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Wed Mar 25, 2015, 08:23 PM

How do you feel about precious metals?

Not asking for advice, just general attitudes towards precious metals such as gold. And no, Glenn Beck did not turn me into a Bug, but I did read that it doesn't hurt to have about 5% of one's portfolio in gold or silver. How do you approach it? Also, where does one find a reputable dealer and avoid getting gouged?

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Arrow 14 replies Author Time Post
Reply How do you feel about precious metals? (Original post)
RandySF Mar 2015 OP
lumberjack_jeff Mar 2015 #1
elleng Mar 2015 #2
CaptainTruth Mar 2015 #3
Hoppy Mar 2015 #4
TexasBushwhacker Dec 2015 #13
SheilaT Mar 2015 #5
A HERETIC I AM Mar 2015 #6
Common Sense Party Mar 2015 #7
A HERETIC I AM Mar 2015 #8
Common Sense Party Mar 2015 #9
A HERETIC I AM Mar 2015 #10
Common Sense Party Mar 2015 #11
Michael_wood Apr 2015 #12
TexasBushwhacker Dec 2015 #14

Response to RandySF (Original post)

Wed Mar 25, 2015, 08:27 PM

1. If you believe that inflation has the potential of being a big problem, in principle, it's not bad.

 

However, "inflation" used to be called "a wage and price spiral". I see little evidence that wages are poised to spiral

... at least not up.

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Response to RandySF (Original post)

Wed Mar 25, 2015, 09:12 PM

2. Personally I'd not consider it without serious advice from a serious investment advisor.

NOT LIQUID!

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Response to RandySF (Original post)

Wed Mar 25, 2015, 10:35 PM

3. I invest in precious metals mutual funds ...

... when the stock market (&/or dollar) is soft or declining.

In general, if the stock market is strong investors buy paper (stocks & bonds). If the market is weak, they buy metal (gold).

I kept an international precious metals fund in my portfolio for many years but finally sold it off last year. It just wasn't doing anything, with such a strong stock market.

I won't invest in metal again until I see the stock market stumble & start to decline, along with a corresponding rise in gold.

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Response to RandySF (Original post)

Wed Mar 25, 2015, 10:55 PM

4. Instead, buy a metal fund or buy stock in a gold mining company. They follow the price of the metal,

 

except in cases of bad management.


If you buy the metal outright, you are paying a high commission, in and out. Buy the stock and you pay $10. or so in and out.

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Response to Hoppy (Reply #4)

Sat Dec 26, 2015, 12:31 AM

13. Be careful about gold mining companies

A friend of mine had stock in a company mining in Africa. The Ebola crisis hit and the mine was shut down. He lost $25K.

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Response to RandySF (Original post)

Thu Mar 26, 2015, 12:59 AM

5. As jewelry, yes.

 

As investment, consult a real professional. For what it's worth, and I realize you know absolutely nothing about me, I've had financial advisers in one form or another for more than thirty years, and none of them have ever suggested precious metals by themselves. Not even as a very small part of the portfolio.

As one person has already said, they are not very liquid. I'm also under the impression that there's a high cost to the buying and selling in the first place, so do plenty of research and understand exactly what you are doing before you buy.

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Response to RandySF (Original post)

Thu Mar 26, 2015, 09:40 AM

6. Couple of big problems;

As mentioned, commission is one. Unless you are buying coins and KNOW WHAT YOU ARE DOING and are buying from a reputable dealer that sells for a thin margin, it is difficult to come out on top.

Secondly is the storage. Be they coins or bullion, you have to keep it somewhere and that means either a safe deposit box or a safe in the house. That is an added expense that can kill any gains.

They pay no dividends or interest, so you are relying strictly on price movement.

They can and are used as a storage of value. One good analogy I heard was that in the 1850's, a $20.00 gold piece would buy you a finely tailored suit. Today, that same gold piece will buy you a finely tailored suit.

I had a client who bought heavily into coins in '06 and if he sold at the right time, he would have done well. If he didn't? Not so much, not to mention, as I indicated above, he had a lot of money tied up in an asset that provided no dividends.

There is nothing wrong with having a portion of your portfolio in metals, but how much depends on your risk tolerance, and ALL commodities are an inherently risky asset class for the average investor.
(Edit here; This is a possible reason why SheilaT above, has never had an advisor suggest it. As an asset class, it is likely outside her risk tolerance and they knew it, as they should if they have done their jobs properly.)

Would you also consider placing a portion of your portfolio in Feeder Cattle? Oil? Corn?....etc.

As mentioned by others, a Gold or other precious metal ETF is a somewhat safer and certainly more liquid facsimile.

Gold ETF's;
http://etfdb.com/type/commodity/precious-metals/gold-etf/

Other precious metal ETF's;
http://etfdb.com/etfdb-category/precious-metals/

CAUTION! On the tables at those links above, where you see the letters "ETN", that stands for "Exchange Traded NOTE". These are debt securities. One should make sure they understand COMPLETELY these securities before investing, as they act differently and can be priced contrarily to an Exchange Traded Fund.

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Response to A HERETIC I AM (Reply #6)

Thu Mar 26, 2015, 05:11 PM

7. Agreed.

As usual.

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Response to Common Sense Party (Reply #7)

Thu Mar 26, 2015, 05:18 PM

8. DUDE! Long time, no see! Howyabeen?

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Response to A HERETIC I AM (Reply #8)

Thu Mar 26, 2015, 05:42 PM

9. Hey, man! Doing okay.

Got diagnosed as diabetic a while back, so I've been trying to get my crap together and get healthy.

How have you been? How's the open road?

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Response to Common Sense Party (Reply #9)

Thu Mar 26, 2015, 06:43 PM

10. Road is open!

Things are good. Been with this firm a year December now. Staying busy, even at the bottom of the seniority board!

Sorry to hear about the Diabetes. Stay healthy!

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Response to A HERETIC I AM (Reply #10)

Thu Mar 26, 2015, 07:42 PM

11. Thanks, my brother!

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Response to RandySF (Original post)

Mon Apr 27, 2015, 08:55 AM

12. Gold Falls Away From Key $1200 Level

Gold prices fell for a third consecutive week with the precious metal off more than 2.17% to trade at 1177 ahead of the New York close on Friday. Investors, big or small, both are bearish on gold.

There is a strong majority of those who believe there is a bearish continuation. Yes! Financial Headlines regarding gold bullion are downright negative on gold. But, is this all about gold price in 2015?

Watch this video--Lombardi says there is a classic supply/demand squeeze is in the works that could push up gold prices significantly.

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Response to Michael_wood (Reply #12)

Sat Dec 26, 2015, 01:08 AM

14. Platinum is less than gold right now

$882 an ounce. Gold is $1077

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