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Vvnewbie

What portion of savings should be in PM

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Hello everyone, 

I'm new here. I bought my first two gold bars on Monday, as well as 5 silver coins. So as you can see I'm a complete beginner :-) 

I was wondering, what do you think is the best % for saving money in gold and silver? I'm mostly interested in preserving the value of what I have, because I think this current system will crash. My family comes from a country that underwent great inflation, so I know a crisis can happen anytime anywhere. 

I don't really earn that much, I have a regular middle class job. 

I'd like to ask for your opinion, how much (what percentage of my savings) should someone like me have in PM? 

Thank you. 

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Often quoted since 2008 are 10 to 20% which I find reasonable. It also depends on whether you own another comparably wealth conserving asset, like a house. I don't, so I am keeping more than 20% in precious metals.

Precious metals are not an unproblematic investment (like any investment). Look at it like at any other asset and consider liquidity, risk and return, then balance your portfolio. If you are expecting economic collapse weigh towards wealth conservation, but do not go all in.

 

And welcome to the forums :)

If you like to, introduce yourself in the Welcome section, and if you're comfortable with it, post your goodies in the Today I received thread...

Above all, have a good time ^_^

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Thank you guys, I have to admit when I began reading about this topic it makes me want to Invest most into metals. But I suspect it might not be such a great idea so I came here to hear more points of view. 

I don't own a property, in fact I'd like to buy one sometime in the future. 

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4 hours ago, Vvnewbie said:

Thank you guys, I have to admit when I began reading about this topic it makes me want to Invest most into metals. But I suspect it might not be such a great idea so I came here to hear more points of view. 

I don't own a property, in fact I'd like to buy one sometime in the future. 

I personally spend what I can afford and won't miss in an emergency. Each month I put a set amount into an S&S isa split between high and medium risk. This I plan to not touch for 15 to 20 years.

I also put away a set amount into cash savings for easy access/holidays  and then a smaller amount is put away for buying gold or silver. Probably split 50% isa, 35% cash savings and 15% gold/silver.

It's good to put money away ready to buy metals if possible as you never know when the next bargain will appear on here.

I mainly stack silver bars for the long term and also full sovereigns. I also collect a number of series of coins which is for my own personal pleasure. 

Obviously we all have different strategies so the choice is down to the individual.

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Buying PMs should be considered only in light of your overall strategy for building your wealth rather than in a vacuum.

What country are you in? Do you have a workplace pension? I would prioritize taking advantage of this, and also strongly consider maxing out tax-advantaged accounts before considering what I could invest in precious metals.

But frankly, any amount > 0% is good. As others have suggested, maybe 10-15% is a reasonable number to aim for; some might argue higher, but I would issue caution and say that slow, mechanical, disciplined accumulation eventually wins the day you should only hold as much as you are comfortable with.

Don't neglect holding a decent amount of cash or cash equivalents. My opinion is that having a cash buffer to meet unexpected living expenses makes you a better stacker/investor.

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the problem with PM is that, when you first Strat buying you only do it to preserve wealth and to make sure you are safe against the ups and downs of the market  but slowly slowly it becomes a hobby and you get addicted and start buying numismatic, semi numismatic, graded and proof coins with high premium which is a not a bad thing at all if you learn how to manage it.

I personally have more than %20 of my wealth in gold and silver and I am enjoying this experience a lot  but I know that I still have a lot to learn, so I am just keeping it simple at the moment, I try to avoid proof and graded coins and stay as close to spot price as possible, I do buy some semi numismatic coins here and there but mainly bullion.

 

 

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Agree with 10 - 20 percent. 

My advice is to buy at frequent and regular intervals to smooth your investment cost vs gold price. Pound cost averaging. 

If you want to stack then obviously go for the lowest premiums - perhaps Sovereigns. 

Good luck and enjoy!

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I had serious issues with saving and holding onto money mainly due to my own downfall (bad habits) but getting into PM's has allowed me to save as in my head I consider the PM's as a tangible saving means. I can easily withdraw cash from my account but do I really want to sell an few Oz's of Ag for something stupid, definately not. 

When I had extra disposable income I'm glad it went into PM's because if not that money would be loooonngg gone. 

