Post by Admin on Jul 24, 2021 22:31:57 GMT -6
I got caught up in one of those FaceBook posts with over 100K comments that said something like "Give us all great advice in only four words!!"
My reply was a simple "Buy Physical Silver Now!!"
I did it as a throwaway. I think it is good advice for several reasons. I got some likes from family and friends, but then someone tagged me in a reply and asked sincerely "why's that? I'm asking because I respect your input.. and I know you know what you're talking about"
This person is younger than me and I'm not sure of their full financial situation, but his question has led me to post this summary of why I think silver is good thing for everyone to have going forward into the economic situation we find ourselves in.
Please note, this post is not investment advice. Please do not put any of your financial assets at risk solely on the points discussed here. I am stating my opinions and speaking about what I have done for myself and why. Our situations are different and I will accept no liability for losses incurred if you ignore any part of this paragraph. Do your own research and come to your own conclusions and decisions on your investments before executing any trades or taking any risks.
For additional background, please read previous Politics and Economics or Inflation based entries in the Blog Forum of this website.
Why buy physical silver now? Let's break it down into a few questions.
Why Precious Metals (PMs) and not dollars? Inflation/Financial Hardship Hedge -
Historically, PMs (gold, silver and sometimes platinum and palladium) have performed well as investments in times of inflation and financial hardship. I believe these times are coming, if not already here. Previous posts of mine, many of them found here now, explain my reasoning and beliefs. I have been calling for gold and silver to rise for quite a while and for the stock market to become risky, but I will admit to being very early in my call. I was saying it 8-10 months ago and there is still time to buy in, in fact, today is likely a better buy-in point than my original one was all those months ago.
Dollars sitting in your account at the bank for the long term is costing you buying power all that time. In many situations, it would be better to hold a kilogram of silver than to have dollars sitting in a savings account year after year. You would be getting a low or perhaps no interest rate return, while inflation eats away the value of your dollar. Metals hold their value better in the long run like that. Now that we are likely moving into a high inflation environment, it will be an even better idea to have metals instead of dollars. I personally no longer keep bank account balances above 4 digits. I pay my bills and use what's left over above that to pay off leveraged silver that I have bought that is sitting in storage at a low interest rate. I believe this will be better for me over the coming months. More on leveraged silver later.
Why Silver and Not Gold? 2 reasons -
1 - Silver is, obviously, cheaper than gold to acquire. It does not take a lot of money ($30 or less right now) to buy a physical ounce of silver. It would cost you nearly $1900 to get an ounce of gold right now. Sure, you could buy smaller increments of gold, like a gram (1/31 of an ounce), but if you pay the going rates, it would end up being over $2000 per ounce when you caught up. Premiums can eat into your profits. Skip eating out a couple of nights a week, buy an ounce of silver. Skip your rent for a few months, buy an ounce of gold. It's more flexible for a long, slow build up of a stack of precious metals that will be worth big value in a few years.
2 - The Gold to Silver Ratio is heavy in favor of gold right now. Silver comes out of the ground at a ratio of 8-10 oz of silver per oz of gold. The current pricing is 71.4 to 1. My general rule based on historical pricing ratios is that when the ratio is above 60:1 stack silver in preference to gold. When the ratio is below 30:1 stack gold in preference to silver. In between is neutral. If you followed this ratio over time and shifted your investments back and forth on those ratios, you would have a secondary method of building your stack without investing additional capital. 60:1 switch out your gold to mostly silver, 30:1 do the opposite, rinse and repeat, stack free metals. The highest the ratio has ever been is 120:1. It's value now is the main reason silver is my preference to gold.
Why Silver and not Stocks? Asset Bubbles due to Inflation -
I don't know how much attention you pay to the financial markets and the health of the financial sector at large, but hopefully, at a minimum, you know that the stock markets are at or near all-time highs and you have noticed that everything is starting to get more expensive. I believe that both of these items are due to inflation. Inflation has gotten so bad that it is finally starting to be seen in the prices of normal, everyday items. The truth is that the policies that are the underlying causes of inflation and rising prices have been at work for many, many years. The inflation, until recently, was limited to stock market values instead of affecting goods and services. Decisions being made by the government and the Federal Reserve Bank have been inflating stock prices for a long, long time.
