Author Topic: where to buy silver to average down?  (Read 5671 times)

steviesterno

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where to buy silver to average down?
« on: December 19, 2015, 08:25:24 AM »
ok, this might be face-punch worthy, but I'm going for it anyway. about 2 years ago I wanted to start investing, and had an interest in precious metals. I didn't want to buy gold and didn't have a grand to my name, so I bought maybe 20 ounces of silver in bars and coins a little at a time. The going rate here was like spot plus $3 an ounce, so I'm into them for $23 or so an ounce.

Now that I'm learning a lot more through here and a bunch of other sights, I know that 15% is crazy to be paying for transactions, and I should have been buying vanguard. Oh well, too late for that. but silver is at a long time low at $14.60 or so, and I think it might be the best time to average down, bring my per-unit cost down lower buy buying an equal number at a lower price.

So is there a good place to buy online that's reputable and don't tack $3 an onto each ounce? is it worth it to both getting my cost brought down? or should I just suck it up and buy maybe one gold coin to sit on for a while now that it's $1050 and the lowest it's been in years?

or is precious metal stupid? Some of it does still appeal to me, as it's a physical thing. We're also about to have a kid, so I think giving them a gold coin or pile of silver I bought when they were born would be a cool college age gift 18 years from now. I could just keep what I have and buy VOO instead (early next year goal is to become admiral on vanguard and start buying VSTAX or whatever it is instead).

money won't be coming out of 403 investments, no CC debt, and is basically part of a "found money" pile, now that I'm cutting down on an expensive hobby to work towards FIRE.

Roland of Gilead

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Re: where to buy silver to average down?
« Reply #1 on: December 19, 2015, 08:48:04 AM »
I have been buying some junk bonds in mining companies which are hurting but not really near bankruptcy.

One bond I bought pays 12.5% and is selling for 25% of par and so is yielding a 50% annual return.   I just got a $2000 payment from that one.

seattlecyclone

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Re: where to buy silver to average down?
« Reply #2 on: December 19, 2015, 09:24:15 AM »
I think precious metal is pretty stupid, especially gold. That aside, the idea of "averaging down" has little merit. Whether buying an investment today is a good idea or not has nothing to do with whether or not you bought some last year for a higher price.

TomTX

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Re: where to buy silver to average down?
« Reply #3 on: December 19, 2015, 10:03:56 AM »
Buying precious metals for an investment is dumb. I say this as someone who bought silver at half today's price ("junk silver" - circulated US coins without collector/numismatic value), and gold more like one third today's price. I would have had a better return with VTSAX and more liquidity. I did sell most of it when silver was high, and it wasn't that much.

Paying $3/oz over spot for silver is dumb. At most you should be paying 3% over spot. When I sold my junk silver (at a gun show) I sold it at 1% over spot since the dealers were at 3% over spot.

Averaging down is dumb. Prior purchases have no bearing on whether it is a good investment today, it's just you trying to save ego.

Tyler

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Re: where to buy silver to average down?
« Reply #4 on: December 19, 2015, 11:30:37 AM »
Buying precious metals is certainly not stupid -- they can play a constructive role as part of a diverse and well-considered asset allocation strategy.  However, speculating with precious metals with most of your money is probably ill-advised. 

In any case, I feel like you're looking at the individual lug nuts without understanding the big picture of what function they serve in the larger machine.  Rather than focusing on buying more silver, gold, or even stocks right now, the more important question is "what's your plan?".  What is your desired asset allocation, and why?

« Last Edit: December 20, 2015, 12:03:16 AM by Tyler »

v8rx7guy

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Re: where to buy silver to average down?
« Reply #5 on: December 19, 2015, 11:45:50 AM »
If you buy bars or generic coins like AMEX coins you can get your purchase price closer to spot or $1 over.

TomTX

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Re: where to buy silver to average down?
« Reply #6 on: December 19, 2015, 11:48:19 AM »
If you buy bars or generic coins like AMEX coins you can get your purchase price closer to spot or $1 over.

$1 over spot for silver is like 7%. Too high by far.

Bucksandreds

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Re: where to buy silver to average down?
« Reply #7 on: December 19, 2015, 11:54:04 AM »
I like gainesvillecoins.com

v8rx7guy

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Re: where to buy silver to average down?
« Reply #8 on: December 19, 2015, 11:54:39 AM »
If you buy bars or generic coins like AMEX coins you can get your purchase price closer to spot or $1 over.

$1 over spot for silver is like 7%. Too high by far.

Yes, but you can sell it at $1 over spot too.   That's just the way the precious metals coin market works...

brotatochip

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Re: where to buy silver to average down?
« Reply #9 on: December 19, 2015, 05:07:01 PM »
I've been stacking silver for years now.  Jmbullion has the best prices around.  They have specials every Monday and shipping is free if you spend over $100. 

Jack

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Re: where to buy silver to average down?
« Reply #10 on: December 19, 2015, 05:16:58 PM »
That aside, the idea of "averaging down" has little merit. Whether buying an investment today is a good idea or not has nothing to do with whether or not you bought some last year for a higher price.

Quoted for truth.

