Would you ever take credit to buy bullion?

Bobhawke33

Bobhawke33

New Member
Hi guys, I'm new to the forum but a stacker from way back.

I have a decent size collection of bullion that I have put together over the years. However, I have a friend that has just started, and seems impatient to achieve at a stack similar to mine.

He told me he is planning to take a personal loan out (from a bank) so probably over 10% per anum.

Am I the only one saying this is a bad idea or can anyone find some valid points for doing this?
 
Hi and welcome to Silver Stackers.

With regards to your question, no I wouldn't borrow money to invest in metals either. Why? The first thing is the 10% interest rate, that means for a start that your precious metals have to go up by that much each year your loan is open to cover the repayments. In other words you are 10% behind the 8 ball to start with. Secondly, how will you friend handle the price going down? It is possible. If that happens not only is he paying 10% interest he is also losing capital value of his metals and what if he has an emergency and needs to sell them? Then he gets less than what he paid and STILL has the 10% interest to pay. I wouldn't do it, cheers.
 
I have made alot of these points to him which he does agree with but I think he's trapped in the fomo spiral. Thinking there won't be an opportunity to slowly stack and cost average his purchases because SHTF in 2020.

At the end of the day it's his decision, I just wanted to show him that other people have also made these or similar points. Just trying to give him the best chance at successfully putting a stack together
 
I also don't recommend borrowing money to buy bullion!
Although if you have the time and skills to do a bit of research, I think it's possible to fund your bullion purchases with cheap funds.
I know a member here who has been stacking using funds from a number of short term no interest credit cards
A degree of skill and time is needed as he has to actively search out new no interest credit card deals to replace current cards that expire after 6 - 12 months!
Not everyone's cup of tea however it seems to work for him:)
 
Aurora et luna said:
I also don't recommend borrowing money to buy bullion!
Although if you have the time and skills to do a bit of research, I think it's possible to fund your bullion purchases with cheap funds.
I know a member here who has been stacking using funds from a number of short term no interest credit cards
A degree of skill and time is needed as he has to actively search out new no interest credit card deals to replace current cards that expire after 6 - 12 months!
Not everyone's cup of tea however it seems to work for him:)
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Wouldn't that be basically a cash advance transaction though? I thought that would attract an even higher interest rate?
 
Bobhawke33 said:
Wouldn't that be basically a cash advance transaction though? I thought that would attract an even higher interest rate?
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Nah it's not usually, it's a purchase like you buy groceries you buy bullion instead. Maybe sometimes a bullion shop might put 1 to 2% on top to cover credit card charges but in my experience it's definitely a standard purchase.
 
From the gist of our discussion, as soon as one interest free credit card is about to expire, he rolls it into another.
He probably buys the initial stack using the credit card instead of taking out a cash advance.
If one day, banks decided not to issue interest free credit cards; he would probably have to reduce his stack or pay 9%+
I suppose it would still work if silver prices increases at the current rate
 
Aurora et luna said:
From the gist of our discussion, as soon as one interest free credit card is about to expire, he rolls it into another.
He probably buys the initial stack using the credit card instead of taking out a cash advance.
If one day, banks decided not to issue interest free credit cards; he would probably have to reduce his stack or pay 9%+
I suppose it would still work if silver prices increases at the current rate
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Interesting way of stacking i must say. But definitely risky as you outlined earlier. I just like not owing anyone a dime and progressively stacking from my own cash
 
Gold definitely not even if you bought gold at the lows in 2015, at 10% interest, you’ll still be losing money now. Maybe something like palladium or rhodium where the price can go up 10 times, but you need to catch the lows.
 
Could try options, which involve putting down a small percentage of the PM's value. So if you put down 5% and the price goes down 5% you're wiped out, but if it goes up 5% you double your money.
 
Sounds like a friend with a case of premature FOMO. Even if it is too early for this sort of thing, it’s nice to see a whiff of it in the metals forums. It’s been long time between drinks.

The most valid point for your friend to adopt might be the concept of making a profit. Buying due to FOMO is a popular emotional recipe for failure.

It would make more sense for your friend to consider the reason why they want it so badly they would go into debt for it.

It would be wildly bullish, even more bullish than travelling showmen like “Jackass” Jim Willie, to think prices will double in the next year. Not saying it won’t happen, but that is an outlier viewpoint.

What if it’s more of the crabwalking sideways action? Your friend is then locked into a marrow sapping progressive loss that they will stew over in a mental prison of their own making. Not worth it. They could end up with much less than had they just bought small purchases as they earned the money. It is bad enough losing money on something. It is going to be misery on steroids to lose money on something AND be underwater in debt from it as well. Would your friend gamble with a credit card?

This isn’t like a house or, if young, a car ...these are going to provide immediate tangible utility.
 
alor said:
10% personal loan is way too high
the low interest environment have come to an ending
he should sell his car to buy metal, if he can't do it, don't use credit
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This is how I bought my first bulk batch of gold even though I was in and out of work. Sold two cars and went down to share a single family commuter. Ignoring that I can now stack more because of less bills, I bought 4.5 ounces of gold for the loss of convenience.
 
some people can pay off debt but cant save. it may be the only way they can accumulate wealth.
not saying it is the smarted way to do it but some people are just geared that way thanks to years of banking brainwashing teaching them debt is the only way to get ahead
 
serial said:
some people can pay off debt but cant save. it may be the only way they can accumulate wealth.
not saying it is the smarted way to do it but some people are just geared that way thanks to years of banking brainwashing teaching them debt is the only way to get ahead
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That's actually a really interesting way of looking at it. It's a psychological game
 
Bobhawke33 said:
That's actually a really interesting way of looking at it. It's a psychological game
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It’s like a mortgage, people have no problems paying off a mortgage but the problem comes after you sold the house and got hold of half a million which can turn out to be a curse.

This is why Chinese people like to pass down houses in belief that their offsprings are less likely to squander it away.
 
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