Now, there is a chance that as inflation becomes widespread, that the stock market will simply continue to inflate bigger and bigger and the bubble never bursts. There is also a chance that the bubble pops and the ratios and values currently seen in the markets at all-time highs correct back to more historical levels. Given that inflation will increase the price of silver and has an equal chance to either increase or decrease the price of stocks . . . I'll stick with silver. There will be several that try to "time the market" and will stay in stocks while they are going up and silver is flat (like now) and believe that when the stocks start going down, they will jump ship over to silver and have the best of both worlds. It is possible to do that, but it is not easy and it is possible to get exposed for big losses. I am a bit more conservative, so I have shifted to silver already and I am waiting for the upwards movement.
Why Silver and Not Other Commodities? Buy Low/Sell High -
Other commodities (Oil, copper, nickel, etc.) have already moved with inflationary forces and are or were recently at elevated levels. Gold and silver did not participate in this big upward shift and have traded pretty flat or a little down since highs in the middle of last year. So, should I buy assets that are at high prices already or find those items that are under-priced now and should still participate in the big gains to come given the fundamental outlook and economic analysis? I think that PMs will catch-up to the runs that the other commodities have had and participate in moves even higher once the inflation cat has been let out of the bag.
Why Silver and not Cryptocurrencies? Actual Value -
This is an admittedly old school view and many posting on social media will disagree with it, but I think that something should have intrinsic value to be an inflation hedge. Cryptocurrencies are just digital fiat currencies at their hearts and the value of each of them is based purely on confidence, momentum and perception. This is also why they are so volatile. They are doing some very good things with the applications, but the security, tracking, governmental attitude towards and possible regulations/scams are just too much for me to worry about researching deeply. If you disagree, feel free to pursue that avenue, they are not part of my portfolio.
Any Other Factors in Silver's Favor? Scarcity and Industrial Usage -
Silver is not just used as a shiny metal for bullion and coins, it has several industrial applications for solar panels, electronics, electric cars and a host of other things. Projections show that industrial usage of silver will only increase in the coming years and that means less for investing purposes and higher prices. This is a watered down version of this part of the argument, but there are many online sources that are better at explaining it than I am.
How are you invested for the coming financial status in the world?
I believe that inflation is coming or already here. I believe that globalization is a goal of the current powers that be in the world and I believe that bankers across the world are trying to keep a lid on how bad inflation already is as they prepare to make it worse, shrinking their own massive debts (and those of the countries they represent as well) at the expense of the people who are working the hardest to get by paycheck-to-paycheck. As such, I am invested heavily in precious metals and a few commodities. You can simplify my current strategy to 60/10/10/10/10. I switched to this about a week ago with some re-balancing.
Allow me to explain.
Currently I am 60% Clear PMs, 10% Leveraged PMs, 10% PM Mining Stocks, 10% Uranium Stocks, 10% Misc. - mostly Rare Earth Mining and Foreign Stocks.
One week ago I was 15% Energy stocks, 45% Clear PMs, 10% Leveraged PMs, 10% PM Mining Stocks, 10% Uranium Stocks, 10% Misc. My energy stocks had all started to decline slightly from their highs of a few weeks ago, but I could still sell them for about a 30% profit, this was right PMs took a little tumble down in price, so I re-allocated profits to go heavier into PMs and to further limit my exposure to the stock market. I do not recommend this for anyone. I feel comfortable with my analysis, but you should do your own before you allocate so heavily into a single sector. I am basically 80% PM linked now. So that's how I am dividing things up.
I should also explain Leveraged PMs. Given my financial situation, I had a chance to take a loan at 2.3% APR for about 10% of the worth of my investment portfolio. I took the chance to do that at the low rate and I bought physical silver with it. When it comes due in Feb 2022, I will sell the silver I purchased, pay off the loan and see how much of it I get to keep. It's a risk and I could lose, but I believe that much in the price going up in the next 6 months. If you don't count the Leveraged PMs part of my investments, you could say that I am 67/11/11/11 diversified. Which is honestly, not very diversified.
