Borrowing money to buy up right now???????

[jpanggy]

So cyclone, have you made a decision?

To be honest, I actually posed the question originally just as an idea, not so much as advise for me!
I have a little silver ticked away and I'm quite happy with where I stand, I was just wondering what everyone else thought.

Thanks all for your input.

Take your time, keep asking the questions. The more you read (from both side of argument) the better informed your decision will be.

Oh yeah, I originally predicted 1750 aud for gold by end of this year. Obviously my head has been blown off by the spot movement.

At the end of the day, can't really predict spot movement, but outlook for gold is pretty good at 1800+ assuming economy is crap(but not collapsed).

 

[Yippe-Ki-Ya]

A very risky game indeed. Others tried it before the last big dip as the mania caught on when silver approached $50.00. If you decide to do it, perhaps only borrow a small amount that you won't be left in hot water if there is another fall in spot price.

Falling spot wont make a bit of difference - unless you have to sell at that particular point in time.

if you can manage the repayments and only need to sell say 6 months or more into the future then its a no brainer mate

 

[Yippe-Ki-Ya]

Go back to the early April posts,this came up then.Some brought a New suit,some lost their shorts.
My vote "NO" you would have to be a lunatic to borrow to invest in Silver in this Economic Climate
REDBACK

I'm a lunatic!!

now dont be nasty fellas - no comments required from the peanut gallery!

 

[fishball]

The only scenario where you would win if you borrow to buy PMs is if PMs growth rate outpaces the interest you are paying on your loan.

All other scenarios, buying bit by bit and cost averaging wins.

Which do you think is more risky and stupid? Which scenario is more likely to happen?

 

[Yippe-Ki-Ya]

The only asset I'd go into debt for is a house. You'd live in that, so it serves dual purpose.
Your silver doesn't provide shelter, can't be used as food, won't keep you warm.
In fact it's fairly useless except as a store of wealth IMO (oh and to look at - it's pretty). So why are you storing the banks wealth in precious metals?

ok now i KNOW you're kidding ... :lol:

 

[Yippe-Ki-Ya]

Depends on your motives and your means.

I suck at saving money, but I am awesome at paying off debt... mostly because I hate debt so it works as a great personal motivator.

I borrowed to buy my first 3kg of silver as a sort of 'savings' plan. I ended up paying it off in 4 months, 20 months ahead of the loan term, and the silver has earned (as yet an unrealised) profit of somewhere around 1k. Some of that has been absorbed by interest, but the interest paid is proportionate to the length of the loan term.

So yeah it cost me a few hundred in interest, but the end result is a tidy little stack of pretty shiny stuff that I have wanted to start building for a long time, paid for with cash that would otherwise have been spent on useless purchases of little to nil value.

There is always concern about whether the price is going up and down, but realistically it's going to do that whether you're paying with cash you already have or cash you're paying off. Consider what your motivations are and whether you actually care what the currency value of the metal (or money) is at this point in time, or whether you are in it for some other reason that makes you consider the cost to be 'worth while'.

Do what works for you; in a quantity you can handle; with associated risk you are willing to accept.

After all, I hear the buzz words "measured in ounces" on this forum all the time... So why does it matter where the paper comes from, as long as you can comfortably cover it at short notice?

*commence bombardment*

Whack!!!!!!
I would have been embarrassed to admit to that by my self but now that your here i will. I am a terrible saver, and a loan keeps my in check, just gently nudges me in the right direction. The obvious thing to say to this is "yeah but your losing money in interest", but as far as i am concerned i would have probably bought something useless and virtually wasted my money anyway.

Not true - unless you're borrowing from a loan shark.

credit card balance transfers can be done at between 2 and 6% interest. silver is and will continue to outperform this WITH EASE over any reasonable period.

savvvvi??

 

[Yippe-Ki-Ya]

Best thing to do is every pay day, put aside cash and buy some silver and gold and stay out of debt(no loans). Right now there is no way I would invest in SLV and GLD ETF's, as your purchasing something that doesn't exist. Physical silver or gold is the way to go.

When in comes to investing in high interest accounts, you have to consider that there are currently bank runs happening around the world, there are 'bank glitches' every day in countries around the world where people cant access their money. Then you have hundreds of banks that have collapsed in 2011 (almost 70 so for in USA alone).