I don't have a % in my head of how much I allocate for PM's I just buy as and when I can. A bit erratic of me for the time being but it is not something which is causing me great concern as of yet.

Some really good sound advice however has been given on this thread by fellow forum members. Having read the thread I am definately looking to build up some cash reserves.

Anybody need Thier car washed?

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I assume we're talking about investment across bullion and coins with numismatic values.

I would say typically 5-10% on bullion. Higher allocation towards cash (especially if you're in US where short term rate is high) and numismatic items.

- Coins of numismatic values in general are cheap relatively speaking at this time. I think it's a good entry point over the long run, especially for world coins.

- Gold and silver are not very expensive, considering how many bubbles out there and how much debt this entire world has.

 

My framework of thinking when to do what:

Negative growth surprise + High inflation shock (i.e. stagflation) => Stackers win big, stocks lose big

Negative growth surprise + Low inflation shock => Difficult for PM.

Positive growth surprise + High inflation shock => Just buy stocks, and a bit PM

Positive growth surprise + Low inflation shock => Just buy stocks, and a bit PM

 

Hope it helps!

 

 

Edited by *tada*

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38 minutes ago, *tada* said:

- Coins of numismatic values in general are cheap relatively speaking at this time. I think it's a good entry point over the long run, especially for world coins.

My interest has been piqued recently on Mexican coins, and further afield as i buy modern base metal coins for my lad.  With so many different countries, regions, silver or gold, age to consider, do you have any pointers or resources?

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14 minutes ago, Martlet said:

My interest has been piqued recently on Mexican coins, and further afield as i buy modern base metal coins for my lad.  With so many different countries, regions, silver or gold, age to consider, do you have any pointers or resources?

I think for Great Britain coins and Mexican coins this forum is perhaps the best and fastest in distribution information and facilitating knowledge sharing. The topic is vast and if you narrow down a bit of your interest, I can def point to resources.

For example, Don Bailey's Whitman Encyclopedia of Mexican Money Vol I and II (III is incoming hopefully), which I like as reference books.

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Thank you so much everyone. I wanted to give like to all of you but it says I'm not allowed? 

I'm a little afraid to put money in stocks or any kind of "work" because I know someone who lost their money that way. Also someone else who's really addicted to watching prices, selling and buying all the time. This person couldn't even enjoy their holiday because of this addiction. 

I suffer from anxiety and I don't think it would be good for me if I stressed like that. I have more serious problems, anyway. 

So right now I think I will go about 25- 30% in gold and coins. I will buy slowly and gradually let's say once or twice a year. I guess this will be OK and it will make me more relaxed and safe than insecure speculations. And I like the look and feel of actually holding the coins :-) my country has obligatory payment in the pension fund which is taken from my salary. I will get that back if I live long enough (my generation 1987 is supposed to retire at 69!!!) so right now it doesn't seem real to me that I'll ever get there haha. I really hope that the EU will solve the problem of pension by then. 

BTW this seems like a very lovely community! I'll definitely be reading here. Although you probably won't see me posting much, as I don't really don't know anything about PMs, but I'll learn from you :-) 

Edited by Vvnewbie

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Hi and welcome to the forum. Sounds like buying in gradually is a good strategy. When I first started buying I would check the market price everyday but now I don't bother. Some people stacki continually, for me, I now have a core stack and only add occasionally. I have just added a few frectiojal platinum Britannias as I feel they are well priced at the moment. Good luck and don't get carried away, despite what the doom mongers say there is plenty time to build up a little insurance pot. 

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2 hours ago, Vvnewbie said:

I'm a little afraid to put money in stocks or any kind of "work" because I know someone who lost their money that way. Also someone else who's really addicted to watching prices, selling and buying all the time. This person couldn't even enjoy their holiday because of this addiction. 

 

This type of behavior is very typical when you have no real assets or savings, and it actually prevents you from sitting tight and making any real money. As you slowly accumulate wealth and build your net worth you worry much less about the daily fluctuations and start seeing the big picture more and more. If gold prices jump 10% today or tomorrow it means very little in the overall scheme of things, because I am investing for a 5-10+ year plan. Learning to have patience to let your investments come to fruition is everything in this game.