So there you have it. Why buy physical silver now and how I am putting my money where my mouth is in the coming days. Questions and comments are welcomed.
My reply was a simple "Buy Physical Silver Now!!"
I did it as a throwaway. I think it is good advice for several reasons. I got some likes from family and friends, but then someone tagged me in a reply and asked sincerely "why's that? I'm asking because I respect your input.. and I know you know what you're talking about"
This person is younger than me and I'm not sure of their full financial situation, but his question has led me to post this summary of why I think silver is good thing for everyone to have going forward into the economic situation we find ourselves in.
Please note, this post is not investment advice. Please do not put any of your financial assets at risk solely on the points discussed here. I am stating my opinions and speaking about what I have done for myself and why. Our situations are different and I will accept no liability for losses incurred if you ignore any part of this paragraph. Do your own research and come to your own conclusions and decisions on your investments before executing any trades or taking any risks.
For additional background, please read previous Politics and Economics or Inflation based entries in the Blog Forum of this website.
Why buy physical silver now? Let's break it down into a few questions.
Why Precious Metals (PMs) and not dollars? Inflation/Financial Hardship Hedge -
Historically, PMs (gold, silver and sometimes platinum and palladium) have performed well as investments in times of inflation and financial hardship. I believe these times are coming, if not already here. Previous posts of mine, many of them found here now, explain my reasoning and beliefs. I have been calling for gold and silver to rise for quite a while and for the stock market to become risky, but I will admit to being very early in my call. I was saying it 8-10 months ago and there is still time to buy in, in fact, today is likely a better buy-in point than my original one was all those months ago.
Dollars sitting in your account at the bank for the long term is costing you buying power all that time. In many situations, it would be better to hold a kilogram of silver than to have dollars sitting in a savings account year after year. You would be getting a low or perhaps no interest rate return, while inflation eats away the value of your dollar. Metals hold their value better in the long run like that. Now that we are likely moving into a high inflation environment, it will be an even better idea to have metals instead of dollars. I personally no longer keep bank account balances above 4 digits. I pay my bills and use what's left over above that to pay off leveraged silver that I have bought that is sitting in storage at a low interest rate. I believe this will be better for me over the coming months. More on leveraged silver later.
Why Silver and Not Gold? 2 reasons -
1 - Silver is, obviously, cheaper than gold to acquire. It does not take a lot of money ($30 or less right now) to buy a physical ounce of silver. It would cost you nearly $1900 to get an ounce of gold right now. Sure, you could buy smaller increments of gold, like a gram (1/31 of an ounce), but if you pay the going rates, it would end up being over $2000 per ounce when you caught up. Premiums can eat into your profits. Skip eating out a couple of nights a week, buy an ounce of silver. Skip your rent for a few months, buy an ounce of gold. It's more flexible for a long, slow build up of a stack of precious metals that will be worth big value in a few years.
2 - The Gold to Silver Ratio is heavy in favor of gold right now. Silver comes out of the ground at a ratio of 8-10 oz of silver per oz of gold. The current pricing is 71.4 to 1. My general rule based on historical pricing ratios is that when the ratio is above 60:1 stack silver in preference to gold. When the ratio is below 30:1 stack gold in preference to silver. In between is neutral. If you followed this ratio over time and shifted your investments back and forth on those ratios, you would have a secondary method of building your stack without investing additional capital. 60:1 switch out your gold to mostly silver, 30:1 do the opposite, rinse and repeat, stack free metals. The highest the ratio has ever been is 120:1. It's value now is the main reason silver is my preference to gold.
Why Silver and not Stocks? Asset Bubbles due to Inflation -
I don't know how much attention you pay to the financial markets and the health of the financial sector at large, but hopefully, at a minimum, you know that the stock markets are at or near all-time highs and you have noticed that everything is starting to get more expensive. I believe that both of these items are due to inflation. Inflation has gotten so bad that it is finally starting to be seen in the prices of normal, everyday items. The truth is that the policies that are the underlying causes of inflation and rising prices have been at work for many, many years. The inflation, until recently, was limited to stock market values instead of affecting goods and services. Decisions being made by the government and the Federal Reserve Bank have been inflating stock prices for a long, long time.
