General PM's Thankyou / Liquidity

Discussion in 'General Precious Metals Discussion' started by Fe Mike, Jan 12, 2011.

  1. Fe Mike

    Fe Mike New Member Silver Stacker

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    I know this isn't the place, but first thank you to Steve, Leila and all the others at the Sir John Young for their warm welcome Wednesday.
    One of the things that Slam brought up in discussion was liquidity. I wonder, how many of you/us have actually sold some silver or gold? Liquidity - like faith - should be tested from time to time. My experience? Around the holidays a lot of the larger gold & silver buyers close up shop. What if your usual broker is flooded out and closed for the duration, what then? I take the view that while gold and silver are important, a stack of cash can't hurt neither.
    Thoughts anyone?
     
  2. Slam

    Slam Well-Known Member Silver Stacker

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    There is no problem with liquidity, post something up on the for-sale section on these forums at a fair price. The buyers will come along withing seconds to hours =D.

    Slam
     
  3. Fe Mike

    Fe Mike New Member Silver Stacker

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    Yes, that's true. But then these are ideal conditions.
     
  4. Slam

    Slam Well-Known Member Silver Stacker

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    IMO, theres no problems with selling gold in the future. If its not accepted here, I would take it out of the country and sell it overseas. The asians love gold and are more then willing to offer spot price for it. Already sold some to dealers overseas a few years ago.

    There is always intrinsic value tied to gold and silver, it can never be worth zero. When something is worth zero value, thats when no one wants it. Tell me someone that wouldn't want gold or silver (bars, coins, nuggets etc).

    The worlds fiat dollars are going down the path of zero value. This will happen eventually when the masses wake up.

    Slam
     
  5. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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    Hi Mike, good to see you yesterday.

    Yeah, I think the record for forum sales is something like 15 seconds. I've made enough contacts through the forum to be able to privately unload whatever I'd need to anyway, mainly because I've already sold to them previously. If you ask around, you start to get an idea of what certain people are looking for.

    You're right about having some cash on hand though. The main reason I have silver and gold is to diversify and spread the risk and keeping all your money in metal doesn't really accomplish that, so I've got a bit stashed under the proverbial mattress for emergencies too.

    If you really want to know how liquid this stuff is, ask "crazy" Roo what happens when he lists a monster box at a few bucks a coin above wholesale.
     
  6. Aurora et luna

    Aurora et luna Well-Known Member Silver Stacker

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    Welcome Mike, good to see that you could make it to one of our meets.
    I have always paid a minimum of spot for silver and gold bars.
    Never ever refused to buyback; can never get enough to keep my inventory fully stocked.
     
  7. Savige Silver

    Savige Silver New Member

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    A month or so ago I advertised 5 x 1 kg bars on here and ended up selling 10 kg in no time. I don't see problems selling but do agree some cash on hand is essential.
     
  8. Peter

    Peter Well-Known Member

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    If your selling
    Some people say that they would love silver to go down so they could buy.
    Maybe they would change their minds thru' fear.
    Maybe they wouldn't buy just then hoping it would go down more.
    Maybe they would wait for the bottom to stablise and then buy,but by then you might have lost good money.
    Maybe lots of newbes would sell then having lost lots of money and there be lots of PMs around.
    Maybe lots of people would want to buy then thinking it will go up lots,and cause no supply.


    I note that silver appears on the forum for sale when the price goes up.Yet most people say they believe it will go up much more!

    When it was going up big a couple of years ago nobody had physical gold to sell.You couldn't pick and choose.If it goes up big again I expect that would happen again.
    Easy to sell,hard to buy then.

    Paper gold is very liquid.
     
  9. JulieW

    JulieW Well-Known Member Silver Stacker

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    So if you had 10k cash and 10k gold would you make that 20k gold? If it was 20k/20k what would you do?

    How much cash laying around is just 'laying around' and how much is a good idea, considering that cash in the bank at least earns interest. Or do you trust banks enough to leave most of your cash in their hands?
     
  10. Randomz

    Randomz New Member

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    If I had a total of $20k, I would go $1k cash, $4k bank, $15k metal

    With $40k or more, I would go $2k cash, $10k bank, the rest in metal.

    The cash is for emergency food - you can't use a credit card if the power is out, or for buying metal if a really good deal became available.

    The bank money is partly for interest, and available in case the price of metal tanks.
     
