Small Budget/ Newby Advice

[aztecstargazer]

I am looking back at my first year of stacking as the new year approaches. There are a few things I wish someone would have told me about having a more limited amount to invest with. As it comes to silver, I wish I had never fallen into the "stack for weight" advice I got from the local coin shop where I first bought silver. The idea of "silver is silver" is not true. The idea of premiums was difficult for me to understand at first. Which is why I only bought generic rounds or bars. But truth is that premiums grow over time. Depending on the coin you are interested in, it can appreciate rapidly or not at all. But the premium will almost always be returned plus interest. The idea of a "key date" is another concept I wish had been better explained to me. There are years where interest in bullion is down, and fewer coins are produced by the mint. Limiting the supply will have higher possible impact on future price. The other thing I was always aware of and never fell victim too is the idea of graded coins. The only coins worth grading are older coins. This is a collectible and not a precious metal investment. The reason these coins are rare is because they were never meant to be uncirculated. Unless the newer semi-numismatic coins are MS70(perfect), there is no point in grading coins unless they are absolutely perfect. Never buy older coins in my opinion. I stick to buying coins which are made this year or even the year before. This is for people with limited budgets remember. If you have the funds, by all means, buy whatever you like. Shoot to collect all the dates and complete sets.

The other thing I wished I had know was to better time my purchases and buy online and rarely to buy nor sell to local coin shops. Local coin shops have insane mark-ups for buying and ridiculous undercutting when it comes time to sell. This option should be used in case of needing to sell in case of emergency. It may also give you the ability to buy a variety of coins and rounds which are not available online. The other thing is that ebay is going to increase your risk of purchasing fake silver. A LCS is likely to test the authenticity of any silver they buy and you can request them to test it in your presence. 

The timing of your purchases should also be cut down. Don't fall into the "fear of missing out" mentality. It is something I have begun doing, which is to save and buy every quarter instead of every 2 weeks or 1 month. Do not buy silver with your debit card or credit card. Dealers online will give you a better price if you use checking and buy in higher volume. It may seem superficial right now, but these small percentages add up quickly and over the long run, you will save and increase the profitability of your stack. I have also implemented this into my buying of stocks and other investments. The other thing I would tell people is that if you are expecting the economy to collapse and the apocalypse to come, you are buying silver for the wrong reasons. When Nixon took the world of the Bretton Woods system, did the world collapse? Of course it didn't. When the gold standard was replaced with the fractional reserve system, did society collapse? No, of course it didn't. 

Silver will increase in value because of its ever increasing industrial demands. It is mined at a 9:1 ratio with gold. But is used more as an industrial metal than a "monetary metal". The reason I don't buy bitcoin or crypto's is because crypto's need computers and computers need silver. Silver is tangible, crypto's are susceptible to computer virus's and many other pitfalls.  Silver is used in tech, pharma, jewelry, mirrors, solar panels, etc. It will almost certainly be illegal for a person to throw away anything which has a silver component. It may even be mined from land-fills once it becomes rare enough. 

The last topic I wish to address is gold. I refuse to buy gold. The reason is because gold has no uses. Gold is used for jewelry or bullion mostly. It is unlikely to be monetized again and has a much higher likelihood of prohibition. The problem I have with currency is the same problem I have with gold. It has no function and serves no purpose. Yes it's chemical properties and scarcity are ideal for a money, but it is now far too rare and would be tied to paper currency as a trade system again. Gold is not the end all be all of money. It is a much more useful tool in international commerce as it is in day-to-day transactions. 

[HawkHybrid]

44 minutes ago, aztecstargazer said:

The reason is because gold has no uses.

 

gold is actually one of the most flexible elements/metals when it

comes to uses. the reason why gold is used only in cases where

it cannot be replaced is because it it expensive. the high price of

gold have restricted its application. think of it like expensive wine

only has uses on rare special occasions but cheaper wine is

consumed throughout the year. is expensive wine less useful than

the cheaper wine?

from what I read, my belief is that silver is not half as rare as

people claim it to be. historically silver came out of the ground at a

ratio of 12:1 or higher. why is it currently mined at 9:1? the silver and

gold market is a demand driven market. it is mined at 9:1 because

there is only demand for 9:1. it's not because silver has got more

scarce. since it was demonetised silver demand have come largely

from industry. there is more silver than industry needs at any given

moment. if it wasn't for coins and bars (investment demand), silver

would be coming out of the ground at a ratio of 8:1 like it did pre

2009.

 

HH

[aztecstargazer]

3 hours ago, HawkHybrid said:

 

gold is actually one of the most flexible elements/metals when it

comes to uses. the reason why gold is used only in cases where

it cannot be replaced is because it it expensive. the high price of

gold have restricted its application. think of it like expensive wine

only has uses on rare special occasions but cheaper wine is

consumed throughout the year. is expensive wine less useful than

the cheaper wine?

from what I read, my belief is that silver is not half as rare as

people claim it to be. historically silver came out of the ground at a

ratio of 12:1 or higher. why is it currently mined at 9:1? the silver and

gold market is a demand driven market. it is mined at 9:1 because

there is only demand for 9:1. it's not because silver has got more

scarce. since it was demonetised silver demand have come largely

from industry. there is more silver than industry needs at any given

moment. if it wasn't for coins and bars (investment demand), silver

would be coming out of the ground at a ratio of 8:1 like it did pre

2009.

