Way Underwater on Collectibles/Precious Metals - Sell or Hold?

[FreelanceToFreedom]

Hey all,

I'm trying to decide what to do with some seriously under-performing assets and could use some advice.

About 6 years ago I inherited some collectible coins and a good amount of precious metals.

This sparked an interest in collecting and particularly in investing in precious metals (some gold, mostly silver). I was young and stupid and didn't know what diversification was - so I basically threw all extra cash in to metals and coins. I became a bit of a "gold bug". Live and learn...

Flash forward to today and a significant amount of my assets are in physical precious metals/coins tucked away in a bank safe deposit box. Maybe 30% of my total net worth, which I realize is way too high (although my net worth is quite low, haha. I'm like 5% FI). I'm also down somewhere between 25 and 30% in value due to the price of metals (again, mostly silver).

So now I'm trying to decide what to do. I obviously don't like the idea of selling at a huge loss, but at the same time I realize now that metals don't pay dividends, don't compound and don't offer the growth potential of equities.

Another hindrance is that these are physical assets, which take time/effort to sell. Particularly the collectibles, as it will take a lot of effort to sell them for what they are worth.

I also still see precious metals as a bit of a hedge against a market downturn. I guess my reasoning for holding this long has been in part that I see metal prices potentially spiking in a market crash, in which case I would sell the metals and dump more money into equities. Of course there's no guarantee that that would happen, or if the market will crash any time soon! 


That's my conundrum. Any advice?

[GizmoTX]

Just move forward. Don't throw any more money at metals or collectibles, and don't sell them out of panic either. No conundrum.

[RWD]

If you wouldn't buy them now for today's value you should probably sell them. Selling at a loss has the small advantage of not paying the higher tax rate for collectibles (compared to long term capital gains).

What you need to do is figure out what percentage of your asset allocation you would like to have in precious metals and then make an investment policy statement reflecting that. Then rebalance your portfolio to match.

[JAYSLOL]

I went through an identical phase, and decided to keep what I collected, but that I wouldn't put any more money in until it was down to 5% of my net worth.  Precious metals are down to 6% now after 3 years of heavily investing in index funds and I don't regret keeping them as they are becoming such a small part of my portfolio and I can sell them any time I need the cash.  As for the other collectables, I can't say what I'd do without knowing what they are, but id probably to to sell them over time and hold out for a good price. 

[Sibley]

Keep them for now, sell when value goes back up. Don't buy anything new. And if you haven't done it already, massive course of self education on investing is in order.