Author Topic: Precious metals should be part of your picture.  (Read 1002 times)

OthalaFehu

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Precious metals should be part of your picture.
« on: September 17, 2017, 06:50:39 PM »
I am a firm believer that at least a portion of your portfolio should be in physical precious metals.

Silver is at acceptable prices and platinum is actually going for less than gold (a historic anomaly).

Now is the time to pad the coffers with a little of the shiny stuff.

I recently doubled my platinum hoard (ok maybe 5 ounces is not quite a hoard yet)

matched that with gold and bumped up my silver to an even 500 ounces.

Who wants to declare recent moves in PM's and challenge each other to stack coins?
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JAYSLOL

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Re: Precious metals should be part of your picture.
« Reply #1 on: September 17, 2017, 07:38:46 PM »
Thats a pretty big stack of shiny stuff.  How big a portion of you portfolio is that if you don't mind me asking?  I plan to keep gold at 1%, silver at 3%, although it's higher than that at the moment (around double) partly because of the performance (lack thereof) of my investment funds over the last 6 months, but mostly from stumbling across some deals i couldn't pass up buying coins privately.  I've decided not to sell any for rebalancing purposes, but to just keep putting future money into my other investments until balanced the way i like it. 

Frankies Girl

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Re: Precious metals should be part of your picture.
« Reply #2 on: September 17, 2017, 09:00:15 PM »
I'm a firm believer that if you want precious metals in your portfolio, then have them, but insisting that everyone should do the same is quite humorous.



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rdaneel0

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Re: Precious metals should be part of your picture.
« Reply #3 on: September 17, 2017, 09:34:17 PM »
I don't oppose the idea, but I'm wondering why you think having physical metals as part of your 'stache is essential. Any citations or explanations?
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Car Jack

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Re: Precious metals should be part of your picture.
« Reply #4 on: September 18, 2017, 08:18:34 AM »
I bought silver US coins 5 years ago.  2 separate buys of $1000 each.  In my state (Mass), buying $1000 or more qualifies as bullion and thus there's no sales tax.  So just a cool $2000.  Today, it's worth just about $1800 before transaction fees and mailing costs.  Somehow, I don't see this as an investment.  I could have put 20 $100 bills in my safe and been in better shape.

PizzaSteve

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Re: Precious metals should be part of your picture.
« Reply #5 on: September 18, 2017, 08:25:59 AM »
I completely disagree.  Precious metals are commodities with no opportunity to appreciate other than through scarity of supply.  They tend to cost the extraction cost plus a profit margin, so you are paying a `load' right off the top that is probably more than an Edward Jones fund manager fee.  Our planet is rich with this stuff, and technology advances will likely make it cheaper and cheaper to extract (unlike fossil fuels, they are not generally destroyed by consumption), so we will have an ever increasing supply via recycling and resale.

If it makes you feel good, go for it, but i see no rationale for how these assets can help one generate retirement income.   Active use of your capital in real estate, stocks or debt (loans/bonds) has value increasing engines (that can succeed or fail, hence the notions or risk and returns) whereas commodities must be sold at a higher price.  I see commodities as a slightly inefficient cash substitute.  Commodities do not make your life better or reduce living costs like owning a home, solar panels or a good bike.  That said, i have read some data suggesting some commodities are undervalued, but that is a tough market to trade (note I have worked for firms that took signicant positions and been market makers in that business sector, so have some insider perspectives).  I wouldnt touch it.
« Last Edit: September 18, 2017, 09:57:08 AM by PizzaSteve »
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Paul der Krake

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Re: Precious metals should be part of your picture.
« Reply #6 on: September 18, 2017, 09:17:37 AM »
We have gold wedding rings. That's enough exposure for us.

OthalaFehu

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Re: Precious metals should be part of your picture.
« Reply #7 on: September 19, 2017, 06:19:56 AM »
Thats a pretty big stack of shiny stuff.  How big a portion of you portfolio is that if you don't mind me asking?  I plan to keep gold at 1%, silver at 3%, although it's higher than that at the moment (around double) partly because of the performance (lack thereof) of my investment funds over the last 6 months, but mostly from stumbling across some deals i couldn't pass up buying coins privately.  I've decided not to sell any for rebalancing purposes, but to just keep putting future money into my other investments until balanced the way i like it.

About 1.5% for me
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OthalaFehu

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Re: Precious metals should be part of your picture.
« Reply #8 on: September 19, 2017, 06:22:55 AM »
I completely disagree.  Precious metals are commodities with no opportunity to appreciate other than through scarity of supply.  They tend to cost the extraction cost plus a profit margin, so you are paying a `load' right off the top that is probably more than an Edward Jones fund manager fee.  Our planet is rich with this stuff, and technology advances will likely make it cheaper and cheaper to extract (unlike fossil fuels, they are not generally destroyed by consumption), so we will have an ever increasing supply via recycling and resale.

If it makes you feel good, go for it, but i see no rationale for how these assets can help one generate retirement income.   Active use of your capital in real estate, stocks or debt (loans/bonds) has value increasing engines (that can succeed or fail, hence the notions or risk and returns) whereas commodities must be sold at a higher price.  I see commodities as a slightly inefficient cash substitute.  Commodities do not make your life better or reduce living costs like owning a home, solar panels or a good bike.  That said, i have read some data suggesting some commodities are undervalued, but that is a tough market to trade (note I have worked for firms that took signicant positions and been market makers in that business sector, so have some insider perspectives).  I wouldnt touch it.

