flixjamesie

with todays silver prices unusually high considering only a year ago it was probabaly only around 10 bucks per ounce, its really expensive to buy silver these days. i am unsure to buy junk silver for now and then wait till silver dips to like 10 or 15 and buy a boat load of bullion. i amm really unsure of myself and if you could any type of help that would be great. also i want to invest in gold, however me being a kid and having a very limited income, is buying gold a good idea even if iam only buying gram bars of gold.

The best thing to do is to read what the experts have to say about it:

Jim Rogers always advises to keep your money in the bank until you find something that you completely understand and know to be a bargain. Then buy it.

Warren Buffett reminds everyone that there are no called strikes in investing, so waiting for the perfect pitch is not a mistake.

If you are uncertain about what to buy, then don't do anything. You are correct that prices are historically high. It sounds like you should do more research. If you buy something because someone here tells you to, you won't be comfortable, won't know how to react to price changes, and most importantly, won't know when to sell everything and find another investment vehicle.

I would echo what Cloud said in that you should do your own research. If you take what anyone says at face value it comes with a risk. Silver has posted ~100% year over year gains every month this year since March, so it certainly has come a long way, but in my perspective the reasons that caused it to come all that way have only been magnified since then. If you are planning on getting into precious metals I would only do so with the mindset of holding for the longhaul, because there will be price swings and a lot of people who get into it for short term profits end up taking a loss after they throw their hands up when experiencing some of the wild swings. The attraction of metals like gold and silver is that they have intrinsic value, as opposed to being a representation of value.

The last time silver was at $10 was in 2008, and it's doubtful that it will ever return to that level.

Chris

The last time silver was at $10 was in 2008, and it's doubtful that it will ever return to that level.

What you're asserting here is that a metal which, despite 2 world wars, a Civil War, a depression, and multiple recessions has spent over 200 of the last 220 years below $10/oz, will never return there because it's been solidly above it for the last 5.

Just sayin.. Click here to enlarge

What you're asserting here is that a metal which, despite 2 world wars, a Civil War, a depression, and multiple recessions has spent over 200 of the last 220 years below $10/oz, will never return there because it's been solidly above it for the last 5.

Just sayin.. Click here to enlarge

No, but since the total cost of production for silver has risen to a level of approximately $20+, the only way we can have $10 silver is if the world decided that it has enough above ground inventory and will never require more. Of course, the price could spike down or up to just about any price you can name in a wild market, but the days of $10 silver for any sustained period of time are probably over. And yes I know that most silver is produced as a byproduct, but primary silver mines are the marginal production factor that sets the price, and they need $30+ silver to operate.

To be fair though, in an extended worldwide decline oil prices should go down and industrial silver demand down as well, so it could be possible.

Just saying its not impossible by any means, not likely maybe, but economically not impossible.

What you're asserting here is that a metal which, despite 2 world wars, a Civil War, a depression, and multiple recessions has spent over 200 of the last 220 years below $10/oz, will never return there because it's been solidly above it for the last 5.

Just sayin.. Click here to enlarge

The monetary supply would have to go back to the level it was at 5 years ago $10 silver to be a realistic possibility. It could happen, but it looks like the monetary supply is about to be expanded yet again in a few days when the Fed reconvenes for a 2 day meeting on 9/20 - 9/21. Goldman Sachs has been pretty open about the need for QE3, but we'll see.

05:01 PM

The last time silver was at $10 was in 2008, and it's doubtful that it will ever return to that level.

Chris

I agree with this to an extent, however I could easily see it dip to the $20-25 and establish a new base right there. After seeing the stock market, real estate market, oil/ng over the past decade I am hesitant to never say never about anything.

To the OP you and I are roughly in the same boat....that being said I have bought silver in the past 2 months, but I am in it for a 20-25 year timeframe. If silver stays here then I will be buying here...if it drops my monthly allocation for silver will buy me more..if it goes up I will be buying on the rise. Never go full in to any market, if you have $5000.00 allocated towards silver then pick a time frame and allocate monthly/quarterly over that period of time...it is no different then dollar cost averaging into any investment. I always follow the credo of no more than 15-20% of my portfolio should go into 'alternative' type investments and everything I do is done on a long time horizon.

