• The above Banner is a Sponsored Banner.

    Upgrade to Premium Membership to remove this Banner & All Google Ads. For full list of Premium Member benefits Click HERE.

  • Join The Silver Forum

    The Silver Forum is one of the largest and best loved silver and gold precious metals forums in the world. Join today for FREE! Browse the sponsors topics (hidden to guests) for deals and offers, check out the bargains in the members trade section and join in with our community reacting and commenting on topic posts. If you have any questions whatsoever about precious metals collecting and investing please join and start a topic and we will be here to help with our knowledge :) happy stacking. 

BookBayJOHN

Is silver stacking a loss leader?

Recommended Posts

I recently bought the 4 available Queen's Beasts coins because i think they look fantastic, have a great story behind them and the set will look great when all 10 are  mounted. This has been my introduction into precious metals.

Now, I have been reading up on the subject of silver stacking and one thing puzzles me. Why is it seen as an investment and not a loss making hobby?

Please correct me if I'm wrong,  but if you buy a 2 ounce coin at £39 with a silver content worth about £24 this has a premium mark up of £15. Which is fair enough.

Now, if I sell this coin and I'm only offered around the Spot price, I basically lose around £15. So how can that be seen as an investment?  

YouTube is full of videos of people with piles of identical coins. I would really like to know the reason why.

Thanks

 

Share this post


Link to post
Share on other sites

 

@BookBayJOHN 

You have kind of nailed everything on the head with your post. Silver as an investment is risky, especially if you buy high premium items. 95% of these coins will end up being worth melt value in the future - but there are some gems out there that will earn you a very healthy return on the premium you buy. Those become collectors coins and are easily sold on to collectors for the right price. 

Hypothetically lets say your Queens beasts become a rockstar coin. You bought them for £39 (£24 silver and £15 premium) Lets say in 10 years time the silver content is worth £30 (inflation and growth). The coin is desirable, you get double your original premium, £30. You get £60 back over all. You have turned £39 into £60. 

However, if the coin is a dud - you probably wont get the premium you paid. However, if the silver you are buying is as close to spot price as possible when you buy it you will make a profit if you sell when the spot price is higher. Selling at a time of your choosing is always the way to so well with metals. Selling when not of your choosing is how you lose money. 

The best advice I can and always give when someone wants to invest in silver is, always buy within your means, have a clear exit strategy and plan to get there (e.g. 5 years, 10 years, 30 years) and evolve it as you go along the way. 

Ultimately silver and gold are preservation of wealth investments. They help preserve the buying power of you cash right now. Keeping £100 in the bank for 30 years will just mean you get fewer goods for that cash, holding silver means that £100 is converted into £300 in 30 years time and allows you to buy £300 of stuff, which happens to be the same £100 of stuff you could have bought 30 years ago. 

It sounds like you bought your silver from the UK - paying £39 for a QB coin is mostly VAT. We can buy them from Europe for £30 each at the moment. I am organising an group order as we speak.

Here is the thread. 

And here is the unboxing video of the last order we arranged. 

 

Share this post


Link to post
Share on other sites

I'd say that it's not strictly an investment. Investments, like shares, produce something in the meantime (dividends etc) whereas buying PMs is more about a store of wealth (that historically tends to do better than currency over time in terms of buying power)

For me it's partly about savings discipline. I buy coins that are harder to liquidate than cash in a savings account, removing temptation. Also I get to buy pretty and interesting things to hold, and feel like I'm spending relatively guilt free.

Share this post


Link to post
Share on other sites

That is fascinating. Thanks.

I'm not complaining at all. I could easily spend that on aftershave or other junk, but these do have a lovely look and feel about them. I could easily....get....some....more.

BackYardBullion, I cant see the link you shared. I would jump at the chance to put into a bulk buy. Could you please send it again.

 

 

 

Share this post


Link to post
Share on other sites

I often think of it as "insurance." Rightly or wrongly. My PM's will always be worth some form of monetary value, and I can convert some of it back into cash should i get in a pickle financially.

Also, I have some sort of thought in my head that once full time work comes to an end, selling some off may supplement a lower income / pension. I don't plan to value any of it in for living costs, so it doesn't really matter if the price of PM's goes to the wall- but i'd like to think selling a few coins each month might keep me in pump beer and takeaways for a few years!