Silver does get destroyed in its industrial use.

But I think that those methods of making money you listed are all part of a modern economy. If it is working, then your investment vehicles are sound. PM's are an old economy hedge against the modern economy not always being stable.

Shouldn't a good portfolio be balanced across a wide spread of asset classes?
One Day a Rains will come and wash away all you see before you, through Othala kept the true. http://othalafehu.com

OthalaFehu

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Re: Precious metals should be part of your picture.
« Reply #9 on: September 19, 2017, 06:24:20 AM »
I bought silver US coins 5 years ago.  2 separate buys of $1000 each.  In my state (Mass), buying $1000 or more qualifies as bullion and thus there's no sales tax.  So just a cool $2000.  Today, it's worth just about $1800 before transaction fees and mailing costs.  Somehow, I don't see this as an investment.  I could have put 20 $100 bills in my safe and been in better shape.

That is really just a timing issue. I have Palladium I bought at $257 ounce (currently in the 700's) and silver I got for under $5/ounce. Buy and Hold.
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JAYSLOL

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Re: Precious metals should be part of your picture.
« Reply #10 on: September 19, 2017, 08:47:23 PM »
Thats a pretty big stack of shiny stuff.  How big a portion of you portfolio is that if you don't mind me asking?  I plan to keep gold at 1%, silver at 3%, although it's higher than that at the moment (around double) partly because of the performance (lack thereof) of my investment funds over the last 6 months, but mostly from stumbling across some deals i couldn't pass up buying coins privately.  I've decided not to sell any for rebalancing purposes, but to just keep putting future money into my other investments until balanced the way i like it.

About 1.5% for me

Seems very reasonable to me.  As I get up to that kind of net worth, i'd probably reduce my holdings down to something similar as well, maybe 2% or so.  I don't have anywhere close to that kind of NW yet. 

PizzaSteve

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Re: Precious metals should be part of your picture.
« Reply #11 on: September 20, 2017, 10:45:35 PM »
I completely disagree.  Precious metals are commodities with no opportunity to appreciate other than through scarity of supply.  They tend to cost the extraction cost plus a profit margin, so you are paying a `load' right off the top that is probably more than an Edward Jones fund manager fee.  Our planet is rich with this stuff, and technology advances will likely make it cheaper and cheaper to extract (unlike fossil fuels, they are not generally destroyed by consumption), so we will have an ever increasing supply via recycling and resale.

If it makes you feel good, go for it, but i see no rationale for how these assets can help one generate retirement income.   Active use of your capital in real estate, stocks or debt (loans/bonds) has value increasing engines (that can succeed or fail, hence the notions or risk and returns) whereas commodities must be sold at a higher price.  I see commodities as a slightly inefficient cash substitute.  Commodities do not make your life better or reduce living costs like owning a home, solar panels or a good bike.  That said, i have read some data suggesting some commodities are undervalued, but that is a tough market to trade (note I have worked for firms that took signicant positions and been market makers in that business sector, so have some insider perspectives).  I wouldnt touch it.

Silver does get destroyed in its industrial use.

But I think that those methods of making money you listed are all part of a modern economy. If it is working, then your investment vehicles are sound. PM's are an old economy hedge against the modern economy not always being stable.

Shouldn't a good portfolio be balanced across a wide spread of asset classes?


As i said, precious metals are a cash-like asset IMHO.  Nothing wrong with a small percentage of hedged safe cash.  That said, if folks want to speculate in commodity markets, do your homework.  Be careful about intermediariaries as 'storage vaults' have come up empty, historically, an alarming number of times.  You may be left holding the bag, so to speak.

The cash position in your asset plan tends to reduce returns proportional to its share of your portfolio.

Edit.  I look at assets as financial (productive, income earning) and other (valuable, but static).  The FI comes from financial assets.  Other assets provide other benefits (transport...car, housing...paid for home, cash/PM...security/liquidity).  The other assets tend to be negative cash flow due to maintenance or holding costs, the financial ones positive (Investment property, stocks, bonds).
« Last Edit: October 05, 2017, 09:57:19 AM by PizzaSteve »
All posts are opinions of the author subject to independent verification by the reader.  No representations of fact are asserted regarding commercial products or services.

Pizzasteve prefers to avoid excessive critical debates.  In the event of a post, no need to reply or quote if you disagree. I am posting information meant to stand on its own and hope to avoid back and forth debating.

Bateaux

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Re: Precious metals should be part of your picture.
« Reply #12 on: September 21, 2017, 04:37:09 AM »
I've got amalgam fillings.  Times get tough, I'll pop out a tooth.
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Syonyk

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Re: Precious metals should be part of your picture.
« Reply #13 on: September 21, 2017, 10:40:42 AM »
I am a firm believer that at least a portion of your portfolio should be in physical precious metals.

Certainly a reasonable enough assertion, though I generally consider metals and the like as a long term value store instead of an investment.

Quote
Who wants to declare recent moves in PM's and challenge each other to stack coins?

Oh, my.  Certainly not. :p  Metals I may or may not own are my business.
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Classical_Liberal

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Re: Precious metals should be part of your picture.
« Reply #14 on: October 05, 2017, 03:08:38 AM »
I'm currently 6% in metals (only about 2% physical holdings) and my goal is to reach 10% (and double physical holdings).   They may not provide returns, but the non-correlation to equities gives them value in a portfolio.