Silver & Gold & other investing

[RichyrichParticipant 14]

I am interested in everyone’s thought about gold and silver.  I’ve recently started buying face value silver coins as sort of a long term hedging in the event another source is needed outside of paper money.  I’ve managed to save a fair amount of paper money but with all the “economic and financial” problems it stands to reason to have other sources. I’m concerned about the past bank bail outs and future bank bail ins and how the institutions can just up and thieve a lifetime of earnings.  What are your thoughts on how to branch out into other sources of investments.  I’m not much of an investor and trusting financial advisors with my hard earned money, they almost remind me of being married and getting divorced, which  thankfully I’ve never been, and losing what I’ve worked a long time for.

[MadmanParticipant 772]

I put 5% of my total worth into physical metals, the rest is in stocks.

[putraParticipant 2]

I would not look at gold and silver as “investments”, I would look at them as a store of value. An investment is something that you believe will grow in value, and PM’s will not really “grow” in value. Their “growth” (if it happens) will be the result of the diminishing of the value of the dollar (or the particular currency you use to purchase the PM’s).

[UmbreonParticipant 152]

Seconding Putra: Precious metals never really “gain” value as it’s all just an effect caused by inflation and deflation of currency.

This is also why I do not recommend Bitcoin trading or any other currency exchange as an investment. In the end you are literally hoping one currency will deflate a little so you can swap the other currency for it to gain the illusion of profit all while inflation just keeps on ticking the world over. Nobody really gains or loses anything- it’s a zero-sum game.

If the price value increase does not beat the rate of inflation, it’s not an investment. If it keeps up with the rate of inflation, it’s simply holding it’s value.

Beauty fades, dumb is forever.

[TaoTheMgtowWandererParticipant 263]

couple of vids on this, but yes you guys are spot on

 

 

oh, and madman, this is just one source but its going to blow your mind:

 

Seriously though guys, start stacking a s~~~-ton of silver before the depression hits the fan, this is going to make the 1920’s depression look like a picnic by comparison.

My peace of mind is worth more then your vagina...cunt.

[slardy mcbardfastParticipant 118]

Hi Richyrich

My thoughts regarding investing.

The most important investment one can make is to invest in oneself. Nobody can take that away from you. Learn a marketable skill/trade/profession.

As far as passive investment goes….

Hmmmm. I suppose would go along the lines of diversify one’s exposure.

PM is good insurance but if you plan to make money from PM, the irony is that if money is what you want , by the same measure so does everyone else, therefore, money is what you wont get. Does that twisted logic make sense? I used to own gold stocks but then it hit me. Why the hell are my companies selling gold. So I sold my stocks, kept a small PM holding (5-10%portfolio value) and diversified the rest into catfood/energy/finance/Telco etc…ie …..fear based profitable companies that basically set the price of what they produce. A good indicator as such is to listen to what people complain about the most. eg….”bla bla electricity to expensive….bla bla banks ripping us off…bla bla food costs a fortune…bla bla government must increase social security=food and rent increase coming (google rent effect)” on it goes. I laugh my ass off watching my project manager (a blue pill fool)  complain about the cost of stuff. I use him as my best buy indicator.

Property is good on condition that one’s debt exposure is manageable. Otherwise an unfavorable string of bad tenants or interest rate moves will simply see the bank take it off you.

A bad tenant story from my younger days. A friend of mine bought a heavily marketed rental property in an area that turned out to be less than desirable as time went by. He had the misfortune of getting a single mother as a tenant who proceeded not to bother paying rent. After lengthy attempts trying to legally evict her, he had enough. He enlisted my help and one fine day, while she was out, we emptied the house and nailed the doors shut. A real spec-ops stunt. It worked a treat. The neighbors reported some outraged screeching later in the day. The next week she was gone. No additional damage either. Quite lucky in that respect.

Stocks. Follow the Buffet method. Look for middle of the road boring dividend stocks. Accumulate and hold when fear is strongest. Rarely sell.Maybe when the cleaner is preaching the virtue of some obscure penny stock.

Never go all in on anything. A bit of cash on hand will help you capture unexpected bargains.

As far as conspiracy theories go, I agree with Madman. Even if true, there is nothing you can do about it, so pay them little attention. Just position one’s self to weather any unexpected event. This includes considering international alternatives …..good luck with this one 🙂

Finally, read read read. An excellent book,”The intelligent investor” by Benjamin Graham, is like eating cardboard but contains very sensible advice.

You asked my thoughts. There you have them. I wish you all well on the path to fiscal freedom. The world needs more well financed men to take risks which will hopefully lay the path for mankinds next leap forward.