Try to learn how to save, get out of debt, build a vault under your house and become your own central bank lol

Deposits are guaranteed up to a million. If you don't place your cash in the bank and get interest you are robbing yourself. Unless the Australian government collapses in to total anarchy - in which case it won't - the money will still be there. No civilized modern government will outright confiscate your dollars, if the NK populace revolted when that happened even though their government will shoot you for twitching your eyebrow, imagine what a western country would do. If you think a government guaranteed deposit with one of the big four banks in Australia is not a safe bet, then you seriously have too much tin foil going on.

Edit: I would like to point out it is safe from confiscation or loss, as opposed to the other type of confiscation such as inflation.

I think you may have mixed things up there mate - cos when you leave your money in the bank and earn "interest" - its actually the government that will be robbing you ... along with the RBA and their banker pals who are robbing you.

If you buy PMs on the other hand you stand a chance of avoiding these robberies...

 

[Yippe-Ki-Ya]

I stand by my belief that precious metals or shares in mining companies will be much better off in the future that cash in the bank earning interest. Very much so.

No one is disagreeing with you. But to buy your $1800 1 ounce of gold, or your $2000 share in a mining company means you need to save money every week. To do that, the best way would be to put that money in to a bank account - not under your mattress because you think the banks won't give it back (i.e. too much tin foil).

Not nescessarily. A low interest loan could be a far better way in a cbull market.

 

[ReturnToZero]

Best thing to do is every pay day, put aside cash and buy some silver and gold and stay out of debt(no loans). Right now there is no way I would invest in SLV and GLD ETF's, as your purchasing something that doesn't exist. Physical silver or gold is the way to go.

When in comes to investing in high interest accounts, you have to consider that there are currently bank runs happening around the world, there are 'bank glitches' every day in countries around the world where people cant access their money. Then you have hundreds of banks that have collapsed in 2011 (almost 70 so for in USA alone).

Try to learn how to save, get out of debt, build a vault under your house and become your own central bank lol

Deposits are guaranteed up to a million. If you don't place your cash in the bank and get interest you are robbing yourself. Unless the Australian government collapses in to total anarchy - in which case it won't - the money will still be there. No civilized modern government will outright confiscate your dollars, if the NK populace revolted when that happened even though their government will shoot you for twitching your eyebrow, imagine what a western country would do. If you think a government guaranteed deposit with one of the big four banks in Australia is not a safe bet, then you seriously have too much tin foil going on.

Edit: I would like to point out it is safe from confiscation or loss, as opposed to the other type of confiscation such as inflation.

I think you may have mixed things up there mate - cos when you leave your money in the bank and earn "interest" - its actually the government that will be robbing you ... along with the RBA and their banker pals who are robbing you.

If you buy PMs on the other hand you stand a chance of avoiding these robberies...

Sigh. Everyone keeps missing the fact that this is in relation to saving up your cash in the bank to buy PM's as opposed to saving it under your mattress. Not saving up your cash as an investment.

Not nescessarily. A low interest loan could be a far better way in a cbull market.

Until you learn what risk entails, you won't understand buddy. This is the same attitude that housing speculators have.

"Get a personal loan at 11% to buy a 100% geared investment in silver because it always goes up."
"Get a mortgage loan at 7.5% to buy a 100% geared investment in a house because it always goes up."

Sound familiar? If you borrow, you are a speculator, if you buy, you are an investor. Buyers have the most important element of an investment on their side - time. Borrowers don't.

 

[Yippe-Ki-Ya]

The only scenario where you would win if you borrow to buy PMs is if PMs growth rate outpaces the interest you are paying on your loan.

All other scenarios, buying bit by bit and cost averaging wins.

Which do you think is more risky and stupid? Which scenario is more likely to happen?

well thats easy... at least for some of us

 

[Yippe-Ki-Ya]

Deposits are guaranteed up to a million. If you don't place your cash in the bank and get interest you are robbing yourself. Unless the Australian government collapses in to total anarchy - in which case it won't - the money will still be there. No civilized modern government will outright confiscate your dollars, if the NK populace revolted when that happened even though their government will shoot you for twitching your eyebrow, imagine what a western country would do. If you think a government guaranteed deposit with one of the big four banks in Australia is not a safe bet, then you seriously have too much tin foil going on.

Edit: I would like to point out it is safe from confiscation or loss, as opposed to the other type of confiscation such as inflation.

I think you may have mixed things up there mate - cos when you leave your money in the bank and earn "interest" - its actually the government that will be robbing you ... along with the RBA and their banker pals who are robbing you.

If you buy PMs on the other hand you stand a chance of avoiding these robberies...

Sigh. Everyone keeps missing the fact that this is in relation to saving up your cash in the bank to buy PM's as opposed to saving it under your mattress. Not saving up your cash as an investment.

