Q: if you had some round sum to invest in PMs right now...

[bushi]

Hello guys,

I'd like to borrow some of your collective brains. Basically, let's say, hypothetically, that you have just sold some flat, somewhere overseas, and, again, hypothetically, you have, say, in the region of $80,000 to invest - of which, say, you decide to invest half of it into PMs (all this is very hypothetical brain exercise - of course, I'd never buy so much precious metals, because I am paranoid, would need to watch them all the time, and have heard awful stories happening to people with similar habits to mine - like boating accidents, holes in their pockets, lost treasure maps and so on).

Joking aside - what would be your strategy, when trying to purchase about $40k worth of metals - specifically, how to time your purchases? I am thinking of a dollar cost averaging, as a prudent thing to do - although, is it worth it, to try & pick the temporary price bottoms?

What about buying right now? Gold & Silver had a pretty nice rally, thanks to our good friends at Fed recently - do you think some correction is in order, or do you think, it will be just a stop there, before continuing higher?

How long would be your target of dollar cost averaging "purchase program", in such case? How many tranches, how often? Would you try to pick the temp bottom with each single transaction, within given timeframes?

Any thoughts and experiences much appreciated - it is quite a different thing to invest big(ger) money, something I do not have any experience with.

cheers,

 

[swissaustrian]

Would I buy pms with dollars right now? No.
It looks like Europe will be in the headlines for the next few days (CDS surging and bonds yields spiking) which means pressure on EUR/USD and subsequently pms in USD terms. Give it a few days before things calm down. Additionally pms are technically (close to) overbought anyway, so I think we'll see a bigger correction before the QE rally resumes.
In terms of $ cost averaging, I've never done anything like this. If you have the time and patience to watch markets, you shouldn't do it. If you're somewhat busy, it's a good strategy.
Concerning allocation between gold / silver: I'm maintaining a 1:20 ratio on an oz basis (20 oz of silver for every oz of gold). Gold is the way safer play. Additionally supply/demand numbers look more bullish for gold. Silver is definitely exposed to industrial demand changes which does'nt look that great right now. Investment demand might offset this on the other hand. The silver supply might unexpectedly shrink due to production cuts at large base metal (copper, zinc, lead etc.) mines should the world economy slow down further. A big chunk of the silver mining supply comes from base metal mines which produce silver as a byproduct.

That's my $.02

Happy boating

 

[pmbug]

I don't pretend to be a market genius. I would by a fixed dollar amount once a week or so to cost average the purchases.

It wasn't clear from your post, but if (hypothetically), one was planning to purchase the metal overseas and, presumably, store it not with a goldmoney/bullionvault type arrangement, then the choice of which metal to buy will also depend upon where and how the metal will be secured (or moved). It's easier to move about with $40K worth of gold than silver.

FWIW, I was at me LCS once (a couple of years ago) when some older guy asked them how much silver he could buy with $32K. He was going to write them a check. It's not unusual for bullion retailers to handle large orders.

 

[benjamen]

I am not a big fan of picking any one metal: Diversify!

Assuming you are going to diversify across the big 4 PMs, how are you going to numerate your splits? In terms of dollars? In terms of ounces of gold? Ounces of silver?

For ease of working, lets say we work with percentages of $20,000. Doing, so lets think about a base case (minimums for each metal).

Hypothetical conservative base case:
Gold: 50%
Silver: 20%
Platinum: 10%
Palladium: 5%
Investment/play with money: 20%
Essentially, you buy at least the base percentage of each metal, with 20% let over to play in the market with.
This is obviously just an example split. If storage is an issue, you would lower the silver base %. If you really like the long term potential of platinum (like me), you would raise the base %. If you are less conservative, you could lower all the base % to have more to play with in the variable section.

From a short term ratio stand point, palladium has moved the least in this current up swing. However, from a long term perspective, platinum is still very undervalued against the other metals. I would wait for the next drive by shooting to pick up large amounts of silver/gold.
$.02

 

[Penn]

If it were me- I would break it up - to 8 orders- maybe 9.

Have fun with it!

As to me- I actually cut things short- I pay my living expenses- and every spare dollar is in silver. I cut it too close.

 

[ADK]

I don't know how much you (hypothetically) would invest on a regular basis, but I would recommend taking that (hypothetical) lump sum amount and using it to double / triple / quadruple, etc., your regular-basis-investment-amount.

I'm buying nearly 85% silver and 15% lead right now.

ADK

 

[bushi]

Thank you guys a lot, for sharing your thoughts - everything gets considered!

My rough plan is, as some of you might already figured out from my postings, to acquire some bit of land, that would be big enough for eventual self-sustenance. BUT, taking into account the reality, and how everything will inevitably unveil, in my humble opinion, going forward - I do NOT believe, that market forces will be able to FORCE politicians to do the right things - for many reasons discussed here, I don't see it happening. So in my opinion, we will continue to see things deteriorate, and economic reality being distorted with zero interest rates, inflation going higher and pushing prices upwards, etc. -until the (very) sorry end.

Thus, taking this into regard, my general plan is, to lock-in the leverage provided by low interest rates, and just pay down a minimal down-payment to get a mortgage on the land I plan to buy. This way, I would free the most of that lump sum, to make some other investments, that WILL get inflated, while money gets printed around the globe. Although I am 100% confident, that at least here in Ireland, land & houses will continue to go down - but you can already get quite amazing deals on the distressed estate auctions right now. But other than that, the market is lumbering nowhere but down - but also, thanks to all the government meddling - at nowhere the speed rate I would expect it to go, from the sheer size of the previous bubble.