[Anonymous 29]

Richyrich wrote:

I am interested in everyone’s thought about gold and silver. 

Gold is for the well off or the rich. For regular folk who have up to a million in cash, investments, and property, silver is the way  to go.

In that case, between 5% to 10% of you liquid assets should be silver. Why silver ? . . it may not have same value as gold but will appreciate a lot more than gold because so much of it will be sought by a large number of regular populace. A bit like supply and demand.

Stay away from minted coins in silver if you can. Blank/unstamped coins can be bought for as much as 15% less if you can find a dealer. Make sure that at least 30% of all you silver is in small denominations/weight for easier trading. Other 60% to 70% in bullion bars of various sizes.

A word of warning, if you intend to buy and put the bullion aside for a RAINY DAY . Do not fool yourself that it is an investment in pure financial  sense.  It is investing in securing yourself if economy and financial markets go to s~~~. And they will. Soon.

You don’t have to take my word for it but the markets are rigged and your money is not worth anything. In actual fact, a dollar is at -150 %. Invest most of  your money into actual assets. By having/owning asset you loose less when it all turns to s~~~. Only 2o to 23%  of Americas wealth is in hands of the government and its people. The rest of the wealth is owned by the richest 1%. Because, of that difference USA economy and its people are living on borrowed money  and time. So brace yourself.

 

[CatsPawParticipant 423]

Hi RichyRich,

I will try to not make this into a novel:

Before we start, I ask you to double and triple check any information you are given when it comes to any form of investments. I am taking about RAW data, not opinions or advice’s. Those last two are only useful for three things: Finding out something new you might not be able to guess yourself, knowing what the opinion of the general public is (meaning the probable mood of other investors) and challenging your views.

Opinions and advice should NEVER be taken at face value.

DISCLAIMER: I did not formally study Economics, this is my view on what I consider to be important factors. Do your Own research if you really care about your wealth.

 

 

So, as a short index, here are the points I will try to explain:

1 Investments basics

1.1 Investments, what they are, what they mean, why Invest.

1.1.1 Speculation vs Investment

1.2 Good Practices in Investments

1.3 Typical Mistakes

2 Different classes

2.1 Hard assets

2.2 Stocks

2.3 Other soft investments (aka 401k, retirements plans).

2.4 Gold and Silver.

3 Wealth cycles

3.1 Understanding history

3.2 Identifying cycles

4 Some interesting authors.

5 Required skills.

6 Closing statement: Money changes hands vs Wealth changes hands.

 

1. Investment Basics:

There are some ground rules we need to set when talking about Investing any form of currency. Even if you just keep the money you earned in the bank, you are making an Investment (in this case on deflation and banks being honest and intelligent). From this moment on, everything you trade, think of it as an Investment (in food, to live and be healthy, in toys to have fun, but always as an Investment).

This will help you separate things you really want or need from buying things you never wanted in the first place.

Your life is also an Investment, your time working is an Investment… finding the balance that suits you takes time, but the sooner you start thinking this way, the faster it starts paying off.

1.1 Investments, what they are, what they mean, why Invest.

An Investment is, simply put, an exchange of something you own for something else that has more value (at that point, to you, to others, etc).

Please note that, as a general rule, paper money has the lowest value of anything as it is a paper that is already used. We give it value, but a hungry man will pay more for food, a sick woman will pay more for medicine, etc.

This is why most rich humans own less paper/electronic money and more assets or goods. Some may say that “The value of the goods/assets rich individuals have is 5% of they paper/electronic money” and they would be right in many cases, but they key here is to understand the difference between NOT INVESTING in things that are not worth it and considering paper money a good INVESTMENT.

What an Investment means for an individual depends heavily on the individual and his goal from said Investment.

Getting rich fast is almost always a good way to loose it all. It works for 0.0000001% of the population, at the expense of the rest of the population. A deal too good to be true is almost always a con. Careful there. So… what is the difference here exactly?

 

1.1.1 Speculation vs Investment

This is one of the most important points in knowing how to invest: to be able to differentiate Investment and Speculation.

Investment is putting your money into something that will bring Income.

Speculation is buying something to sell it at a higher price.

Its that simple, yet examples can be deceiving. Most of us know that stocks are speculation if they dont pay derivatives or if those are small compared to the price of a share. Especially if we are buying stocks like Apple or Uber because it is going up. Sure, you can get some cash increase if you buy very early and sell a bit after, but that relies on you finding someone else who will buy it after. Probably the best example of this was bitcoin. Almost everyone who bought it didn’t want the bitcoin, but the extra dollars when they would sell the bitcoin.

So what about more complex examples? How about a Home. Most think its an Investment since you get to live in it and the price can go up.

