Let's say you buy silver now at around 30- 35USD/oz for the whole year. Next year you buy even more for around 40USD/oz and your average goes up. If the prices continue to go up and your earning capacity as well and buy more. In 10 years time, your average will be as high as the current price (Maybe the current price is 50USD/oz and your average is 48/oz) So how do you actually make profit?
Silver is a store of wealth, not really a great investment vehicle. The idea is... Buying silver is a hedge against inflation, it stops your savings being slowly eroded by the inflation rate. Recently we have seen the price of silver rise higher than inflation and then plunge. People made money when it went up and some lost money when it went down, just like a real investment! I am still stacking so that my retirement fund is worth having. Not looking for profit.
So in another words, you're stacking silver instead of saving it in the bank? Meaning your silver is your savings?
Yep. Cash in the bank loses value over time thanks to inflation and tax. Theoretically PM's retain their value over long periods of time. Of course Silver is a lot more volatile than Gold, so buyer beware.
Yes, pretty much. I have some cash in the bank, enough for emergencies and to cover basic needs. If I had to sell silver each time I wanted to buy a loaf of bread I would loose too much money. Anything left I use to pay down my debts a bit, not fun but probably saves me more money than silver will make me. Anything after that I put into silver. Not bought silver for a while as paying down debt is probably going to help me out in the short term and I am using a Self Managed Super Fund to accumulate precious metals.
If your asking this question then you are a speculator in my opinion (disregarding other's comments that we are all "speculators").
I must be a speculator then. I am buying silver and gold now because I believe their value in dollars will increase at the rate of inflation, if not higher. A form of saving more so than hoping for the metals to shoot to the moon. I also believe that whilst silver and gold are always going to be a 'rock solid' choice for wealth protection in the future, I still think in the mean time there will be better opportunities to transfer my wealth into, should that be real estate, stamps, guns etc. End of the day, if I can make more money buying a house and sitting on it for 10 years, than I can with silver in 10 years, then why wouldn't I chose the house? If I then wanted to get back into silver at the end of the 10 years, I'd be able to purchase more ounces.
I think that's an excellent question that stackers seem to be vague about. IMO you keep an eye of different assets value (purchasing power). Right now silver and gold are dirt cheap. But one day it will be over-valued. At this point (blood in the steets) other assets will be dirt cheap. Time for a switch-a-roo. That would mean land, stocks. Bonds will be good after the credit crunch that's coming up. Personally I will always keep a chunk of gold as a "foundation". So the key, as I understand it, is to being able to value assets in other terms than fiat money. In terms of gold, most assets classes besides commodities and energy have been deflating. Long way to go though. btw silver is way too volatile to be a reliable store of value long term. At the end of the cycle it will get crushed (not gold), but that's waaaay down the line, after the silver fever. but you can use silver's volatility to get more gold.
Yup agreed. I traded all my silver for gold for quitq a good buy (below the WE BUY PRICE). Im planning to hoard gold now only and buy silver every month and trade for gold cause I cant afford gold (unless its 1g which the premium is too high) So would it be a good idea to save for a couple of months and buy a little gold or get a couple of oz's of silver every month and sell or trade for gold?
Have you come across the Gold to Silver ratio in your reading? If not, it is a way of seeing how expensive one metal is against the other. Based on the ratio you can see if gold is more 'expensive' than silver or the other way around. This might help in deciding which to buy. An alternative is, if you haven't got much money you can buy unallocated or mini allocated. Small amounts of either gold and silver. If you buy silver you can buy a 1oz round each month and get it held for you by the dealer. When you have a decent amount you can get it all sent in one package to save money on postage. If you can't afford to buy much gold because of the premiums you can buy an gram a week of unallocated gold at very low premium. You wait until you have enough for a coin and then you pay the rest of the premium to have it converted from unallocated to allocated. If during this time, the price of gold goes up, or the gold:silver changes you can ask your dealer to buy back some of your gold and take some profit, or convert your gold holding into silver. There are a few options, take a look at GoldStackers if you haven't already and see if there is anything that would suit your purposes. I use them for my SMSF but for my own money I prefer to hold physical metals
Sadly I can't cause I'm from Malaysia and its quite difficult to do so :/ I only can save up RM 200 a month (around USD70). So normally in 2 months, I buy some local gold coins ( 1/2 dinars) 22K gold though cause that's the cheapest I can afford and closest to spot for something below RM 400 (USD140) and easiest to sell.
Usually the profit is brought by misleading people to pay too much, and later on again to sell too low. Because profit requires a higher price to sell, and a lower price to buy back in, the spread and amount fluctuations being determining profit size. For ex, central banks do press announcements about quantitative easings, bond purchasements, and so on. People then expect inflation and pay higher prices for gold/silver. But in reality, most of that money didnt add to circulation, and expected general price increases didn't happen. That means that every price cycle as described above, is profit in terms of purchasing power, at expense of those that buy/sell on the inverted (bad) moments. Aside of this, the profit implies a loss in the silver market since a buyer requires a seller and vice versa. For someone that hedges against inflation, the goal is to determine the real inflation trend and the buy & hold fashioned share of the market and thus the bottom price. So, it's as r0dman says: "buyer beware". Don't just buy silver at any price. Then it serves as well as other things as hedge against inflation. And it has more potential, due to its current market size. At the moment it doesn't need much fiat to move the price. It's like anything, look at Facebook, X years growth, and then, only then, they sell shares / stock market. Late eh? It wasn't hard to predict what happened already from the very first day. The gold price is controlled by the inflation-generators. So I decided to stay away from it. Some taking-care when buying AND selling silver, should in the longer term suffice to do better than a bank account.
Exactly. So your mind set is different hence you should go about purchasing silver in ways that make you a profit. Contrary to the opening post, I'm wasn't saying how to make a profit, I'm was just pointing out the mind set. Dealers make a profit (usually). Perhaps follow what they do. Some traders like wrmcad make a profit. Perhaps follow what they do. All semi-competent banksters make a profit. Perhaps forget silver and become an immoral counterfeiter selling debt-based Ponzi promises to the indoctrinated gullible sheeple that inflation will happen forever so take out bucket loads of debt to front run the next generation of debt slaves so that you can onsell your negatively geared real estate "investment" to them.
I'm probably going to stop buying at around the $60 mark and try to not sell any significant amount till its $100+ in todays dollar value.
I've never bought silver over $35 and never intend to. Most was bought around $17 with a few pieces here and there since. I've since sold some of it at various points between 30 and 45 to take some profits and also when I've found other investments that I've wanted to put money in. There are 2 reasons why I will sell. If I need some money for another investment I will sell some or if I think it is at or near the top I will liquidate most of my investment. Anything above $50 I will consider a good investment, but I am hoping for around $100 or possibly more. I look more for conditions at the time than particular price points. But I am a fairly active investor and not just focussed on PM's although they are currently a large percentage of my portfolio.
One of the quickest way to profit nicely handsomely is to play blackjack, win and re-invest the money into silver. i earn 7 ounce in 20 minutes!
When you invest in something, you dont expect it to rise and earn profits? Why do you bother investing then? :O
