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Old 11-02-2011, 11:18 AM   #1
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Advice someone new to precious metals wanting to make a big purchase

Hello All,

I've been watching the forums here for the past week or so after seeing it mentioned on rpforums i believe. I recently have become interested in purchasing PMs, and have purchased a few small silver rounds.

I've never really followed any markets, and am not really sure what kind of things to look at nor would i even begin to understand how to interpret the things that are going on. Ive seen people going back and forth quite a bit with whether now is a good time to buy or not. I was planning on going to a local shop today and making a decent sized purchase, but am now seeing the spot prices going down again, and sounds like people are expecting prices to drop quite a bit (or at least that is how im reading comments).

Since this is all about PMs, I was hopeful that you could give me some pointers, as to what type of current events i should take notice of, or any other knowledge that you wouldnt mind bestowing upon me, as im a complete noob, and would greatly appreciate any sound advice.

My biggest concern at the moment is, if i make a decent purchase, and then the bottom falls out of the market, then my wife is going to tell me she told me so and wont let me invest any more.

Thanks in advance
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Old 11-02-2011, 11:38 AM   #2
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Hi oppie2005, welcome to the forum.

Volatility is crazy right now. I've been reading blogs from traders, but they don't always get it right. Trying to time the market is nearly impossible IMO.

I would suggest dollar cost averaging your way into bullion. Plan on breaking up your large purchase into several smaller purchases and spending a fixed amount on a set schedule. When the price is up, you get less ounces. When the price is down, you get more ounces. Over time, this works out well regardless of how the market moves. This strategy should work great as long as the supply of physical bullion doesn't tighten up to where premiums decouple from the paper spot market prices. At that point, IMO, it's time to get what you can ASAP.

Another consideration though is the discount on premium that can be had for large orders. If you can handle a little bit of volatility (ie. don't spend more money than you will need for the next few months should the economy crater so you aren't forced to sell at a loss to pay bills), it might make more sense to find the best deal you can on a large order whenever the price is within a range that you find fair. I would check prices at tulving.com and a few other online retailers to compare against what your local shop is offering if I were making a big order.

Long term, there is no doubt in my mind that the metals are going to outperform all other stores of wealth. Short term, there could be crazy volatility (and painful losses for anyone who has to sell to pay bills).

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Old 11-02-2011, 12:21 PM   #3
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thanks!
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Old 11-02-2011, 12:35 PM   #4
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@oppie

I would go along with our PMBug.

What I have done (for decades) is to buy small but often. No need to be at the "All Inn" (big purchase all at once, or even having 100% of your assets in PMs). I buy when I have EXTRA money come in. When I get some, part of that goes to gold. I don't let the price of gold influence my decision. My goal is to accumulate a lot of ounces...

The price will indeed go up and down. I only check the price before buying only to make sure I do not get ripped off (via too high premiums).

Yes, I like buying from the coin shops, just make sure yours is big and has been in business a while. Also, a coin shop will be there in case you do need to sell (but try not to).

I also agree that you need to make sure you do not use all your cash, because you DO need to pay bills, groceries, etc.

Good luck and happy hunting!
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Old 11-02-2011, 12:41 PM   #5
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Thanks. This brings up another question though, and ill use Silver Eagles as my example as this is what i am planning to purchase. with the current spot price, or any spot price really, what would be an acceptable premium?
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Old 11-02-2011, 12:46 PM   #6
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Generally, you are going to pay a higher premium at a local coin shop than you will with an online dealer. But when you factor in shipping and handling it usually works out to be close enough. I personally don't mind paying a small local shop premium over internet delivery prices if I like, trust and want to support the local shop.

Again, you can shop prices online to get an idea of what the going rate is before you head out to the local shop. See also: Comparison shopping engine for gold and silver bullion
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Old 11-02-2011, 01:00 PM   #7
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the shop came recommended to me from several people that i work with. I called them just a few minutes ago and they said they are selling the silver eagles at 38 right now. looking that the goldshark site you pointed me to, seems like that is abut typical of what they are going for in the quantity im looking for. Ill post again in a little bit and let ya'll know how my first real purchase goes
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Old 11-02-2011, 01:03 PM   #8
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@oppie,

I have not bought Silver Eagles in a while, but something like spot + $4 or +$5 is probably about right (?, need confirmation from a recent silver buyer).