Here is the problem: Most people do now know exactly how much a home costs to maintenance, fees, real estate taxes, security… then you need to adjust for inflation and then you need to calculate how much money you get from lets say renting the home, assume a certain amount of time that the home will remain empty, and similar.

According to my calculations, when homes were at those high prices (In spain for example it was around 300.000 EUROS for a 50 m2 home) you were overpaying by close to 75%. Nowdays, there are 80 m2 homes for less that 35.000 EUROS in Spain, and rent is for around 700 EUROS for a home that size. We are talking about a home returning its own value in about 5 years compared to over 20.

Bare in mind, in 5 years the economy has a higher chance to remain stable compared to 20 years.

A decent job should be able to pay a home 60 m2 under 6 years, directing 35% or less of your income in the home (ideally 25% or less). If that’s not the case, you are overpaying. Why those numbers? Thats where history will come in, for now we can just keep this in mind as an example.

So, if we paid 35.000 EUR, we could even call that home a very long term investment. Its still pushing it, but I could agree with it.

However, if we paid 300 000, its not gonna be an Investment, even if we sold it for 400 000. We got lucky.

 

Some people say that if you are very good at trading, you can always find out when something will go up, buy it, then sell it at a profit. Thats not true.

You cant predict human behavior (in this case buying something from you) with certainty. I suggest to only speculate with a very small portion of your money each time. NEVER use most of your cash on speculation (think of this as bank roll management in poker. Set a % and NEVER use more than that, no matter how sure you are).

 

1.2 Good practices in Investments.

a) Read financial statements if purchasing stocks of a company. You want to know how the company operates. Read as far back about them as you are able to.

b) Study the market in the areas that they do business. Is it an emerging market? Is it already over bloated with competition? Does the company Im interested in have any competitive advantage over other companies? Is the Political landscape optimal for this company’s growth? How well were their last 4-5 products accepted in the market? Is the company flexible to adapt to change or is it a big elephant of a corporation that takes 5 years to make a decision? (there are A LOT more questions like this, read about markets and how to understand them).

c) Look at their competition and where the trend is going. Your company can be one of 3 things: Trying to be the best company and winning, trying to be the best company and loosing or focusing on a niche. The competition of the company you are considering, stocks, opening it yourself, etc will always have others that compete with it. You want to know what is that company’s position relative to others and how well it can do against them in the following years. Always study the lead company, the second lead company and your company in parallel to see what your interest lacks or can do better and what it actually does better.

d) Have an Investment plan. You dont want to start putting money into ANYTHING before you know:

-What do I want from it.

-In how much time.

-When do I exit if things are going wrong.

-When do I sell (if that is in the plan) when things are going well.

-How many resources you can/want/will focus on a single Investment and in all Investments combined.

-What is my long term goal and how the current Investment is helping me get to it.

-Are there better alternatives (this one is tricky).

e) DIVERSIFY.

This is the most important lesson in all investment manuals. There is one reason and one reason for it only: You cannot predict the future.

There are MANY schools on how to diversify, but the way I put it:

5%-25% Precious metals. 5% when the economy is ROCK solid, 25% when Nations are defaulting on their debts…. kinda like now.

10%-15% Real estate. Mostly lands rather than homes, but they can be used as well.

20% cash, in all forms combined (Bank/physical, stocks, funds, deposits, etc etc etc).

Those are the ones that are rather common.

You can also add fine art, or foreign stocks… and others.

Problem is those are only good as long as the system holds together.

Here is the problem: 2008 showed that if one country falls, other will follow, so foreign currency is no longer a diversification strategy.

1.3 Typical Mistakes

a) All-IN. This is when we see a very good offer (one that we like, the reason why we like it is not important). If at any point in your life you want to put more than 10% of your savings into something, you are making a mistake. Sure, there may be some exceptions, but for every exception there are 20 000 cons and cheats ready to happen.

b) Getting c~~~y. This is a very patient and hard way of making money. If you dont do your homework “because you have see this 100 times” or “because trust me, i know what im doing” you are in trouble.

c) Talking to others about your investments. NEVER talk about money. With ANYONE. Not friends, not family, not no one. Dont brag that you made a good investment, don’t start buying expensive stuff. Its your Money, your secret. If you want to keep making it, SHUT UP ABOUT IT.

d) Counting your wealth in currency. If you ever think to yourself “I dont need any more, I have XXXXXXXXXX Dollars/EUR/etc”  poke yourself in the head and get your brain working again. Currency can loose all its value in seconds. You want to think in terms of cash flow (but in terms of purchasing power cash flow). You dont want a million, billion or trillion dollars. You want to have a positive cash flow, that will remain positive after all your spending and investing. Then you are rich.

e) Asking others for tips instead of doing the research. Dont trust others, period. The chances that you will find someone who will have as much interest in you making money as you have in making money is virtually ZERO. They can be misleading you, mistaken, not smart enough, etc. The opinions of others are always for cross-reference only at this point.

f) Asking the wrong questions. Learn how to get the information you want rather than they information that people want to give you. Takes time, but is key.

