New entrant to Silver, with questions.

[SlyGuy]

At the moment, equities are out for novices. Even prominent hedge funds managers like Ackman and Einhorn have lost significantly in the last 2 years.

Everyone is a novice.

Anyone can do fine if they just buy index funds for major stock markets; that will do pretty well in the longer term (maybe short term also). I echo what SilverDJ said: young people need money in growth areas, and there is almost no chance that gold or silver out-performs the market (S&P or Dow or similar) in any 30 year period (probably not even over any 10yr period). You can invest in market index with a few clicks and forget about it.

If you want to pick your own stocks, that is more complicated, but it is certainly not impossible if you read and get a fundamental understanding of P/E ratio, debt to capital, dividend yield, etc. The key thing to always remember is that behind the stock... is a company. You want to have some idea of what the company does and how it does it. There have been studies of elementary school kids who have picked much better than professional stock broker firms just by naming major companies they've heard of... hence, everyone is a novice. Still, if you enjoy it, stock picking is a fun hobby... I enjoy it immensely.

The "expert" and "actively managed" stock/fund services are just for people who are too fearful or too lazy to learn and do it themselves. It has never been easier and cheaper with the index funds.

 

[SlyGuy]

...And for those in the "if you don't hold it you don't own it" camp, you have to be realistic. If SHTF, and I mean really hits the fan and the government confiscates your metal in the few days it would take you to get it out, then you have more problems than losing your metal.

You are right about that. If civil war, major natural disaster, bank failures, etc broke out... there are big problems. The last thing you would need is to have your gold inaccessible due to mail not running and bank closure/bail-in/flooding/etc if you wanted or needed to flee the country. I could hardly care about silver in that scenario since it is hard to conceal or carry very much of it anyways. The chances of that SHTF stuff is super super slim, though. I agree.

...The main reason for holding substantial amounts (or all) of metal physically is pretty simple in my eyes. I guess this depends on your country's l@ws:
>If guy A buys 15kg of unallocated silver at a storage facility and sells it a couple years later for $1000 profit when silver spot rises, his storage facility sends him papers and t@x receipt for his sale profits.
>If his buddy, guy B, buys a monster box of 500 maple leaf 1oz silver coins and sells a few rolls to each local shop a couple years later for $1000 in profit, then guy B should then accurately report any and all capital gain for appropriate t@xation.
...on the other hand, if guy B hypothetically took a loss since he sold when spot had gone down, the coins were stolen, he was just dumb and sold them for a loss since they were milk spotted, he discounted since he wanted to be nice to the buyer or whatever... then no gain was made. He doesn't have to report anything.
So, in the end, they are similar but not identical. Unallocated makes for ease of storage and quicker selling... and very accurate book keeping

 

[SlyGuy]

I never really put too much stock into GSR. It is fine to be aware of, but I don't think you can decide for or against gold or silver based on it. Much like two auto companies or two oil refiners, I view the metals more as separate items... but in the same sector.

I think the rise in the GSR in the late 19th century to present is simply due to the fact that central, and private, banks don't hold silver much anymore. That makes for much less demand. The GSR basically went from 20 to 80 after that, and it has stayed there for over 100 years (with exceptions of a few spikes in one or both metals).

There are a million ways to overthink GSR and what it means for future outlook for them, but that lower demand for silver due to banks jettisoning it is the easiest explanation IMO. Sure, the supply and Earth crust ratios are still the same 15:1 or whatever, but supply/demand has changed. That is all that matters for any market. Many metals are rarer than silver yet less valuable due to low demand. Heck, the price of gold would probably drop 75% or more if the central and private banks dumped most/all their gold... but I sure don't see that happening anytime soon. Similarly, either metal, esp silver, would rise significantly if more people started stacking. It's always good to have both

 

[SilverDJ]

Similarly, either metal, esp silver, would rise significantly if more people started stacking.

Silver coins and bullion is 25% of the market, much less for individuals. So more people stacking is unlikely to influence the market a huge amount. The institutional investors would have the follow suit.

 

[sgbuyer]

Everyone is a novice.