Not nescessarily. A low interest loan could be a far better way in a cbull market.

Until you learn what risk entails, you won't understand buddy. This is the same attitude that housing speculators have.

"Get a personal loan at 11% to buy a 100% geared investment in silver because it always goes up."
"Get a mortgage loan at 7.5% to buy a 100% geared investment in a house because it always goes up."

Sound familiar? If you borrow, you are a speculator, if you buy, you are an investor. Buyers have the most important element of an investment on their side - time. Borrowers don't.

I hear what you're saying, but keep two things in mind:
1. During the property bull market, how many people made money saving to buy properties cash without lending?
Now compare that to how many made gains through leverage??
2. Where do you think we are in relation to the PM bull run? Nearly spent?

 

[ReturnToZero]

I think you may have mixed things up there mate - cos when you leave your money in the bank and earn "interest" - its actually the government that will be robbing you ... along with the RBA and their banker pals who are robbing you.

If you buy PMs on the other hand you stand a chance of avoiding these robberies...

Sigh. Everyone keeps missing the fact that this is in relation to saving up your cash in the bank to buy PM's as opposed to saving it under your mattress. Not saving up your cash as an investment.

Not nescessarily. A low interest loan could be a far better way in a cbull market.

Until you learn what risk entails, you won't understand buddy. This is the same attitude that housing speculators have.

"Get a personal loan at 11% to buy a 100% geared investment in silver because it always goes up."
"Get a mortgage loan at 7.5% to buy a 100% geared investment in a house because it always goes up."

Sound familiar? If you borrow, you are a speculator, if you buy, you are an investor. Buyers have the most important element of an investment on their side - time. Borrowers don't.

I hear what you're saying, but keep two things in mind:
1. During the property bull market, how many people made money saving to buy properties cash without lending?
Now compare that to how many made gains through leverage??
2. Where do you think we are in relation to the PM bull run? Nearly spent?

The answer to both your question would be something along the lines of how long is a length of string.

No idea mate, at least with the housing market it's been manipulated up, with the silver and gold, it's been manipulated down. Yes, the market will win in the long run but how many people will the banks wipe and and put in to negative equity first? And how many of these people who were impatient in the first place be patient enough to sit through it all? Impatient decisions don't breed patient ones. Look at what happened when they raised margins the other week...

I think that we are right at the start, just as you believe - but taking a punt in the short run with personal loans is not sound.

 

[jrbrans]

Hi guys,

New to the forum here so go easy on me. I've been reading this thread and have seen some interesting answers... I do not fully agree with the statement of borrowing money to stack. AND, I also do not fully agree that your house that you live in is an asset. I think what it comes down to is balance. What I mean by that is that you should ask some questions to make sure whatever solution you pick, that it works for you.

For example. Could you continue your current lifestyle? (assuming it's a positive cash flow lifestyle) Could you service the actual debt without it taking away from your lifestyle? Is the return on your investment going to leave you with a profit? (Winning money at the casino is easy, it's the walking out that's hard) And I think most importantly: WHAT IS YOUR EXIT STRATEGY?

On the whole house is an asset thing... It's not an asset until it's paid off in my opinion. Yes it provides shelter and all that, but what if you default on your payments for a few months? Will it provide shelter once the bank takes possession of it? In my eyes, silver would be something you could liquidate easy in small quantities and for example pay a 6 month lease up front in a rental property. You don't own the place, they can't take it from you. (Now I know some of you might think: What if the bank repossesses it from that owner? At least it's not your net worth that's screwed.) You can't just take some of your bricks and mortar to Bunnings or Home Depot and sell it back for a profit now can you?

If you want to treat your house as an asset for leverage, go for it. As long as you have an EXIT STRATEGY in place and it does not add stress to your current lifestyle. A lot of Ozzies here got screwed with the 21K First Home Buyers Grant because they took on a debt that was bigger then they could handle after the banks upped the interest! As always, do your DD first and make sure you are in a comfortable place to service the debt. Last thing you want is a bad credit history when you go for a loan.

Again, I'm not an expert, I just have an opinion. I'm not saying it's right or wrong, it's just what is. Whatever meaning you attach to it, it's up to you.

JRB

- Even though I am team Jacob, I stack silver...

 

[jpanggy]

Nobody is truly/always right or wrong. Only in hindsight will our opinions be proven right or wrong.

At this point, everyone is just trying to figure out what to do.

Heck, maybe after this zombie apocalypse happens, all sorts of prediction goes out the window.