2 Different classes

When I talk about classes I dont mean what manuals or economists mean by classes (at least I think I dont)

For me something is in a different class when the variables that affect its performance are not directly linked to other classes.

So, if there is a stock market crash, gold can go up, but if gold goes up, that does not have to mean stocks have crashed (and other similar things).

2.1 Hard assets

This is probably my favorite form of investment. Investing in things that are real, needed, produce positive cash flow and can survive ANY form of panic, crash, recession.

It is also the one that needs the most work, as you need to know almost everything there is to know about a company before you buy it or open it.

I suggest to start learning as much as possible about hard assets TODAY, and leaving it for when you have a great understanding of how they work.

2.2 Stocks

This one is actually a lot more simple than most people think: Does it pay you for keeping it? How much? You are looking at stocks that will pay for themselves in 15-20 years tops. STILL READ THEIR FINNACIAL STTATEMENT first.

Forget anything else if you are looking for an investment.

2.3 Other soft Investments

Any type of fund or 401k relies on the company managing it. Im know very little of these, because I know little about how they work, because usually they have nice offices and many workers (that came from the money you put into it instead of going for your retirement) and because nowdays the finnacial sector seems to be too unpredictable.

 

*I will write the rest later. Im a bit tired :D.

[Jon the Ex-SquidParticipant 298]

You can’t eat gold or silver. Tend to your basic needs first, then worry about investments.  I prioritize thusly: Shelter (paid off home or cheap land and a paid-off RV), non-perishable food storage, water (well on the property, rain harvesting), reliable transportation (paid off ‘junk’ 4×4 backup, paid off later model vehicle for daily driving), and insurance on everything.

If you invest in gold/silver, make sure you have physical custody. Others can and have offered far better advice than me in regards to investments that earn you income. My priority has always been a roof over my head, food and water in my belly, and enough saved up to keep the government from taking my home (property taxes).  Figure out the long term once you have the short term settled.

And always invest in personal skills. Learn a trade of some sort that allows you to repair your home and/or vehicle, even if its not your current profession.

[MadmanParticipant 772]

The markets are cyclical, and I do admit that a large correction is probably on the way. But it can happen tomorrow or years from now. If you wait and never jump in, trying to time the market, you will miss out on dividends, splits, and the market generally keeps up with inflation as well.

Is the next market crash conspiracy, or is it just regular behavior of the markets? Right now the stock market is overvalued compared to all other assets. Check this out for more of what I mean.  http://www.macrotrends.net/1311/asset-price-bubbles-since-1976

I fully acknowledge that a huge crash is coming, and I cant wait to buy even more after shares are on sale.

 

 

 

 

[CatsPawParticipant 423]

It seems after the small downtime of mgtow my second post got deleted:

2.4 Gold and Silver.

Gold and silver have an interesting place right now. Those two metals have been used as money and for other stuff for 5000 years, and for some reason its still here.

It has manufacturing uses and most of it is never salvaged back. Also, its rather rare and expensive to get out of the ground. Most silver and gold advocates say there is a manipulation going on in Silver and Gold (Im one of them) but that is something you will have to find out yourself.

In general, the reason to keep it is for hedging your position against inflation or massive deflation. Normally people say that when there is a deflationary process, gold and silver wont be a good investment as money will be scarce making it more valuable.

That is true until people dont have money and have to use other forms of payment like labor or products. In that scenario gold and silver is more valuable than paper money since trust in currency vanishes fast.

A lot of electronics require silver, but very few require gold. However, both metals are used in jewelry, and are commonly considered stores of value.

Also please note I talk about physical silver and gold, not paper contracts.

It is well known in the common traders that there is about 12 contracts of gold and silver per each real piece, meaning that 12 people will try to claim the same metal.

As an example, I can tell you that in Poland, there have not been Silver bars from reputable dealers for almost a full year. All you can get is coins, and even those are not on sale every month.

So it seems that physical is going away, while prices are staying still, even dropping.

There are a lot more expirienced people than me in those markets, but for me, silver is the best bet at this point.