Either an investment is good on its own merits now and you should buy, or it isn't and you shouldn't. Buying in to anything less than the best investment just because you bought it before when it was even worse makes no sense at all!



If I were going to invest in precious metals I'd get myself a scale, learn how to evaluate gold for karat rating and/or jewelry/numismatic value, and put up some "I buy gold" bandit signs. (But I have no plans to actually do that, because I think stocks make much more sense.)

woopwoop

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Re: where to buy silver to average down?
« Reply #11 on: December 19, 2015, 07:20:12 PM »
or is precious metal stupid? Some of it does still appeal to me, as it's a physical thing.
I think it's pretty stupid if you're actually hoarding gold and silver under your bed or something - metal bugs seem to think that in the case of an economic collapse, people will want their dumb shiny things, which is about the most ridiculous thing ever. As a small percentage through a mutual fund for precious metals to spread out your allocation, maybe. Or to speculate/market gamble if you have money to play with and it's fun to you to try and guess gold prices.

steviesterno

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Re: where to buy silver to average down?
« Reply #12 on: December 20, 2015, 06:45:16 AM »
Buying precious metals is certainly not stupid -- they can play a constructive role as part of a diverse and well-considered asset allocation strategy.  However, speculating with precious metals with most of your money is probably ill-advised. 

In any case, I feel like you're looking at the individual lug nuts without understanding the big picture of what function they serve in the larger machine.  Rather than focusing on buying more silver, gold, or even stocks right now, the more important question is "what's your plan?".  What is your desired asset allocation, and why?

my plan with the precious metals is more speculative for sure. I have been doing much more with my 403b, investing in taxable vanguard stuff after that, and paying into a house (which I personally think can be an expense as well as an investment).

the metals were my idea of playing around with stuff few years ago, and now I think it would be fun. ,but only if it works



how is averaging down a bad idea? If I thought it was a good investment idea 2 years ago because I have a 10 year horizon on it, and now I still think it's a good investment idea 8 years down the line, how does buying more to make it cheaper per unit not make sense?

i thought one of the things MMM advocates is consistently buying index funds. that means that as it ebbs and flows, you are paying the yearly average price for it. which is a way of averaging down/?

Jack

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Re: where to buy silver to average down?
« Reply #13 on: December 20, 2015, 10:08:39 AM »
how is averaging down a bad idea? If I thought it was a good investment idea 2 years ago because I have a 10 year horizon on it, and now I still think it's a good investment idea 8 years down the line, how does buying more to make it cheaper per unit not make sense?

i thought one of the things MMM advocates is consistently buying index funds. that means that as it ebbs and flows, you are paying the yearly average price for it. which is a way of averaging down/?

Dollar-cost averaging is a good idea, but that's only because the underlying investment you're trying to average into is assumed to be a good idea.

Attempting to justify an investment as a good idea just because you're dollar-cost averaging into it, as it seems like you're doing despite your protest to the contrary, is backwards and wrong.

Here's the thing: you don't really believe silver is a good investment. You only want to believe it. We can tell because you admitted it in your first post: "I should have been buying vanguard. Oh well, too late for that." That second sentence, by the way, is also a fallacy: there's nothing at all stopping you from buying an index fund right now.

The bottom line is that you have to invest with logic, not emotion. You have to ask yourself "is a stock index fund a better long-term investment than silver or gold?" Period. That's it! There really aren't any other important considerations. If your investing rationale is "ooh, shiny!" (as you also basically admitted in your first post), you're going to lose your fucking shirt.

sol

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Re: where to buy silver to average down?
« Reply #14 on: December 20, 2015, 11:09:47 AM »
When you buy stock, you're buying ownership of a little piece of a company.  You then own part of their corporate assets, and part of their annual earnings.  Every year that the company stays in business, part of their profit flows to you.  The price of your stock is only loosely correlated with the amount of assets and earnings it represents, and is instead related to someone else's willingness to buy those assets and earnings from you.  But if they don't buy, you keep making money in the mean time.

When you buy precious metals, you're buying a chemical element.  You own a raw material that does not generate any value at all.  The price of the metal is entirely dependent on someone else's willingness to buy it from you.  If they don't buy, you've lost 100% of your investment.

These two things are such different categories of purchases that I'm not sure why we even consider them both investments.  One is more like buying a cash-flowing rental property, the other is like buying a house you can't live in.

woopwoop

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Re: where to buy silver to average down?
« Reply #15 on: December 21, 2015, 04:07:41 PM »
Dollar-cost averaging is a good idea, but that's only because the underlying investment you're trying to average into is assumed to be a good idea.
Hasn't DCA been shown to reduce returns so that you can reduce risk of capital loss? It's not that great an idea, imo, unless you're risk averse. If you have cash, invest it immediately for maximal returns.

dandarc

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Re: where to buy silver to average down?
« Reply #16 on: December 21, 2015, 04:17:29 PM »
Dollar-cost averaging is a good idea, but that's only because the underlying investment you're trying to average into is assumed to be a good idea.
Hasn't DCA been shown to reduce returns so that you can reduce risk of capital loss? It's not that great an idea, imo, unless you're risk averse. If you have cash, invest it immediately for maximal returns.
This.  DCA is a method brokers use to get a reluctant investor to buy some shares.  Watch Boiler Room for a vivid depiction of the sales process.