Now, there is a chance that as inflation becomes widespread, that the stock market will simply continue to inflate bigger and bigger and the bubble never bursts. There is also a chance that the bubble pops and the ratios and values currently seen in the markets at all-time highs correct back to more historical levels. Given that inflation will increase the price of silver and has an equal chance to either increase or decrease the price of stocks . . . I'll stick with silver. There will be several that try to "time the market" and will stay in stocks while they are going up and silver is flat (like now) and believe that when the stocks start going down, they will jump ship over to silver and have the best of both worlds. It is possible to do that, but it is not easy and it is possible to get exposed for big losses. I am a bit more conservative, so I have shifted to silver already and I am waiting for the upwards movement.
Why Silver and Not Other Commodities? Buy Low/Sell High -
Other commodities (Oil, copper, nickel, etc.) have already moved with inflationary forces and are or were recently at elevated levels. Gold and silver did not participate in this big upward shift and have traded pretty flat or a little down since highs in the middle of last year. So, should I buy assets that are at high prices already or find those items that are under-priced now and should still participate in the big gains to come given the fundamental outlook and economic analysis? I think that PMs will catch-up to the runs that the other commodities have had and participate in moves even higher once the inflation cat has been let out of the bag.
Why Silver and not Cryptocurrencies? Actual Value -
This is an admittedly old school view and many posting on social media will disagree with it, but I think that something should have intrinsic value to be an inflation hedge. Cryptocurrencies are just digital fiat currencies at their hearts and the value of each of them is based purely on confidence, momentum and perception. This is also why they are so volatile. They are doing some very good things with the applications, but the security, tracking, governmental attitude towards and possible regulations/scams are just too much for me to worry about researching deeply. If you disagree, feel free to pursue that avenue, they are not part of my portfolio.
Any Other Factors in Silver's Favor? Scarcity and Industrial Usage -
Silver is not just used as a shiny metal for bullion and coins, it has several industrial applications for solar panels, electronics, electric cars and a host of other things. Projections show that industrial usage of silver will only increase in the coming years and that means less for investing purposes and higher prices. This is a watered down version of this part of the argument, but there are many online sources that are better at explaining it than I am.
How are you invested for the coming financial status in the world?
I believe that inflation is coming or already here. I believe that globalization is a goal of the current powers that be in the world and I believe that bankers across the world are trying to keep a lid on how bad inflation already is as they prepare to make it worse, shrinking their own massive debts (and those of the countries they represent as well) at the expense of the people who are working the hardest to get by paycheck-to-paycheck. As such, I am invested heavily in precious metals and a few commodities. You can simplify my current strategy to 60/10/10/10/10. I switched to this about a week ago with some re-balancing.
Allow me to explain.
Currently I am 60% Clear PMs, 10% Leveraged PMs, 10% PM Mining Stocks, 10% Uranium Stocks, 10% Misc. - mostly Rare Earth Mining and Foreign Stocks.
One week ago I was 15% Energy stocks, 45% Clear PMs, 10% Leveraged PMs, 10% PM Mining Stocks, 10% Uranium Stocks, 10% Misc. My energy stocks had all started to decline slightly from their highs of a few weeks ago, but I could still sell them for about a 30% profit, this was right PMs took a little tumble down in price, so I re-allocated profits to go heavier into PMs and to further limit my exposure to the stock market. I do not recommend this for anyone. I feel comfortable with my analysis, but you should do your own before you allocate so heavily into a single sector. I am basically 80% PM linked now. So that's how I am dividing things up.
I should also explain Leveraged PMs. Given my financial situation, I had a chance to take a loan at 2.3% APR for about 10% of the worth of my investment portfolio. I took the chance to do that at the low rate and I bought physical silver with it. When it comes due in Feb 2022, I will sell the silver I purchased, pay off the loan and see how much of it I get to keep. It's a risk and I could lose, but I believe that much in the price going up in the next 6 months. If you don't count the Leveraged PMs part of my investments, you could say that I am 67/11/11/11 diversified. Which is honestly, not very diversified.
So there you have it. Why buy physical silver now and how I am putting my money where my mouth is in the coming days. Questions and comments are welcomed.