New to FIRE, unsure about cutting 7K Metals?

[chickenstick]

Hey folks!

First post here. My wife and I have recently begun studying FIRE and implementing it. I first learned about it in September of 2020, but for various reasons (happy to get into it somewhere else) could not implement it immediately. I talked and thought about it here and there and planned to aggressively work on it in January 2023. Well, January 2023 is here, and I've been manically listening and reading as I'm out of town for a business trip. Through lots of conversations, wife was also 100% sold on FIRE and we just (literally last night) took a hard look at our budget and cut our monthly expenses from ~$4100 to ~$3100/mo and look like we'll be on track to save over 50% of our income (which means paying off debt, quite possibly ending the year debt free!).

However one item that I am not completely sure about is this: We are members of 7K Metals.

https://www.sevenktoday.com/7k-metals-who-are-we/

7K is a sort of MLM - we don't work the MLM part at all, so our income from it is nothing. We use it as a way of automatically putting away silver every month - this was our only trickle of savings for 2-3 years. We pay $200 annually membership fee. We pay $129 or so every month for a specially-minted, MS70 numismatic silver coin that's either a Silver Eagle or else a custom design. As we understand it, these limited coins are pretty valuable, more so than just 1oz of silver - there's a collector's element to it all.

Anyway, I can't quite follow all of the logic. I really hate to see $145 go into what basically amounts to a budgetary question mark every month, that may have value, but that depends on how much it sells for someday. I can't put that financial fogginess into a spreadsheet and use it in calculations. I'd much rather take that capital and stick it into something more valuable. But, I'm not super sharp on all the investing stuff quite yet, so I don't know if my gut is right on this or not. Perhaps it's actually a wise thing!

I'm posting this here in the hopes that a sharper, more experienced mind than mine will be able to answer and give clarity. I'm willing to be 100% honest and transparent with my answers as this account is anonymous.

Keep 7K membership? Cut it?

[travel2020]

I’ve never heard of this 7k Metals org but based on a quick look at the website, seems like their big claim is that a 50k investment in coins over 30+ years is likely to grow to 1.2M. It pulls a few examples of coins that have appreciated significantly to make its case.

I personally have a hard time believing these claims and definitely don’t like the idea of paying annual fees for the privilege of committing to buy coins every month. My only personal experience is with trying to assess the value of various mint and circulation coins my DW recently inherited and all my research so far has shown they are only worth about their weight and not much more.

If you want to invest in precious metals or coins, there are definitely better ways of doing so.

[bacchi]

If you want to invest in precious metals or coins, there are definitely better ways of doing so.

Like the US Mint. They sell numismatic silver coins (obviously MS70) without the annual fee. https://catalog.usmint.gov/

Dump 7k Metals and buy anything else -- iBonds, VTI, TIPS.

[EverythingisNew]

Yes it seems it is best to buy the coins directly from the US Mint and not pay the annual fee. My dad has a coin collection and it hasn’t appreciated much. He does it for the pride of collecting and not as an investment. If we sold his collection, I’m sure we would get less than value because we would need assistance with the sale. Financially it’s more likely that S&P500 funds are a better investment.

[JohnnyZ]

As a coin collector myself, I'll say that the kind of coins you get through this website are not likely to increase in value, certainly not 24X over any length of time, as they have no numismatic value and are not worth much more than their weight in metal (and if what you get for $129 is a silver eagle, you're paying a huge premium even without considering the membership fee). You are indeed much better off buying directly from the Mint, it will be cheaper.
Still, in both cases you are not actually investing in a numismatic collection, but in metals, and there are cheaper ways to do that (buying junk silver, lots of old silver coins, ingots, even ETFs).
If you do want to invest in a numismatic collection, then the easiest way is to buy high-grade older coins like silver dollars, but there's still no guaranteed ROI.
In any case, I would definitely dump 7k.

[uniwelder]

Do you happen to know @clarkfan1979 ’s brother? He has posted on a number of occasions about various get rich quick schemes— Iraqi dinar, gemstones, and silver. Please drop this 7k group and keep some silver if you like, but invest at least 90% of your money in something else— stocks or real estate.

[nouseforausername]

However one item that I am not completely sure Keep 7K membership? Cut it?

Cut it.

There's a Case Study section here where you can anonymously post your financial situation, invite repsonses, and make a game plan. Folks will direct you to an Investment Order post, calculators, and other good info.

EDIT: Half jokingly hoping this wasn't a guerrilla marketing scheme.

[Metalcat]

However one item that I am not completely sure Keep 7K membership? Cut it?

Cut it.

There's a Case Study section here where you can anonymously post your financial situation, invite repsonses, and make a game plan. Folks will direct you to an Investment Order post, calculators, and other good info.

EDIT: Half jokingly hoping this wasn't a guerrilla marketing scheme.

[/b]

That was my first thought.

But yeah, OP, I can't see any reason not to cut it.

[chickenstick]

EDIT: Half jokingly hoping this wasn't a guerrilla marketing scheme.

Nope, completely serious question.

[ATtiny85]

Read some stuff here, read some stuff over at Bogleheads. Then you will realize the correct action (cut it) on your own.

[RWD]

Cut it. Silver is a terrible investment and this sounds like one of the least efficient ways to acquire it.

[clarkfan1979]

Do you happen to know @clarkfan1979 ’s brother? He has posted on a number of occasions about various get rich quick schemes— Iraqi dinar, gemstones, and silver. Please drop this 7k group and keep some silver if you like, but invest at least 90% of your money in something else— stocks or real estate.