It is also pretty rare for anyone to even have a real choice to DCA on a large part of the portfolio.  Windfalls like inheritances are the most likely time you might actually have this choice.  Most of us make smaller monthly investments not because we're choosing to DCA in - it is because we don't have the money yet.  We're lump sum investing regularly.

Jack

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Re: where to buy silver to average down?
« Reply #17 on: December 21, 2015, 04:27:12 PM »
Dollar-cost averaging is a good idea, but that's only because the underlying investment you're trying to average into is assumed to be a good idea.
Hasn't DCA been shown to reduce returns so that you can reduce risk of capital loss? It's not that great an idea, imo, unless you're risk averse. If you have cash, invest it immediately for maximal returns.
This.  DCA is a method brokers use to get a reluctant investor to buy some shares.  Watch Boiler Room for a vivid depiction of the sales process.

It is also pretty rare for anyone to even have a real choice to DCA on a large part of the portfolio.  Windfalls like inheritances are the most likely time you might actually have this choice.  Most of us make smaller monthly investments not because we're choosing to DCA in - it is because we don't have the money yet.  We're lump sum investing regularly.

I was giving the OP the benefit of the doubt. Whether DCA is itself a good idea or not, we can at least all agree that DCA'ing into a bad investment won't magically turn it into a good one, right?

dandarc

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Re: where to buy silver to average down?
« Reply #18 on: December 21, 2015, 04:31:00 PM »
Dollar-cost averaging is a good idea, but that's only because the underlying investment you're trying to average into is assumed to be a good idea.
Hasn't DCA been shown to reduce returns so that you can reduce risk of capital loss? It's not that great an idea, imo, unless you're risk averse. If you have cash, invest it immediately for maximal returns.
This.  DCA is a method brokers use to get a reluctant investor to buy some shares.  Watch Boiler Room for a vivid depiction of the sales process.

It is also pretty rare for anyone to even have a real choice to DCA on a large part of the portfolio.  Windfalls like inheritances are the most likely time you might actually have this choice.  Most of us make smaller monthly investments not because we're choosing to DCA in - it is because we don't have the money yet.  We're lump sum investing regularly.

I was giving the OP the benefit of the doubt. Whether DCA is itself a good idea or not, we can at least all agree that DCA'ing into a bad investment won't magically turn it into a good one, right?
For sure.

seattlecyclone

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Re: where to buy silver to average down?
« Reply #19 on: December 21, 2015, 06:19:59 PM »
how is averaging down a bad idea? If I thought it was a good investment idea 2 years ago because I have a 10 year horizon on it, and now I still think it's a good investment idea 8 years down the line, how does buying more to make it cheaper per unit not make sense?

Here's the thing: you bought some silver because you expected it to perform nicely compared to other investment options. Fair enough. The price has since gone down. If your expectation of its value in 10 years has not changed, then clearly the correct thing is to buy more. However, the reason to buy more is not to get your average cost down. The price you paid last year is irrelevant, as is the average amount you paid for your holdings. What matters for your investment decisions today is whether you think the investment is likely to perform well between today and your desired selling date. That's all. What happened in the past is in the past.

I happen to agree with what everyone else has said about precious metals being a silly investment. The logic in the previous paragraph applies to pretty much all investments though.

ShoulderThingThatGoesUp

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Re: where to buy silver to average down?
« Reply #20 on: December 21, 2015, 06:26:33 PM »
The only action you can take to affect your profit or loss on the silver you have is selling it. Buying more of a stupid investment doesn't make any sense. It would be like if I wanted to buy another 2010 Honda Fit so when I sold both the one I bought new and the second one, I recorded a lower overall depreciation loss as a percentage of the transaction. Just doesn't make sense.

(Edit: Fixed typo.)
« Last Edit: December 24, 2015, 07:54:13 AM by ShoulderThingThatGoesUp »

JAYSLOL

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Re: where to buy silver to average down?
« Reply #21 on: December 21, 2015, 06:48:49 PM »
I'll second those saying not to purchase more of something that doesn't produce a return.  It's entirely possible the markets will have a bad year and metals will go up short term, but even if you buy index funds high right now and hold them long term, they will likely do better for you than buying silver low right now and holding long term.  That said, if you really feel you could use more metals in your portfolio, learn how to spot gold and silver at garage sales, I've bought gold jewelry for pennies on the dollar at like that. 

Telecaster

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Re: where to buy silver to average down?
« Reply #22 on: December 21, 2015, 07:28:07 PM »
I'll second those saying not to purchase more of something that doesn't produce a return.  It's entirely possible the markets will have a bad year and metals will go up short term, but even if you buy index funds high right now and hold them long term, they will likely do better for you than buying silver low right now and holding long term.  That said, if you really feel you could use more metals in your portfolio, learn how to spot gold and silver at garage sales, I've bought gold jewelry for pennies on the dollar at like that.

Exactly.  Gold and silver are fine as a trade, if you are speculating.  Or if you think the asteroid is about to hit.   But they aren't really investments.