Basically, for me its like a hobby with an interesting investment type slant. I do it for the fun, but if I do get benefits when the time comes to sell, bonus :)

Share this post


Link to post
Share on other sites

At first I did it as an investment believing all the pumpers then i sold all that stuff at a small loss. Now I'm buying as a savings vehicle for a house etc as I'm not the best at saving cash. Some coins however, I have became a collector of some and I will probably never turn a profit on them but I don't plan to sell those coins either :) 

Basically if Im buying silver at say £15 an ounce and in 5 years I make a small loss on each coin Id prefer that to having nothing because anytime anything good comes up in life i splurge all my cash and am left with nothing. 

Share this post


Link to post
Share on other sites
1 hour ago, BookBayJOHN said:

Please correct me if I'm wrong,  but if you buy a 2 ounce coin at £39 with a silver content worth about £24 this has a premium mark up of £15. Which is fair enough

How is that fair?  Do you really pay that much for bullion QB coins?  I expect to pay a small premium over spot for bullion, but nowhere near that. 

Also, higher premiums in silver is (partially) why I've changed my strategy to gold some time ago.  Definitely smaller premiums for gold bullion.

Edited by tbone

Share this post


Link to post
Share on other sites
3 minutes ago, tbone said:

How is that fair?  Do you really pay that much for bullion QB coins?  I expect to pay a small premium over spot for bullion, but nowhere near that. 

Also, higher premiums in silver is (partially) why I've changed my strategy to gold some time ago.  Definitely smaller premiums for gold bullion.

I meant, if that's the price then that's the price.  If I am happy to pay it then, its fair enough.

I don't have any experience or strategy. I simply happened across something I liked and if I can leave it for my daughter, then all the better.

Share this post


Link to post
Share on other sites
1 minute ago, BookBayJOHN said:

I meant, if that's the price then that's the price.  If I am happy to pay it then, its fair enough.

Its not fair if you're paying too much.  For example, I can get 2018 QBs at about $3 or $4 over spot:

https://www.apmex.com/product/152535/2018-great-britain-2-oz-silver-queens-beasts-the-unicorn

Where are you buying?  I would suggest to shop around.

Share this post


Link to post
Share on other sites
18 minutes ago, JCRJM said:

At first I did it as an investment believing all the pumpers

Yep. When I first got into this a couple of months back I subscribed to a few podcasts hoping to learn something... There are folks out there who'll gladly tell you that the apocalypse is coming and you should stockpile gold, tinned food and guns... Needless to say that's really not what I pursue this hobby for 

Share this post


Link to post
Share on other sites

I started collecting PM's initially after listening to the pumpers on Youtube, after a couple of years however I'm more sceptical about their claims, if silver has been suppressed for 30+ years then what makes me think it should suddenly be set free in the next few years for me to gain from it the likelyhood is it's going to continue to be suppressed.

Now I look upon it as wealth preservation, speaking as someone who has a habit of pissing away money with ease (I would happily spend £50 on a horse but grudge paying it on a pair of shoes etc.) having it in gold or silver means I can still liquidate it for cash if need be without too much hassle but it's enough of a hassle to allow me to stop and think about it.

It's always going to be worth something and to my mind thats something worth having, there are so many financial products based on nothing that could easily return to nothing.

Share this post


Link to post
Share on other sites
13 minutes ago, tbone said:

Its not fair if you're paying too much.  For example, I can get 2018 QBs at about $3 or $4 over spot:

https://www.apmex.com/product/152535/2018-great-britain-2-oz-silver-queens-beasts-the-unicorn

Where are you buying?  I would suggest to shop around.

Over in the UK and Europe we dont have the luxury of quite as cheap silver as the US. 

£39 is a pretty standard price from a UK dealer, and includes 20% sales tax. 

Buying from Europe and importing it through some VAT loopholes and margin schemes means it is about £29 - £32 with delivery - this is about as cheap as it gets for us. Melt value is £23 so £3 - £5 premium over spot. 

Share this post


Link to post
Share on other sites

Buying coins at such premiums then I hope it is the start of a hobby and not an attempt at a silver investment :P

Any commodity based investment is a bet on the price and you want to get as close to the spot price as possible to increase your chances of a return. Naturally a commodity does not produce a yield, but it is not the yield that makes something an investment.

