Opinions Needed: Should I go into debt to buy more silver?
- Thread starter ThisIsJoe
- Start date
I was comfortably paying off the last of a loan I still had, but decided to sell off some silver to pay off another large chunk of it so as to have it paid off sooner rather than later. Could not imagine getting a loan for silver, or gold :\
opti
Member
Your better off slowly stacking as you can afford it, silvers not gonna go to the moon tomorrow morning, dont panic buy.
If you borrow, to make a profit on your investment, your silver not only has to increase above what you paid for it in the first place, it also has to increase the percentage of the interest you are paying on your loan. Bad idea.
If you borrow, to make a profit on your investment, your silver not only has to increase above what you paid for it in the first place, it also has to increase the percentage of the interest you are paying on your loan. Bad idea.
Although the original post was back in April, I guess this is an ongoing question!
With the volatility in the Silver price, maybe a good way to look at it is like this:
Determine the loan amount you would have been comfortable with.
Determine the monthly repayments you would be making (if you took out the loan).
Buy Silver (or whatever) each month to the same value as the loan repayment you would have made.
(The "don't panic buy" is great advice I think. "Oh my god, silver is going to the moon, better take a loan!!!" might not be a good investment strategy!)
Everyone will have their personal degree of comfort for what they would do - I think I'd be reluctant to take out a loan, since there is only a reliance on capital gain and no cash flow. I guess if the market is clearly on a bull run AND you are sufficiently psychic to be sure it will continue, then it's a calculated risk.
Read "The Black Swan" by Nicholas Taleb (not an "easy" read but worthwhile) to make sure you aren't blind to any downsides. http://en.wikipedia.org/wiki/The_Black_Swan_(Taleb_book) (Basic premise: You never know what unpredictable event might be coming down the track because ... well ... by their nature, they are unpredictable. Yes, he managed a book out of that, but it's still a good read for a great analysis of the lessons we can draw from our flawed reasoning and psychology that can eventuate)
With the volatility in the Silver price, maybe a good way to look at it is like this:
Determine the loan amount you would have been comfortable with.
Determine the monthly repayments you would be making (if you took out the loan).
Buy Silver (or whatever) each month to the same value as the loan repayment you would have made.
(The "don't panic buy" is great advice I think. "Oh my god, silver is going to the moon, better take a loan!!!" might not be a good investment strategy!)
Everyone will have their personal degree of comfort for what they would do - I think I'd be reluctant to take out a loan, since there is only a reliance on capital gain and no cash flow. I guess if the market is clearly on a bull run AND you are sufficiently psychic to be sure it will continue, then it's a calculated risk.
Read "The Black Swan" by Nicholas Taleb (not an "easy" read but worthwhile) to make sure you aren't blind to any downsides. http://en.wikipedia.org/wiki/The_Black_Swan_(Taleb_book) (Basic premise: You never know what unpredictable event might be coming down the track because ... well ... by their nature, they are unpredictable. Yes, he managed a book out of that, but it's still a good read for a great analysis of the lessons we can draw from our flawed reasoning and psychology that can eventuate)
Yippe-Ki-Ya
New Member
I believe i had anwered YES to this post before.
I'd like to change that to NO now...
I'd like to change that to NO now...
Yippe-Ki-Ya
New Member
renovator said:Lock it in Eddie ? Are you sure you dont want to phone a friend or ask the audience ?Yippe-Ki-Ya said:
mate - you followin' me around??? :lol:
Nothing wrong with going into debt on an appreciating asset .... house buyers used to do it all the time.
In a rising market, if you need to get out you can always liquidate your leveraged asset and get out and still be ahead (or at least break-even).
You just gotta be sure it IS going to go up in price.
In a rising market, if you need to get out you can always liquidate your leveraged asset and get out and still be ahead (or at least break-even).
You just gotta be sure it IS going to go up in price.
I borrow money to buy Silver all the time but it's simple Math, what is the average % gains on Silver year to year compounded compared to the compounding debt rate of the loan. You have to look at it like this as you never know in the short term what the price will do so you don't know how long you will have to hold out before you can sell. For this reason it makes no sense to borrow on Credit Cards at 18%, even a Personal Loan at 11% is not the best but a 6%-7% Secured House Loan is perfect. If you can borrow against your home on a low interest loan, be confident you can manage the payments and not be putting yourself in more debt than the average Australian then it is worth considering. I would be very weary about using a Credit Card just because it has the first 12 months at 5% or something because who knows there may be a 2 year deflationary period before prices rise, you just never never know what crazy Ben and Friends are going to try and do next.
Ghost Story
Active Member
not me
Ghost Story
Active Member
sounds like a lose lose to me
CDNstacker
New Member
i wouldnt go into debt to buy some pm. Id buy what you can when u can. Everybody likes to dream about making the big buy right before it rushes. IMO buy what u can with what u have on the side.