Gold Eagles run about $80 - $85 over spot recently (coin shop). I bought a couple of Australian Kangaroos (first time I have bought foreign gold) at $55 over, I bought the Ks because they had NO Gold Eagles in stock.......

I prefer the American PMs when possible for three reasons:

-- more recognizable
-- less likely to be counterfeited (Legal Tender, so the Secret Service would be on the case)
-- I think there is/was a slightly better tax in buying or selling (I forget!)

Last edited by DoChenRollingBearing; 11-02-2011 at 01:04 PM. Reason: three reasons, not two!
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Old 11-02-2011, 03:57 PM   #9
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Originally Posted by DoChenRollingBearing View Post:
@oppie,

I have not bought Silver Eagles in a while, but something like spot + $4 or +$5 is probably about right (?, need confirmation from a recent silver buyer).

Gold Eagles run about $80 - $85 over spot recently (coin shop). I bought a couple of Australian Kangaroos (first time I have bought foreign gold) at $55 over, I bought the Ks because they had NO Gold Eagles in stock.......

I prefer the American PMs when possible for three reasons:

-- more recognizable
-- less likely to be counterfeited (Legal Tender, so the Secret Service would be on the case)
-- I think there is/was a slightly better tax in buying or selling (I forget!)
I agree that a good premium is as listed above by DCRB.

Keep an eye on the Deals that PMBug so kindly posts from time to time.

Here is one that might still be available. http://www.pmbug.com/forum/f8/ase-0-...spot-%2410-10/

I can vouch for that company, in so far as that, I have sent them my money and they have sent me my product. Still waiting for my gold eagle but like they say, its 2-3 weeks. They get a lot of orders from these deals, as a woman explained to me on the phone. Then of course, the travel time.

Anyway, use the tools provided on this site to keep an eye out for good deals, and keep some cash ready to strike while the iron is hot. It isn't all about buying all at once. Slow and steady can still win this race.
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Old 11-02-2011, 06:25 PM   #10
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Welcome, oppie.

All the advice given so far is rock solid. One item to consider when dollar cost averaging is how PMs are taxed in your area. Where I live you have to pay a considerable sales tax (the same for other goods) if you purchase under a certain amount in dollars, over that amount it is tax free. So, I tend to buy larger amounts less often in order to avoid the tax. The amount I would have paid in taxes had these regulations not existed equates to a little over 2 Oz silver at current prices. That being said, I would prefer to not have it be taxed ever and do smaller, more frequent purchases.

As PMbug said, shipping can make the online deals not much different than the local shop. When buying enough to not pay taxes I generally beat Apmex's prices, even before shipping, by buying local.


Good luck, stack it high, stack it deep, protect it with steel/lead/brass.
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Old 11-02-2011, 06:42 PM   #11
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Ok so, i got back from the shop, and made my first purchase of silver eagles(46 oz's). wasnt too sure what to expect but it went really well. As for the sales tax, i wasnt sure how much that was going to be....so, when i got there that was one of the first questions i asked him. Luckily, in my state, there is no tax on coins...WOOT! I walked in, he laid them out for me to see and inspect, weighed them. everything went great. Carrying the cash makes me a little nervous, and then carrying that amount worth of silver makes me a little nervous as well, so as i usually do, i carried my springfield.

Once the purchase was done, and i was getting in my car, the guy came outside flagging me down. I'd forgotten my receipt. On a side note, he had his firearm on his hip too. Its not very often that i actually see other people carrying. I love this state!
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Old 11-02-2011, 06:49 PM   #12
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Outstanding! I hope this is the first of many such trips to the shop for you.
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Old 11-02-2011, 07:41 PM   #13
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Originally Posted by dontdeBasemebro View Post:
... One item to consider when dollar cost averaging is how PMs are taxed in your area. Where I live you have to pay a considerable sales tax (the same for other goods) if you purchase under a certain amount in dollars, ...
Great point! I totally forgot to mention that. Here in Texas, you pay sales tax on purchases less than $1,000.