For every one person that makes the quick buck on any type of investment I am pretty sure there are 20 that lose they're shirts. The steady player that goes in eye's wide open with a plan and time frame will normally come out ahead of the quick buck lay it all on the line type of investor.

As far as gold goes I am following the rules of silver before gold until I am more knowledgeable...much easier to make a $42/ounce mistake then a $1800/ounce mistake.

No, but since the total cost of production for silver has risen to a level of approximately $20+, the only way we can have $10 silver is if the world decided that it has enough above ground inventory and will never require more.

Not at all. Admittedly, that's one way it might happen. (And is pretty darn unlikely *heh*)

But the cost of production could easily change. The production costs of a great many industrial resources have changed...often very quickly and by large amounts...over the years.

Andrew Carnegie "perfected" the Bessemer process for mass production of steel, and radically changed not only its price, but the uses to which it could be put.

If you prefer to deal with a "natural resource" like silver is, then consider the changes in the cost and uses of petroleum products from laborers in hot fields to offshore rigs to, more modernly, shelf drilling.

Or perhaps new methods of reclaiming existing silver will be developed that are more efficient, less expensive, or both.

I'm certainly not suggesting such things WILL happen...merely that a "sudden" radical change in the cost or method of producing, reclaiming, or distributing silver is not out of the question, and could easily impact the price.

The monetary supply would have to go back to the level it was at 5 years ago $10 silver to be a realistic possibility.

Why? The money supply expanded and contracted by multiples of itself from the 1790's until the 1990's, several times. The money supply was radically different before and after the Depression...or before, during, and after World War II.

Those events did not make even a dent in the average silver price.

==============

Again..I'm not arguing silver won't go up. I'm not arguing it won't go down. It may, or may not, ever hit $10 again, or it may be $100 by the end of the year.

I'm simply suggesting that a vast majority of arguments advanced..particularly in "biased" groups such as a silver forum or coin forum...either for OR against silver as an investment tend to be over simplified. Since this thread was started by the OP asking for advice on PM investing, it's appropriate to discuss the counter-arguments, I think.

==============

Again..I'm not arguing silver won't go up. I'm not arguing it won't go down. It may, or may not, ever hit $10 again, or it may be $100 by the end of the year.

I'm simply suggesting that a vast majority of arguments advanced..particularly in "biased" groups such as a silver forum or coin forum...either for OR against silver as an investment tend to be over simplified. Since this thread was started by the OP asking for advice on PM investing, it's appropriate to discuss the counter-arguments, I think.

Great post sir. I agree that forums like this are biased.

I would think a more likely reason why all PM's and other commodities could go down would simply be a better place to stick money. There is a tremendous non-hostoric demand for PM right now. Why? Fear and lack of other investments. Get the economy going again, have some better investment area, and don't be shocked by a giant sucking sound as non-traditional buyers of PM sell their stock.

PM simply would not be as high as it is if there were a roaring bull market somewhere in the world, in something, that investors could trust. I do not count Chinese stocks or other dangerous investments as that, but tech stocks, European stocks, real estate, junk bonds, SOMETHING. Basically everyone around the world are getting no returns on their money and are scared. Put bond yields to 10% and improve their mood, and that will have an effect.

Just my opinion.

Chris

Great post sir. I agree that forums like this are biased.

Thanks.

I would think a more likely reason why all PM's and other commodities could go down would simply be a better place to stick money. There is a tremendous non-hostoric demand for PM right now. Why? Fear and lack of other investments. Get the economy going again, have some better investment area, and don't be shocked by a giant sucking sound as non-traditional buyers of PM sell their stock. Absolutely..."safe havens" are, by their very definition, fear based. Nobody seeks safety from sunshine and kittens...we seek safety from nasty storms and Godzilla. We flee to safety out of fear.

All it takes is either a reduction in fear...which doesn't even have to make logical sense, it just has to "be"...OR the perception that another investment is safer.

Once again...not a prediction that it WILL happen...simply that it COULD.

Or heck...

Maybe you just like silver cuz it's shiny, and you want to leave as much of it as you can to your kids when you die. Click here to enlarge

flixjamesie

Thursday, 15 September 2011

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