You analogy can be applied to any investment by the way. I buy some stock, I pay stamp duty and a trade fee, depending on the size of my investment this could be say 2% of the investment. When I sell, I pay the fees again and so need to see my investment increase in price by at least the combined amounts to break even on selling. The same applies to silver. You have bought some queens beasts coins at a premium and need the price of silver to rise by the premium to break even (or better yet, find a buyer willing to pay the premium you paid, can't do that with stocks). That is why it is important to buy any investment with as low premium as you can, to increase your returns when the price goes up. You are buying because you think the price of silver is going up right?

This is my stacker mentality though, others will tell you to buy coins with a good chance of appreciation so you can gouge someone trying to finish their collection in a couple of years time. :D 

Share this post


Link to post
Share on other sites

Silver does have a problem with premiums (and VAT), however the investment is that you do still have the underlying metal value.  Which you hope will go up at least with inflation over the long term.  The premiums tend to carry through to the secondary market, people buy on ebay for around 50% over spot for basic bullion Britannia, kookaburras etc, and a bit more for older years or other designs.  

You can get down to a ~20% starting premium with European dealers, which can offer reduced VAT, but then have to order enough to absorb the delivery, and premium rises from 20% too once you've taken that into account.  Get nice designs and 50% is a hopeful target :lol:

 

Edited by Martlet

Share this post


Link to post
Share on other sites

I think the long and the short of it is have a clear idea about why you're doing it (I'll admit I like silver because I can afford enough to have a nice physical chunk in my hand. Tactility means a lot to me). But on a base level it's easier to get hold of gold at a lower premium than silver :).

Id also put in a quick word for Royal Mint's signature gold, enables buying and selling gold, silver, platinum at fairly low premiums... It's just you don't get to hold it physically.

Share this post


Link to post
Share on other sites
10 minutes ago, BackyardBullion said:

£39 is a pretty standard price from a UK dealer, and includes 20% sales tax

Wow, I didn't realize you guys paid so much for silver!  And 20% sales tax ?!?  I really do have it good here :D (0% sales tax too for most online purchases, 0 VAT or anything else). 

Share this post


Link to post
Share on other sites

Wow, titles like the one on this thread get a swift response, eh! Did a klaxon go off, cause mine must be bust?

Good input by everyone and i think i would only be repeating some of what has been said. Nice that there are so many to defend the honour of our precious :D

@BookBayJOHN great, relevant question to ask when starting out, though. There are ways, means and avenues to getting the most out of your investment/hobby. Hope you manage to find time to read through lots of old threads on here. It's well worth doing.

Share this post


Link to post
Share on other sites

I really appreciate your replies. 

Eventually I'll mount them on a wall and amaze my friends. Like others have said I could spend the same amount on a bottle of something and watch my brother mix it with Coke. 

This brings me to my next question....

Why do bars have such a premium? I can understand the logic with coins, but a bar.....

Share this post


Link to post
Share on other sites
1 minute ago, BookBayJOHN said:

I really appreciate your replies. 

Eventually I'll mount them on a wall and amaze my friends. Like others have said I could spend the same amount on a bottle of something and watch my brother mix it with Coke. 

This brings me to my next question....

Why do bars have such a premium? I can understand the logic with coins, but a bar.....

Do you mean hand poured bars?

If so, you are paying for the humble silver pouring artists time, energy and skill ?

Also, it isn't easy to make ?

Share this post


Link to post
Share on other sites

Hi John, I'm Roy the resident ogre.

Silver as an investment? Pah!

It's a hobby, a speculation, a fantasy and a poor man's entry into precious metals.

Do I own silver? Yes, because of all the reasons I list above.

 

Share this post


Link to post
Share on other sites
2 hours ago, BookBayJOHN said:

Please correct me if I'm wrong,  but if you buy a 2 ounce coin at £39 with a silver content worth about £24 this has a premium mark up of £15. Which is fair enough.

If you buy a 2 ounce coin for £39 then you are not stacking for oz.

Share this post


Link to post
Share on other sites

I got into silver at the wrong time... 2011 when spot price was $45+ and youtube shills were everywhere. I don't think I ever sold a piece of pure silver bullion for profit to this day :lol:

But it did turn me into a collector of numismatic old coins, something which I would have considered nerdy just a few years ago. And I now stack gold.

I actually barely even look at the spot price these day, the money I have in my metals is frankly what I would have blown on trash before so I don't see it as an investment but as a store of wealth.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now