Originally Posted by oppie2005 View Post:
Ok so, i got back from the shop, and made my first purchase of silver eagles ...
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Old 11-02-2011, 08:01 PM   #14
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Originally Posted by dontdeBasemebro View Post:
Outstanding! I hope this is the first of many such trips to the shop for you.
If only the wife would do some reading, or at least listen to what im saying about the economic crisis world wide, and the impending disasters, then i would be making many more just like this one.....unfortunately, she either doesnt listen or doesnt care so, the purchases will be smaller, but hopefully on a regular basis.
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Old 11-02-2011, 09:50 PM   #15
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@ oppie

46 oz of silver is great start! And you missed the dreaded "buying at the top" when silver was at $48. Well done.

As income permits keep buying! One thing I REALLY like about buying PMs (esp. gold) is that I feel like I am saving AND spending at the same time! Also as time goes by you should take a look at gold, it's more portable if you are saving it for a long, long time.

oppie and anyone else, send me a private message for a link to my blog. I put up an article not real long ago about WHO should own gold.

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Old 11-06-2011, 09:50 PM   #16
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Congrats oppie on your first purchase of silver!!!! You won't regret it. IMO I would stick mostly to the local coin shop purchases unless they can't fill your order, you're looking for something specifically or you can't get to the shop on a huge dip that is happening overnight. Because you're new in the metals market I feel I should share this with you: http://www.kitco.com/charts/livesilver.html

Metals trade 24 hours a day, worldwide, Monday-Friday so a potential buy could happen when your coin shop is not open. This chart shows where the spot price of silver hit 26 bucks recently but some people in the US had no clue b/c it happened overnight. http://stockcharts.com/h-sc/ui .... btw to look at spot price of silver the symbol for this site is $silver.

Buying PM's with cash is best way to keep your anonymity though, just in case SHTF or the less likely govt confiscation happens. I find the premiums at the local store to be most of the time less expensive than online, so as long as travel doesn't cost too much you're making out ahead. Another big piece of advice would be to BTFD (BUY THE F**KING DIPS)!!!!!!. This market is volatile and dips will happen occasionally. This also why every one will recommend to space out your purchases over a period of time. But again, congrats, keep buying, and get some gold too!!!

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Old 11-07-2011, 08:41 AM   #17
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buy dips. Buy a little each month and don't trade it.
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Old 11-07-2011, 09:39 AM   #18
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ok so, i have had a small coin collection that my dad started for me when i was a kid, and here and there i had bought some coins that i liked....not really for the value as ive never kept up on the prices of specific coins. Here recently i was looking through all my coins to see which ones contain silver and which ones dont, and i found a couple where they are worth more than their weight in silver. My question is, would it be worth it to sell these and buy silver with what i make off of them?
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Old 11-07-2011, 11:14 AM   #19
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Originally Posted by oppie2005 View Post:
ok so, i have had a small coin collection that my dad started for me when i was a kid, and here and there i had bought some coins that i liked....not really for the value as ive never kept up on the prices of specific coins. Here recently i was looking through all my coins to see which ones contain silver and which ones dont, and i found a couple where they are worth more than their weight in silver. My question is, would it be worth it to sell these and buy silver with what i make off of them?
It depends...

There is a cost associated with doing that kind of transaction that you need to account for. In addition, rare coins right now get a MUCH smaller premium than they did say 4 years ago. Personally, i'd wait for the rare coin market to get hot before selling them. Right now is a better time to be putting new money to work than do reallocation IMO.
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Old 11-07-2011, 01:33 PM   #20
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Originally Posted by dereksatkinson View Post:
It depends...

There is a cost associated with doing that kind of transaction that you need to account for. In addition, rare coins right now get a MUCH smaller premium than they did say 4 years ago. Personally, i'd wait for the rare coin market to get hot before selling them. Right now is a better time to be putting new money to work than do reallocation IMO.
Ok, ill sit on them for a while then. Thanks
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