  11. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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    If the average weekly wage is ~$1250 and you have two weeks pay "laying around" as emergency cash, you're looking at $2500 stashed under the mattress.

    If you put $2500 in a high interest savings account (Ubank or ING) @ 6% p.a. you'd get $154.19 in annual interest.

    The ATO will take $46.25 of that in tax (assuming your marginal tax rate is 30%), so you'd be left with $107.93 in net interest, which is the opportunity cost of having your cash close to hand vs. keeping it in the bank.

    If you look at the recent bank system meltdowns, is it worth $107.93 to you to have access to that money whenever you want it and for whatever reason?


    (Personally, I dip into my cash reserves if I see bargain silver or gold come up for sale and I'm ahead way more than $107.93 over the last 12 months as a result. Your mileage may vary).
     
  12. JulieW

    JulieW Well-Known Member Silver Stacker

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    Good perspective Big AD. I hadn't considered that in the equations. Randomz - seems a bit light on cash in light of the two weeks wages issue that Big AD raises.

    Interesting too on the 'opportunity' cost of investment versus under the mattress - and I agree, the world banking system is too dodgy to trust most of your assets to.'

    On a 10/10 basis, I think I'd go 5k under the mattress, and 15k metals. On the 20/20 I'd put 5 under the mattress, 5 in the banksters hands and 30 in metals.

    Assuming there's no personal debt held that is.
     
  13. boston

    boston Well-Known Member Silver Stacker

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    +1
     
  14. Randomz

    Randomz New Member

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    JuliW, it depends what you think you will need the cash for.

    $2k will buy a few weeks of groceries, or if prices tank then 2kg of silver, or an ounce of gold.

    I can get more from the bank 5 days a week, I don't forsee any emergency that would require more than $2k in less than 48 hours.

    Most of us don't spend anywhere near our weekly wage on discretionary spending, take out rent/mortgage, utilities, etc which aren't usually need-cash-for items.

    $5k under the mattress is more $$ at risk of theft and CPI loss.

    But it really doesn't matter a lot in the great scheme of things. :)
     
  15. JulieW

    JulieW Well-Known Member Silver Stacker

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    Theft is a good issue to consider and also the potentials of loss of cash by fire and so on, agreed. Good point on need to spend more than 2k in 48 hours too.

    I actually have accounts in two banks, a practice i started one time when the ATM went down for too long at my original bank.

    From this thread I'm starting to think that access to your bank stored cash immediately (as much as they'll let you have!!!!) is the most important issue to consider overall.

    Is it just me, or are all ATM limits set at $1,000 a day?
     
  16. Big A.D.

    Big A.D. Well-Known Member Silver Stacker

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    ATM limits vary. The limit on private ATMs can be as little as $200 in a small convenience store, but go up to a more typical $500 limit at pubs and clubs or $1000 at bigger clubs or the local casino.

    Bank ATMs are more likely to be limited by the maximum daily withdrawal limit on your account which is set by your bank, but a $1000 limit at the terminal level wouldn't surprise me.

    You can always ask your bank to raise your daily limit, but the reason the limit is there in the first place is to reduce the damage (and everyone's liability) in the event that your card is compromised and some scammer tries to drain your account. With no restrictions in place, they can clean out your account in minutes and then you and your bank have to argue about who's responsible for the loss.
     
  17. Guest

    Guest Guest

    I've had absolutely no problems selling my silver and gold here for bear minimum spot, usually more.
     
  18. Randomz

    Randomz New Member

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    BankSA has a $2k limit at least at the local bank ATM.
     
  19. chimpanchu

    chimpanchu New Member

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    Welcome Mike, I think we met on Wednesday briefly.

    I don't think liquidity is a problem for gold. For one you can sell your metal here in this forum, or sell back to your dealer. In the worst case scenario if dealers are close everywhere, you can always take your gold to jewellery store I'm sure they'll buy your gold (and lost heaps in spread in process) if you're really desperate.

    I agree that having some cash doesn't hurt, but what I mean by "some" is little amount of cash nearby just enough to cover your household expenses for 3 months if banks and ATM close.
     
  20. chimpanchu

    chimpanchu New Member

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    Not to mention inflation rate ("tax") at 4% or more (not the 2% or whatever official figure say) p.a. Base on your figure above, whatever amount you got left after tax could EASILY be wiped out by inflation tax.

    Inflation is really insidious, it makes depositors think they're gaining something from Interest earned in actual fact they're bleeding cash out of their pocket.
     

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