Using credit/loan to fund current PM lows ? Good idea ?

[Paul]

In light of our current mega smack down in gold and silver today it has got my mind bubbling away about using finance/debt to fund purchases.

 

What do people think about using credit today to finance bullion purchases in the thought of settling finance or paying them off down the line.

• Loans

Cheapest standard loans for £7,500 - £14,999
Marks & Spencer 3.6% rep APR
Cahoot 3.6% rep APR
Sainsbury's 3.7% rep APR
Tesco Bank 3.8% rep APR
Zopa 3.6% to 4.1% rep APR (depending on amount & term)

• Credit Cards

x25 months interest free on purchases with Post Office credit card

x24 months interest free on purchases with Virgin Money credit card

x21 months interest free on purchases with Tesco Bank credit card

 

 

As knowledgeable gold buyers here we are looking to be able to purchases at 3% - 5% over spot.

 

If purchases made not with loan, but credit card you would have the usual 2.5% visa/mastercard surcharge for purchasing to be added

 

We can sell down the line to a few sources for 98-99% of spot

 

 

Now if we wind the clock forward a few years, can we expect the price of gold to be 10% - 20% higher ?  

Settle the finance and pocket the difference

 

Or lock in todays good prices and spread the pay off over a few years on favorable terms knowing your not paying haemorrhage rate interest

 

 

Any thoughts or input on this ? Wise to try ?  or leave the hell alone ?

[motorbikez]

Not a very good idea IMHO, the guru's have been predicting gold going to da moon for the last 3 years, things will turn around at some point, in 6 months time or 6 years who knows. I wouldn't borrow money to basically take a pure punt not very wise thing to do at all.

[Danny-boy]

Agree with MB. When silver shot to almost £30, I bet there were some people who borrowed to buy when it dropped back to around £15. They'll be hurting now at sub £10.

[HighlandTiger]

If you think that Silver and gold have hit rock bottom, then using a credit card with 0% interest might be a good idea to get what you would have bought over the two year interest free period anyway. Just make sure you can afford to repay over the period

 

Providing it's all paid off before the rates increase, it could be a chance to bulk up now. 

[Agpanda]

Never a good idea to spend money from loans or credit cards.

I believe that PM prices will drop more before they will go back up.

[SilverPirate]

Don't get the loan,sell some un-used stuff from the shed,garage or loft,or get a little gardening job.Debt is not the way to go.

I just sold a signed football shirt for £100 it will get me half a sovereign,job done.

[Paul]

At the moment, 4 against this vs 1 suggesting maybe with a possible punt 

 

I am just opening this idea up for discussion to see what the crowd consensus is here to be fair.  

 

I have not committed to or sign anything.

 

Just been doing number crunching an wondering the possibilities.  

 

Guess it is just the gambler-gene ever present in me but much more controlled to what it used to be

[Danny-boy]

I don't think there is much number crunching to be done, when the purchase object can go up or down.

I'm surprised we are back in the 9's, but now realise that anything could happen!!!

[HelpingHands]

Whether spot goes up or down the monthly payment will eat into your future pm buying power. You'll have less to look forward to.

[HawkHybrid]

If you think that Silver and gold have hit rock bottom, then using a credit card with 0% interest might be a good idea to get what you would have bought over the two year interest free period anyway. Just make sure you can afford to repay over the period

 

Providing it's all paid off before the rates increase, it could be a chance to bulk up now. 

 

I agree that this might work. otherwise it's a much

bigger gamble, debt can rise quickly. you'd need a

better strategy on what to do if things don't go your

way.

 

HH

[KevinG]

It is better to save every month.And buy when there is another dip.

[SilveriteFX]

"Neither a borrower nor a lender be"  

[Pete]

You have to decide based on your attitude to risk and your financial position.

If you have to borrow money to fund PMs then you will be over-exposed to losses that could hurt.

If you are swapping other investments then that's just a different investment - some you win some you loose but you remain out of trouble.

The easiest way to choose is to assume your new purchase drops in value by 30% and stays low for 3 years.

If you can face this then you can take the risk and hope your PMs will eventually return to breakeven then on to profit.

There is a chance PMs will rise in the near term and you are today buying at bottom but check the charts and see how many bottoms there have been during the past 5 years and take note of the trend in spot.

No-one can predict the future prices regardless of their expertise and there will always be those who precict correctly half the time!

[Melon]

Bad bad bad idea. Don't get yourself in to debt!

[lightjaw]

This idea is based on the thought that silver/gold will rise over the next decade or two. There is absolutely no guarantee that it will. Gold could drop lower and lower. We all hope it won't ofc, but it could.

In that case it's a gamble based on your personal appetite for risk. Better IMO to just use what you can afford to spend each month without debt.

[Pipers]

To use credit cards to fund anything that  is not essential you have to go around the houses,  you will need 2 credit cards.

 

Credit card number 1 buy stock you know you can sell at a profit from supplier pay the 4% charge as suppliers will charge.  

 

Credit card number 2 transfer balance from credit card one to two at zero % balance transfers.

 

You now have stock at 4%, you now discount that stock for quick turn over!!!!

 

PLEASE NOTE YOU CANNOT DO THIS OFTEN THE CREDIT CARDS AND BANKS WON'T LET YOU.

[Melon]

To use credit cards to fund anything that  is not essential you have to go around the houses,  you will need 2 credit cards.

 

Credit card number 1 buy stock you know you can sell at a profit from supplier pay the 4% charge as suppliers will charge.  

 

Credit card number 2 transfer balance from credit card one to two at zero % balance transfers.

 

You now have stock at 4%, you now discount that stock for quick turn over!!!!

 

PLEASE NOTE YOU CANNOT DO THIS OFTEN THE CREDIT CARDS AND BANKS WON'T LET YOU.

 

"Buy stock you know you can sell at a profit" - that'll be the new Mastercard by Mystic Meg you're using then? 

[KDave]

Gold and silver are very unpredictable short term and should be viewed as long term investments. They should not be traded on any amount of leverage. A few people I know personally did this in 2011 and we all know what happened with that one. Speculating is one thing. Leveraged speculating is more than a bit silly imho. 

 

Please do not use debt to buy a non productive asset that is clearly trending down in price.

 

Chances are if you buy now, you will not get lucky and prices will keep falling. In my mind, using cash to do this is a sensible risk as long as you can afford to tie it up for a long time. But with debt involved any loss in the mean time is amplified by the interest you must pay for the next X amount of years potentially for a real term loss and no gain. Having to pay interest plus cash value of more than you have gold value in '23 months interest free time' does not make logical sense.

 

I understand the feeling though Paul. I have been there myself last December. Watching the price drop and thinking 'this could be the lowest it gets I need to buy now!' then realising the cash pool is exhausted (2 kids at Christmas). But as we have established that gold and silver are more likely than not to be cheaper in a months time, this feeling is just an emotional fallacy and does not indicate the right frame of mind to be an making investment decision. Emotions almost always lead to bad investment decisions. 

 

If you start selling stuff around the house to invest in gold and silver that is also a bad sign unless this is your hobby