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32 minutes ago, vand said:

 

This type of behavior is very typical when you have no real assets or savings, and it actually prevents you from sitting tight and making any real money. As you slowly accumulate wealth and build your net worth you worry much less about the daily fluctuations and start seeing the big picture more and more. If gold prices jump 10% today or tomorrow it means very little in the overall scheme of things, because I am investing for a 5-10+ year plan. Learning to have patience to let your investments come to fruition is everything in this game.

Agree. All my various investments are long term. For example, my S&S isa portfolio was down 5% last week on my investment but today is now +6%. As this is a 15+ year investment it is irrelevant the day to day fluctuations. The only time I will start looking closely or worrying is when I am due to retire and will probably move down to a less risk  fund.

Metals wise is the same. I am in it long term. If the price slides heavily I will buy more, but also have the option of selling if the price goes through the roof.

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Another to put it is that as wealth increases, your preference for present consumption decreases.

This is key. That is why millionaires find it easier to continue building wealth than it is for poor people to begin building it; the psychological reason why it is very difficult for someone with no wealth to not constantly engage in self-destructive behavior of constantly monitoring market prices and get excited or depressed by every tick up or down... their lives at this point have been dominated by the need to consume everything in the present.

There is a time preference mismatch between their conditioning and what they are trying to do. So, in a very real sense, just getting started and adopting long term thinking and savings habits is the most difficult thing.

And then as months and years go on and you gradually build up your wealth the way you approach money changes, and it gets easier and eventually becomes second nature. 

Edited by vand

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21 hours ago, Martlet said:

My interest has been piqued recently on Mexican coins, and further afield as i buy modern base metal coins for my lad.  With so many different countries, regions, silver or gold, age to consider, do you have any pointers or resources?

Recently I've been rebuilding my stack, and my focus this time has been heavily on Mexican coins and bullion, as well as US coins, and a little in other national coins and rounds. One thing I'm doing is stacking/collecting silver Onzas and Libertads, at least one from every year since 1949, which is the first year they started minting them.  

In gold, my default go-to fractional coin is the 5 peso (.1205 ounce).  It is consistently the sweet spot for lowest premium. 

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25-30% sounds reasonable to me, whatever you are comfortable with, I don't recommend anything else. Decide for yourself what is a good amount, find out why they recommend 5-10% if you can, I have not found a convincing reason, it appears to be a figure invented by the financial industry and is largely baseless.

I think what is 'comfortable' depends on your outlook and understanding. I see gold as savings, capital first, its track record is good in terms of appreciation over time. Physical has no counter party risk and can not be defaulted on or supply easily increased (without price change to the upside). For these reasons I prefer gold to bonds when balancing against stocks. I have had over 40% in gold in the past to match stocks. I don't hold bonds. If I lend it is to business or individuals and the returns are higher which reflect the risk. The risk in government bonds is not reflected in the yield. All IMO.

Right now I have 15% in metals, of which gold is the majority part. When I get more stocks I will get more gold. I don't recommend this. Anxiety could make investing difficult, I would say don't look at the price often and remember why you started to invest in the first place. Also potentially an indication that there is more to learn before doing anything.

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The 5-10% figure is based on 2 things:

Firstly, the long term return in the (US) stock market is superior

I might be slightly wrong on these numbers, but I think its roughly 6.8% real growth in stocks vs 3% real growth in gold since 1971; it makes sense to put most of your money in where it earns the most

Secondly, gold is a volatile asset class

If you have 10% in gold but gold is 3 times as volatile as stocks, then in reality you have 30% of your risk in gold. This is part of the reason you see so many traditional portfolios having quite a high bond allocation, because bonds are less volatile than stocks. You can hold bonds up to quite a high percentage with a good tradeoff betweeen only slight decrease in the expected returns and and a big increase in the predictability 

 

Deciding how to structure your investments and the asset allocation you want I find is one of the most interesting areas of personal finance

 

Edited by vand

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15% minimum of anybody’s monthly salary should go towards retirement. So as for pms, I would recommend no more than 1.5% of your monthly income split 10% ag to 90% au...but that is just my advice.

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