Archive for October 10, 2012

Is it Time to Buy or Sell Silver and Gold Bullion?

peace dollar silver

Last year I was buying and selling small amounts of silver and gold each month, but put that on hold after a large price drop in silver convinced me to focus every dollar on paying off debt.

Now that I am debt free, I am ready to start purchasing bullion again. Some people have recently asked me if it is time to buy or sell bullion, and I say both.

That’s because it depends on when you bought and if you need the money or not.

If you bought low and the current price represents a high for you, it wouldn’t be a terrible idea to cash out at today’s prices, which are better than they have been for many months.

If you are wondering whether it is a good time to enter the precious metals markets, I’d say that I generally feel that silver at least is undervalued and the current spot price is good enough to establish an initial position and then start a montlhly dollar cost averaging purchase plan.

 

 

Why Bullion?

I prefer silver and gold bullion to “paper” because it is something you can see and verify.

Bullion is also very liquid (and fun to collect). You can take it to almost any established economy in the world and quickly convert to local currencies, possibly without exchange fees.

It is also fairly easy to trade between individuals without reporting to tax collectors.

The easiest way to purchase bullion is buying from a reputable online dealer. This requires no trip to a coin shop that may or may not be reputable. By buying online, you have access to a better selection of gold and silver bullion products.

Another way to purchase bullion is by visiting a local coin or pawn shop. With everything there are pros and cons. By buying your coins in person, you can see what you are getting, but the selection may be low and the premiums (transaction fee you pay above the spot price), may be unreasonable.

 

Is it Time? YES!

Is it time to buy or is it time to sell?

YES!

(But…but…he didn”t answer the question).

That’s because there is no right or wrong answer.

Just because I’ve been watching the daily precious metals charts every day for over a year doesn’t mean I have a strong idea where the price is going to be tomorrow, or next week, or next month. But I do feel overall that in five or ten years it will be quite a bit higher.

And if I’m wrong, there are other worthy reasons to buy and hold silver and gold bullion than profit. For me, bullion is a hedge rather than an investment.

With bullion (and precious metals), I understand what I am getting myself into. If you believe in your instincts and implement a plan that is designed to eliminate as much emotion as possible, then you are in much better shape than if you had instead chased a series of “next big thing” fad investments.

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