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

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).

$.02

thanks!

@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!

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?

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

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

@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!)

DoChenRollingBearing said:

@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!)

Click to expand...

:agree: 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-0-1-age-spot-$10-10/

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.

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.

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!

Outstanding! I hope this is the first of many such trips to the shop for you.

dontdeBasemebro said:

... 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, ...

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Great point! I totally forgot to mention that. Here in Texas, you pay sales tax on purchases less than $1,000.

oppie2005 said:

Ok so, i got back from the shop, and made my first purchase of silver eagles ...

Click to expand...

dontdeBasemebro said:

Outstanding! I hope this is the first of many such trips to the shop for you.

Click to expand...

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.

@ 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.

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!!!

buy dips. Buy a little each month and don't trade it.

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?

oppie2005 said:

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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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.

dereksatkinson said:

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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Ok, ill sit on them for a while then. Thanks

oppie2005 said:

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?

Click to expand...

There will be a much stronger gain in silver coin/bullion rather than numismatic value when entering the financial transition you have mentioned. Waiting for the numismatic value to increase in order to sell, may not occur timely so.
A midway position to take would be to sell all that are not silver, and purchase Ag immediately. Possibly trade at the local coin shop you have nearby.

If and when the transition occurs, scales does not read move heavily so, with a "pretty" or "rare" silver coin.
Other than buying legal tender silver eagles for financial security.
Weight RULES.

Great purchase report you listed, thanks.

Heh, you ARE timing the market - (and it's not always so impossible, I do it for a living) when you say (correctly) to wait for the coin collector's market to be hotter. Dead on, PMBug. That usually happens when times are better, of course, but in the meanwhile, the goodies are still good anyway.

Tell her to be a woman and trust her man the way you trust her.

oppie2005 said:

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.

Click to expand...

oppie2005 said:

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.

Click to expand...

good luck with that one oppie.
think it played its part in my current status ........

Theres an article on Chris Martensons site about the importance of couples not getting too far out of step.
Just dont know how you can achieve this once youve taken the red pill and all they want to do is watch the mind control stuff pumped out of the tv.


Regarding buying strategies , I got caught in two opposing arguments, one that said dont leave it in the bank, convert it to PM's as soon as you can and another that said cost averaging was the sensible way.

So the house got sold, the money ( ok half of the balance ) was in my bank account and gold had 'entered a steeper trend' ......
I fought to get it into a Goldmoney account, cos they really dont make it easy and once it arrived, I converted the lot into gold. Phew what a relief.

Dont care what happens now ....... ok I do care about a 15% beatdown, the largest drop EVER ! But its nearly back to where it was just a few weeks ago ......

I guess Im trying to say it really doesnt matter how much or when, the only important thing is to recognise whats coming and not hold any paper.
The whole financial system is unstable and could topple any time, or they could maintain a semblance of order for several years. It will fail though.

As for holding coins, while I am tempted, I see several risks -

Is it gold / silver ?
Will your coin dealer hand over his client list when someone threatens him ?
Will you hand over your stash when they threaten your family ?
How do you sell and who do you sell gold coins to, when money is broken ?

The risks of holding it in a Bullionvault or Goldmoney vault ( in Zurich ) are -

If theres 40 claims on every ounce, will 'bigger boyz' turn up at the vault with a prior claim ?
If the internet goes down, how easy will it be to sell some ?

In the event of things going badly wrong, I accept my PM's will be of no benefit and know that real wealth resides in our ability to meet our needs -

food
water
shelter
warmth
health

probably best put in place before the system fails though.

And maybe when the dust settles and a new gold backed currency is launched, our selected store will come good.

good luck rblong2us

* bump *

While it's likely not news to the math/engineering wizards or experienced investment pros here, Tekoa Da Silva has published a nice reminder about the power of dollar cost averaging here:

http://bullmarketthinking.com/the-most-profitable-route-for-gold-and-silver-bugs/

wow. really good stuff, Bug! Quite obvious, once pointed out, but so much counter-intuitive and in fact in-your-face, that the problem is I've never get to think about it!

I wonder if that guys wife is screaming at him "no, no more silver! The last batch of that crap you paid $35/oz, now it's only worth 24! Hell no!"

Of course if he was smart, he just went and spent another couple grand at times it was under 20 the last couple months.