danno 1,228]

I have never bought precious metals but I have considered it. I have a question for those of you who are doing it. While Slim has a good point that if the lights go out you want it in your basement, how does it work out if you want to sell it (assuming the lights haven't gone out)? That is, say I buy some gold bouillon and want to sell it. Won't a potential buyer want proof of the purity, etc? If it's been sitting in my basement, how do I prove it? Even if I buy it with some sort of certificate, etc. there is no way to prove that I didn't switch it out for a coin that looks the same but is full of brass or lead and just gold plated (assume I work the weight out so it's the same). I suppose this same argument applies for if the lights do go out.

Also, if the lights go out, why would I sell my goat for your gold?

The same places you can buy silver or gold from also buy it, naturally they are paying prices which allow them to resell it at the current market price and make a small profit.

SOme people buy actual coins which has a value not only for it's weight but also for it's collectable state. YOu can also buy "rounds" or bullion which is simply metal minted with their company logos or historical type impressions.

[scandal 951]

Would it make more sense to invest in real estate... using the "buy it while it is down" concept you mentioned?

* nice to see a post from you, it's been a while.

I think that buying real estate as your primary dwelling is a fine idea - I own my home.

I think if you want to run a property management business and own real estate that you rent out -- then that's a fine business model for those who choose it. The business is one of offsetting rental income against fixed expenses, and generating free cash flow, not one of speculation.

But I think that anyone speculatively buying real estate with the intention of CAPITAL APPRECIATION needs a serious reality check of the recent history of doing so, and the likely prospects for real estate price recovery. Personally I think it will be many, many years before we see anything like the price growth of the past 20 years.

Beyond that dour outlook, I have a further problem with real estate as an investment category for most people. It's an illiquid market with high transactional costs. It also requires high leverage to buy a property, the vast majority of buyers are leveraged 80:20 or worse, even today. You can take $50K in an IRA and buy a basket of bonds or stocks at full cash value but $50K won't buy you a house, you'll still be buying with a hefty mortgage. As I said - I think that's fine if your goal is home ownership, but pretty dangerous if you're just speculative and counting on the price gain to defray (i.e. refinance) the loan.

That addresses buying actual properties. Of course, it is also possible to buy REITs. They can solve much of the liquidity and transactional and leverage issues I raise. You can buy REITs or REIT ETFs juast as you would a stock. But it still leaves you exposed to a play on real estate price appreciation. With all the toxic mortgage debt and CDS still on the books of the banks and the Fed, the weak economy, and depressed housing market, I wouldn't make that play, personally.

Better, I think, might be to buy the better quality investment grade asset backed debt of the REIT issuances. Yes, asset backed debt is a dirty word, and there's still a lot of distrust of how ratings agencies score the risk of the bond tranches. But if you really want a play on the "down" real estate sector that is currently out of favor but may have turned its corner, that could be it. I bet Moody's is now extra-triple-careful when they assign a AA rating to some mezzanine tranche being peddled by your local bond salesperson. This would allow you to collect yield on a relatively good risk-adjusted basis, and who cares about market price appreciation as long as the coupon checks come in every month.

I haven't done it, mainly because it's a rarified field and I don't know enough about it. I don't know much about corporate bonds either, but I feel better able to read a 10-Q filing than to understand a tranched bond prospectus. And somehow I still trust a B-rated bond from an actual company that I know has an operating business, than a A-rated tranche put together by the Wall St sausuage factory from "a bunch of stuff".

[mawilson 2,133]

Silver futures are trading at 30 year highs. How much headroom do you think you have here? The best argument for silver was that photography kept consuming it. Since film photography died and was replaced by digital, I really don't see that argument anymore.

Let's say you are right and prices double from here. So your $15,6K invested doubles to $30K. I have news for you: that's not going to get your kid through a 4 year college. Even at current in-state public tuition rates that would barely be enough. Private or out-of-state, forget about it. And given the increase in tuition rates, they'll be much higher a decade from now. So... plan on saving more, or having your kid borrow, or work, or get some hefty scholarships. Or all the above.

As to what I think of the idea, I think you're buying at the top of a market. I was long GLD until about 2 years ago. I wouldn't be doing precious metals now at these prices.

I'm just looking for yield these days. Good dividend producing equities, and also some moderate exposure to high yield bonds. There are two ETFs I have big positions in -

*SDY which tracks the S&P Aristocrats Dividend Index, whose 50 constituents have raised their dividend each and every year without fail for the past 25 years. It's my only significant equity exposure at this time. I like the dividend stream in these tough equity markets.

*JNK which tracks a Barclays junk bond index.

I've also been buying junk bonds directly. With treasuries yielding essentially zero, CDs yielding less than 2%, and higher quality corporates also offering no yield, I've turned to the junk market for the first time in 2 decades as an investor. I'm getting 6-7% yields on maturities of about 5-7 years on bonds rated about S&P B+ or higher. There's risk of course, but I'm buying issuances from companies that I actually recognize and know something about (mostly IT or energy firms), so I hope the default risk is mitigated by that. Still, it's a bit of a crapshoot.

At a 7% yield you will in fact double your money in approx 10 years, which is what you said you are aiming for on SLV. Wouldn't you rather do that on a stated yield, rather than a speculative capital gain that has no plausible basis? I know I would.

Good luck.

I agree! In a world where even central bankers and economists are confused as to whether

we can expect inflation or deflation, or some uncertain period of stagflation, safe dividend

yielding equities or bonds are the way to go.

[mawilson 2,133]

Beyond that dour outlook, I have a further problem with real estate as an investment category for most people. It's an illiquid market with high transactional costs. It also requires high leverage to buy a property, the vast majority of buyers are leveraged 80:20 or worse, even today.

Well, there are a couple of ETFs that follow the Case-Shiller Index (the CSI 10-city index to be precise),

which may be an easier way to invest in real estate if one believes the market is going to recover soon

(which I don't.)

You can buy UMM to benefit from a rising real estate market, or DMM to be short real estate.

[Ban Hammer 14,286]

don't know squat about silver, i buy gold coin every quarter - krugeraands.. from a dealer - his hand to mine.

invest in ammo