Anyone can do fine if they just buy index funds for major stock markets; that will do pretty well in the longer term (maybe short term also). I echo what SilverDJ said: young people need money in growth areas, and there is almost no chance that gold or silver out-performs the market (S&P or Dow or similar) in any 30 year period (probably not even over any 10yr period). You can invest in market index with a few clicks and forget about it.

If you want to pick your own stocks, that is more complicated, but it is certainly not impossible if you read and get a fundamental understanding of P/E ratio, debt to capital, dividend yield, etc. The key thing to always remember is that behind the stock... is a company. You want to have some idea of what the company does and how it does it. There have been studies of elementary school kids who have picked much better than professional stock broker firms just by naming major companies they've heard of... hence, everyone is a novice. Still, if you enjoy it, stock picking is a fun hobby... I enjoy it immensely.

The "expert" and "actively managed" stock/fund services are just for people who are too fearful or too lazy to learn and do it themselves. It has never been easier and cheaper with the index funds.

US Indices may have done in the last 20 years, but this is not the case for Singapore indices. When I first came out to work in 2000, the main Straits Times industrial Index was 2300. Today, after 18 years, it is 3150.

Back then in 2000 there was no easy option to invest in US indices and NYSE ADRs like today. I only really started to buy NYSE ADRs in 2011. It’s very difficult to make money in the Singapore stock market because blue chips required that you put down at least $5000-20000 per stock because at that time the minimum purchase is 1000 shares so I ended up buying penny stocks and ended up all my meagre capital at that time. Had I bought silver at that time, I would have done much better. Will the S&P continue to do well in the next 10 to 20 years. Maybe or maybe not.

Having said this, I’m not advocating putting everything into precious metals but great caution is required when buying stocks, especially at the top of the economic cycle.

 

[SlyGuy]

US Indices may have done in the last 20 years, but this is not the case for Singapore indices. Had I bought silver at that time, I would have done much better. When I first came out to work in 2000, the main Straits Times industrial Index was 2300. Today, after 18 years, it is 3150...

Yes, but that index also has a roughly 3.4% dividend, so it paid about the same as S&P 500 TR (which crashed a couple times right after year 2000)...

With dividends, the total return is much higher than the simple capital gain value, esp assuming the dividends were reinvested. Assuming it is linear market growth (of course it is not, but you have to for easy math): 2300 Singapore index grew to effectively 5,084 (3150 market value plus 1898 dividends). That is still not fantastic growth for a market index over nearly two decades, but it is not bad. It more than doubled, while silver roughly nearly tripled (just like the S&P 500).

Gold and silver have a lot less downside than stocks (even indexes), but they have significantly less upside. They don't cash flow... capital gains (or losses) only. Gold or other capital gains stuff (non-dividend stocks, commodities, etc) make money only when they go up and get sold during a rise, but dividend stocks/indexes or income real estate generate gains when they go up or when they go sideways. That is their biggest advantage and why they should be the biggest percentage of most peoples' portfolio: the cash flow increases your probability of profits in any given timespan. If silver had somehow paid a 3% annual dividend from 1980-2000 when it basically just sat flat line on the graph, it would be no big deal... sorta like a mediocre fixed income bond. However, the fact that it laid silent while inflation was going and while other markets were gaining made it painful in terms of inflation-adjusted loss and missed opportunities.

 

[alor]

SHTF testing .... https://www.zerohedge.com/news/2018-12-28/centurylink-system-failure-causes-911-outages-across-us

 

[GF]

There is some awesome advice for a newbie on this thread as well as the usual banter.

For what it’s worth I wish someone had told me to start a spreadsheet with “date purchased, ounces, spot and price paid”. Not so much for recording brands, coins v bars but to have the stark reality of profit and loss in front of you. Like you, I started stacking for the “long term” but quickly realised that was just justification to get in...ie no get out date, no sell plan....and that’s ok. What’s not ok is working your butt off for 30 years (30 x 52 weeks x 3oz = 4680oz plus post) to realise your 100k investment is worth 80k plus post.

All the best of luck

GF

 

[Ian Gillman]

I do not keep track of purchase price because it really does not matter how much I gain or lose. What counts is that when I retire I have a "blob of value" which I can live from. It would be good if I put in less money than it is worth in the end but even if I put in more money as long as the "blob of value" has enough in it then it solves the problem. I keep track of what I have so that I do not get an over abundance of one thing.