I also believe, mid/long term, blue chip stocks are amongst the safest things, that would benefit from Bernankes of this World blowing bubbles with our currencies. Apart from, obviously, that other (hypothetical, of course) heavy stuff, we read & write about here .

So this would be my diversification plan, in general:

1. short-term (10 years, 15 at most, but unwillingly), fixed interest rate mortgage - leveraged land (although nothing that I couldn't sustain, and/or could loose, shall I need to stay, say, one year on forced unemployment - already quite a stretch in stress-testing myself, I think), that still CAN go down from here, (but I should not care if it costs me less or similar to my current rent) - all depends on the property, location & price - but the risk is much lower now here, with prices declining so much from the previous highs, and I am doing my homework in this regard, and knowing the attitude of Irish property companies, it is quite possible, that I could teach some of them a thing or two about their trade & the market now. Secondly, the land usually does much better than general properties, in severe depressions - people can move back to their parents when they loose their houses, but they all still need to eat, and the land is required to feed them. So that is another risk-mitigating factor. Lastly, I do have maybe two business ideas, what I'd like to do with it, that could potentially work - not necessarily traditional farming

3. Some (hypothetical, of course) PMs. I would invest roughly half of my lump sum in them. My plan would be to buy Gold & silver, in 50/50 amounts (dollar terms) - which would give it roughly 1:40 GSR ratio (in OZ terms) in the portfolio.

4. some (not much) potentially high-yield stock plays (some of the biotech, some of the "consumer" robotics (ie not industrial), some of the junior miners maybe - things that I can at least get some grasp on understanding the business)

5. rest would be cash, to try & pick some blue chip stocks, or maybe take a share in some promising local business during the (inevitable) bust cycles. I think we will have one sooner rather than later, with the latest QE to infinity and beyond - have seen some interesting chart, showing that about 40% of market "ups", happened IN ANTICIPATION OF ANNOUNCEMENTS OF QE programs, and NOT as an EFFECT of the announcements (ie stocks were going up shortly BEFORE QEs were expected to be announced, and shortly AFTER the announucement - before resuming the slump down). New QE, which is open-ended - gets rid of that anticipatory part of the play (well done, Ben - law of unintended consequences, anyone? ).

Sorry if all this above reads slightly incoherently - didn't have time to edit properly my non-native speaker ramblings today!

Thanks again for your thoughts, guys, much appreciated! Keep the ideas flowing

 

[DoChenRollingBearing]

Bushi, I like Benjamen's advice to diversity and invest some over time (dollar cost averaging).

Re silver, that is BULKY, so if it were to be overseas, well maybe I would buy more Au and Pt. Maybe a little Pd, it would be worth checking in that location if Pd would be easy to sell, just in case.

 

[drAGonfly47]

$40 grand in metals of any kind takes up minimal space.

I would 3 way split the purchases. 1st purchase immediately in order to remove endless rationalized hesitation. Create a base.

2nd purchase on next dip in the market. Oct is highest history of DOW tankage, which empowers dollar, which could unjustifiably have effect upon silver again, maybe.

3rd purchase will be the easiest, as focus upon the market and extenuating circumstances will have become a nonchalant ability, thus one will know when to; buy buy buy!

Skip the auto industry consumed metals unless you, are young enough to live another 25 years and still be able to spend enjoyably your gains.

70% silver, all in 1 oz coins, rounds, & constitutional silver. Know that 2/3rds of worlds population earns less than $2.00 a day. Silver dimes are a days pay and will be here in the US within 10yrs. BUY DIMES.

More patents are filed every year for/with silver usage than ALL metals COMBINED. Silver is your BEST friend.

30% gold, 1/2 oz or less coins preferably .999+ for ease of sales to user of in industry. Gold will become so valued it will be dangerous to reveal ownership for physical and taxation issues. Keep 'em small.

Again: $40,000 in metals is a very small amount of cubic inches. Do the math after your decision has been reached. 1 green box from US mint with 70/30 split could hold all $40 grand worth. Buy, relax, and enjoy.
Best to you.

 

[oppie2005]

i know nothing about market fluctuations and cycles and all that other stuff that im just not smart enough to understand.

what i do know that i would buy in the situation that i had 40k is:
land and seeds for foods that i can grow and will eat. tools that will help sustain life, like an axe and a maul for a wood stove. cast iron cookware. storable foods. plenty of lead. gold, silver are important too, but they are only important if you have the means to keep it, i.e. the lead.

 

[silvercoinrn]

Personally if i had 40K to invest would depend on if i want to invest in Physical or paper metals.

If I was investing In physical metals i would Post CL ads stating that you buy cgold and silver. You will be able to get the smallest premiums this way. often you will be able to buy your pms at less than spot. Buy it in increments rather than all at once inless you feel the need to buy a $1000 face bag of junk silver that may be a good idea as well but i think i would wait for it to dip under 30 for a purchase like that

 

[Jay]

Know that 2/3rds of worlds population earns less than $2.00 a day. Silver dimes are a days pay and will be here in the US within 10yrs. BUY DIMES.

did you watch that video?