Q and A with Ben – Precious metals
Q and A with Ben
Eryk’s questions are in Bold, Ben’s answers are in normal text.
Q: Ben, what is your current stance on precious metals? I wast thinking in investing in them.
A: As far as silver and precious metals are concerned:
To put my view into perspective, I’ve been making noise about precious metals about a year before the depression kicked in. I put all of my savings and my parents savings into gold in late 2007/early 2008 and most people who knew my stance called me crazy then. So my view is very bullish towards precious metals in general, at any period in time. I’ve made close to 200% gains on that investment. So overall, my opinion will always be to take $X of some commodity over $X on some paper receipt (physical dollar).
Long term, the dollar has been destroyed – this fact is irreversible – and my advice to anyone would be to get rid of their dollars unless they are in the stock market.
If you wish to invest in silver, the time is now. I don’t see it receding in the near future in value, but if you want to see yields in the hundreds of %, the time to invest is now. I regret not splitting my investment 50/50. The decision in 2007 for me was to either put 100% into gold or 50% into gold and 50% into silver. If I had gone with half and half, I would now have 400% yield on half of me and my parents savings. The reason I didn’t do that was because my impression at the time was that long term, gold would out pace silver regardless.
So when investing, don’t hesitate and go with the gut. The gut has made and saved me many dollars.
Q: Thanks for the input… My coworker was talking to me about precious metals and was saying to buy the physical silver, and not paper bills or whatever their called.
You agree?
Actually I calculated it and I’ll have more like $1500 to invest / month, so I’m thinking what to invest in first… was going to split it up into different ‘buckets’, try to find some short and medium term investments, since my company has a good 401k plan, and they already pull out 6% of what I make, and match it 50%.
A: Most financial growth nowadays is artificially inflated. This is a topic that I could write a book about and I don’t have time at the moment to go into it – just take my word – most busts and booms are artificial at the core.
But that’s irrelevant. What’s important is being able to read it when it happens and acting accordingly.
Whether you buy the physical silver or the document stating that you own the silver, that’s up to you. The main concern that your friend probably brought up is government confiscation. If the government decides to confiscate all precious metals – as it has before – they will go to the vaults and they will take it, yes. But holding it at your house won’t make any difference either because they’ll know that you have it and they’ll go to your house looking for it. Regardless, your dealer should give you the option of being able to have the metals shipped to your house whenever you so please.
For safety reasons, I’d tell you to keep it in a vault at the dealer. I had this concern (govt confiscation) before and it’s one of the reasons I didn’t get silver. It was stupid on my part: I wanted the option to keep my metal at my house (if I sensed the possibility of govt confiscation) and with the money and price I was dealing with back then, I’d have several hundred pounds of silver to be delivered and stored, which is quite a task, so I leaned more towards gold b/c it’s less volume. Nowadays 25 oz of silver will run about $1000. Hypothetically, today if you were to buy $100,000 of silver, that’s 160 pounds weight. 3 years ago $100,000 would have bought you 700LBS of silver. That’s also something to consider if you choose to vault it or bring it home. With metals, storage is an issue.
Ultimately, the amount of risk you wish to take will determine profits or losses.
Q: My friend doesn’t talk only about how its artificially inflated, but how silver on paper is artificially inflated and is going to bust soon or something like that… so he recommends buying the real thing and keeping it at a safe place.
I see what you mean about it being hard to store… do you store your silver and gold, or do you just buy the paper gold and silver certificates? Or a mix of both?
Do you have any advice on what to do with my first investments? I got about $1000 I can start investing right now, I was thinking of splitting it into a few ‘buckets’. And for now just open up a CD to start putting money into and start buying stocks once my stock bucket reaches $2000 or something.
Any advice in that category?
A: What he’s implying is that these precious metal companies are printing up silver receipts and selling them to people as the real thing when they don’t have the physical silver at hand. This may or may not be true, I’m not sure. If it were true, I don’t think that the price would inflate this quickly. These places are required to have the physical metal at hand whenever they hand out the receipt, should the customer request to have it shipped.
I buy the physical gold and have it stored at the metals dealer. I have certificates but they’re backed by the physical metal. Again, these places would be knee deep in legal shit if they ever sold certificates that had no physical backing.
Whether its true that they’re printing up certificates w/o the metal being present…I’ve yet to see the evidence.
For your first investment, if you want to have anything to do with the stock market, save up at least 7 – 10 thousand dollars. Anything less and the fees are going to eat up your portfolio. My advice would just be to save up and put it in your bank account until you get to that point. If you plan to buy silver and store it, I would advise you not to do it frequently as the shipping fees and “buying rates” are going to run up your bill. They don’t simply mail you the metals. They have a Brinks truck bring it to your house, it’s guarded and you have to sign for it. If I had all my metals shipped to me now, it would run close to $500. Now imagine if I had it shipped in 3 or 4 portions…it would still be several hundred dollars per shipping because of the liability.
Also get a very large and heavy safe that cannot be carried out of your house.
Q: What do you think is the minimum investment into gold / silver?
A: Whatever 1 ounce of gold/silver is worth. Although keep in mind there are fees every time you make a purchase. I would look to make infrequent purchase with either option.