 

HH

This is not to diminish the price of gold. The ratio of mining or even current above ground supply could be 20:1 for all I care. The fact is that silver is still rare. The fact that it is consumed and not "hoarded", means it will become more and more rare as time goes on. I know there are a lot of gold bugs out there. I am simply unlikely to ever be a gold bug myself. The estimate of approximately 8:1 comes from a source of authority in Keith Neumeyer. He is the CEO of First Majestic Silver Mining and regarded as a leading expert in the industry. 

The limiting factors for the demand for gold are why I choose not to buy gold. Humans are fickle and this can lead to unpredictable swings in the value of gold. Especially as crypto currency is emerging. The fact that I can predict the future demand of silver for its industrial purposes is certain. The fickle demand for gold is not certain. And again, if there were to be a move to monetize gold again, the general public will not be permitted to own gold. Silver is extremely unlikely to ever be monetized again. Silver is far to critical for infrastructure and industry.

I hear a lot of delusional people trying to act tough by saying things like, "if there is ever a confiscation I won't be complying, because I will see my purchasing power rise dramatically."

No, your purchasing goes to zero. Because it is illegal to hold gold.  

[Thelonerangershorse]

12 hours ago, aztecstargazer said:

The reason is because gold has no uses

Pull your mobile phone apart. If they could have used silver which is 75 times cheaper they would have done.

[WealdenWoodsman]

I personally don't buy into the idea that gold will ever be subject to some kind of 'prohibition' again, such an event today would be extremely unlikely.

As for gold having no uses, with all due respect that is simply not true. It doesn't take long to find literally hundreds of uses excluding the more traditional jewellery and bullion industries. Just look at the electronics and aerospace industries for starters. 

Interesting discussion nether-the-less.

[PansPurse]

22 minutes ago, Thelonerangershorse said:

Pull your mobile phone apart. If they could have used silver which is 75 times cheaper they would have done.

You're absolutely right, gold has some excellent thermal and electrical properties (significantly better than copper) that make it essential for some modern electronics.

A couple of researchers recently did a study looking at the potential to replace rare minerals in the electronics industry with carbon nanomaterials. In most cases they believe nanomaterials could provide a viable substitute.

https://www.chalmers.se/en/departments/tme/news/Pages/Graphene-and-other-carbon-nanomaterials-can-replace-scarce-metals.aspx

[airmac]

To be honest what they think and what happens are 2 different. For example in aviation. We know copper is one of the best conductors for its price and yet still the main supply lines are still being made of aluminium as it' lighter then copper. I am sure they could come up with better but as in all its a question of cost. The cost of flying heavy copper around is to high for what you get. A loss of efficiency is preferrd compared to the cost of flying the weight around. And that' how it is in any industry, it's all about cost

[Big23]

I think many aspects are mixed here.

You have mentioned

- stacking (for investment, SHTF situations, conservation/mobility of wealth, 'insurance',...)

- numismatic as collection/hobby (every hobby costs money...)

- jewelry (e.g. India is huge in this concern)

- industrial use (who knows what else will be invented in the future)

- reserve for currencies, itself is money for thousands of years all over the world

...

All these are possible with gold and silver. I don't know any other asset class that can provide this huge spectrum.

[JunkBond]

The power of gold, true or imaginary, is so ingrained in the psyche of us all that I don't think it could every become devalued in the extreme.

You only have to think of gold then silver then bronze in the Olympics and "gold" credit cards for example. People won't just unlearn this stuff.

So I think its rarity is enough and transcends its material uses.

Right, time for a beer!  

 

 

 

 

[aztecstargazer]

Okay, I suppose I should clarify. Gold has a ton of possible applications. For example, it is used as a solar shield in astronaut helmet visors. It has uses in certain pharmaceutical drugs. The problem is that it is prohibitively expensive and impractical in almost all situations. I know the likelihood of gold being prohibited is also unlikely. But these are still factors which need to be considered. Disregarding factors is reckless. 

The idea that people will always value gold is also not true. Not like they used to. Demand for gold is not like it used to be. I have an extremely difficult time trying to explain to people why I even buy silver. This lack of understanding is only going to grow as time goes on. Particularly when it comes to younger generations. I had a 21 year old who was mocking me for buying silver and was pushing me to consider bitcoin. If I had bought bitcoin when he suggested, I would have caught this recent price spike and had huge capital gains. But there are far too many factors which could lead to the bitcoin bubble bursting or being devalued. U.N. sanctions could be imposed to stop international crime and rogue nations from untraceable financial transactions. Competing crypto currencies are already emerging to threaten the value of bitcoin. A simple computer glitch or virus can crumble the whole thing. But I do know we will need more and more silver for the ever expanding tech sector. Especially with ever increasing automation. 

The viability of nanotechnology is decades from being economically viable to replace silver, gold or even copper. And I am a huge proponent of developing nanotechnology .Nanotechnology will not only be super expensive for decades, it will also be proprietary technology, which will limit supply and make it expensive even after it becomes more viable.  But there are still many more industrial uses which silver can't be replaced by nanotech. Silver Nitrate and other chemical solutions which contain silver are irreplaceable in certain chemical reactions. This is also to suggest we won't find other uses for silver in the future.