I think 24X in 30 years is way to conservative for my brother. His projection is 100X in 3 months for silver. Those projections started in August 2021 and he gave me the hard sell in November 2021.

In his defense, silver as an asset has outperformed the S & P 500 over this period of time (-4% vs. -18%). However, there are very large transaction costs to acquiring physical silver that must not be ignored. When he buys in bulk, I think he pays 15% over the market price (spot price?) and 6% sales taxes. When he goes to sell, he must pay 4% below the market price. He needs at least a 25% gain on market price to break even.

I wish him good luck. Not for me.

[JAYSLOL]

Anything that blends precious metals and multi level marketing is something you should scream and run from.  Pull the money immediately, and do some reading on here if you even want to be in silver at all.  I have a bit of silver, but only because I buy coin collections privately so I’m acquiring at a discount, much less any premium paid, and I don’t consider it an investment or part of my FIRE plan, I consider it part of my emergency fund that should somewhat keep up with inflation longer term.  MLMs often feel wonderful and friendly and like they solve the world’s problems, but they don’t, they are ALL to varying degrees dishonest, manipulative and predatory, designed by nature to enrich those that started them and nobody else.  “But J, all the other non-MLM companies are also designed to enrich the people that started them!”.  Yeah, that’s true, but they aren’t fucking lying about it, the MLMs are, which is why I have a problem with them and can’t trust anything from a company that runs one even if I’m looking at a product that isn’t related to the MLM side of things.  As for the high premium graded coins, they are harder to sell when you want to, I couldn’t care less about MS70 or whatever graded stuff, if silver went up to $100, you’d still only get $100 plus like $10-20 premium for it being graded, I definitely think you’re being overcharged

[Michael in ABQ]

Do you happen to know @clarkfan1979 ’s brother? He has posted on a number of occasions about various get rich quick schemes— Iraqi dinar, gemstones, and silver. Please drop this 7k group and keep some silver if you like, but invest at least 90% of your money in something else— stocks or real estate.

I think 24X in 30 years is way to conservative for my brother. His projection is 100X in 3 months for silver. Those projections started in August 2021 and he gave me the hard sell in November 2021.

In his defense, silver as an asset has outperformed the S & P 500 over this period of time (-4% vs. -18%). However, there are very large transaction costs to acquiring physical silver that must not be ignored. When he buys in bulk, I think he pays 15% over the market price (spot price?) and 6% sales taxes. When he goes to sell, he must pay 4% below the market price. He needs at least a 25% gain on market price to break even.

I wish him good luck. Not for me.

I bought about $3k of gold coins about 20 years ago when gold was only $350 an ounce. When I sold those coins a year or two later (I wanted the cash to invest in stocks) the price of gold had gone up to about $450 an ounce but I basically broke even after the spread and transaction fees. Now if I'd held them another several years I would have looked like a great investor when gold topped $1,000 an ounce. But instead, my stock portfolio (heavily weighted toward financials) dropped 70% or so during the great recession and never recovered.


Dump the silver and put it in index funds. If most professional investors can't beat the market (with 40+ hours a week to research investments and huge financial incentives) what makes you think you can end up on the far right end of the bell curve year after year?

[chickenstick]

Hey folks, thanks for the input a few weeks ago. My wife and I did go ahead and cancel 7K.

[JAYSLOL]

Hey folks, thanks for the input a few weeks ago. My wife and I did go ahead and cancel 7K.

Glad to hear you cut that off, I definitely recommend doing a full case study if you want to get really in depth help with things

[chickenstick]

Absolutely. I'm super new to to the FIRE community, so if there's anything I can ever do to make my queries more helpful, I'm more than happy to provide better information.

[CowboyAndIndian]

EDIT: Half jokingly hoping this wasn't a guerrilla marketing scheme.

Nope, completely serious question.

Yup, just what I though also. Also, post count is low ....

Drop the gold/silver stuff. This is big with the preppers, who believe that you must have a big stash of coins.

Also, gold (and mining stocks) have been hedges against recession.

[BicycleB]

Hey folks, thanks for the input a few weeks ago. My wife and I did go ahead and cancel 7K.

Well done, @chickenstick!

Good luck with your overall FIRE project. Feel free to post updates or start a journal, we'd love to hear/ see you progress.

Can be brief if you're busy - don't, ah, run around like a chicken with your head cut off (ha ha).  <--obviously the bar for humor is low :)

[Must_ache]

Coins go up in price because they are old & rare.  If you can buy a new coin off a website, it is not old & rare. 

My dad had a nice stamp collection and recently passed.  Those stamps were worth a bit more in the 1980's because I think there is less interest in that hobby nowadays and so less demand in general for the stamps, hence a lower price.  I can't really speak to whether the same is true of coins. 

Also, the assets aren't particularly liquid either.  Not only do you need to hope the price goes up, but if I sell the stamps thru ebay or an auction with a stamp dealer, I'm likely to lose 12%-15% off the top to the middlemen who aren't going to see that my stamps get sold for free - that's their livelihood.  With stocks the market is much much much much much much more liquid and you can pay little or no commission.  So I would say that coins are a TERRIBLE investment.

If you aren't sure, I suggest you take one of those coins and sell it right now.  Assume that you need that money in the next 30 days to eat, and see what you get for it.