3 Wealth cycles

This is something quite simple. For the rich to be able to stay rich (being rich is not to have a lot, but have a lot more than others, lets make that clear from the start), the middle class has to loose some of their savings from time to time. Other way it would be easy for over 100 million families to reach a savings amount so high, that the rich would loose many of their privileges (due to more competing money for the same items/services in the market).

Due to this, the rich engage in market manipulations (well technically they are legal, but it still is a manipulation)to lead the mass public in one direction, while betting the opposite and cleaning house.

The more vibrant the economy is, the more often this process has to be done. This is where market bubbles come from. Its actually quite easy to spot a bubble, the basic rule is, dont trust anyone or anything. If you see shares going up for something too fast, its probably a bubble. If something has been going up for years and everyone thinks its a good investment, its a bubble and if you think you just found the deal of your life, its a scam or a bubble.

Well, a bubble is actually a scam, but semantics.

Ill let you see Mike’s Maloney video on this subject, he presents it better than I do, plus, I learned that from him.

3.1 Understanding history

Without understanding history, without knowing it, you are doomed in economics. Economic history is one of the main aspects of Economy basic behavior.

Make sure you learn a good amount of it, and from conflicting authors. You want to have both sides of the coin to walk on the edge and be able to be flexible. I suggest learning both Austrian and Keynesian principles (I think Keynesian’s are insane, but even if they are, its good to know how an insane person will think so you can predict what it will do).

So every time you look at an event, a situation, etc, look at it from both points of view.

Also dont forget that in Economy there is a Lag from an event ant the consequences that come from it. Its hard to exactly determine how log it is as it depends on many factors (see skills required), but a basic rule or 1.5 year for instant effect moves like bail outs and about 4 years for policies can be used as a basic standard.

3.2 Identifying cycles

This is a very important aspect of wealth transfers. Generally, when one class drops like homes in the USA and Europe did some time ago, something else starts to rise faster than homes. To identify how wealth cycles will go, many skills are required, but most importantly, daily work has to be done in reading news (and knowing what to pay attention to and what not to), following market moves and understanding the basic economical structure that influences the assets you are looking at. (see skills required).

There are two types of cycles:
a) Initiated by public believe
b) Initiated by economic fundamentals.

In case of a, its when a big news flash event shakes the world and people start going nuts (this usually ends up in a bubble, but it draws a lot of liquidity from other assets than can be bought very cheaply. Most people in this case will want to buy the asset that is going up, hopping it will continue to go up, instead of buying what is on sale).
In case of b, it seems to happen alone, but the reality is that the big money invests in those assets when the time is right as they know waht has to happen. This is where most of the daily work and study pays off.

4 Some interesting authors.

These are the guys that opened my eyes onto economy. See for yourself and decide

https://www.youtube.com/channel/UCIjuLiLHdFxYtFmWlbTGQRQ

https://www.youtube.com/user/whygoldandsilver

5 Required skills.

Math: Mostly for models. Models of probability of event X triggering a response Y. Or Fragility of a market… in general, Advanced math is a must.

Psychology: Required to be able to predict response of the public to a certain event. Things like group thinking, subconscious choices…

Advertisement Basics: Needed to identify fast what is news and what is filler in articles. Also important to be able to tell when someone on TV (in the news for example) is telling the truth or not (very useful skill).

Law basics: Tax laws that will affect you, understanding how long it takes for certain types of laws to take real world effect (for determining lag delays) and also basic framework required as an individual to defend your rights.

Discipline: In order to make sure you dont talk about your investments to anyone, that you read some about the economy every day, that you keep making mathematical problems etc a strong discipline is required. There is no easy way around this unfortunately, but not loosing your wealth is quite the drive.

6 Closing statement: Money changes hands vs Wealth changes hands.

In the end remember that you cant eat dollars or gold. You cant live in a stock and you cant wipe your ass with … whatever.

Real things that have inherent value are always going to have value (even if that value can change over time).

Be sure that every time that you sell something for currency, it is to invest a bigger sum of currency into something else. Selling something jsut to have currency is not a smart move (ofc you need some, we are talking later on when you have at least 100.000 of todays dollars in investments).

Banks have been issuing currency for decades and have figured out a way to get in control of everything without producing anything (not bad if you ask me). Remember, positive cash flow is better than currency, because currency can lose its value real fast.

Example, I am a bank, you have a coal factory thats worth 10 million dollars. I buy the coal factory for 20, then print 60 million more. I got that plant and you still got less money than me since inflation made your 10 million loose most of its value.

There are more and more scandals coming out of bank ex employees, so its hard to trust them.

Well, Ihope this made for an interesting read for you Richy.

Let me know if you have any questions.

[FunInTheSunParticipant 8289]

I’ve had this fantasy of burying a treasure chest of gold coins in a secret location–just in case I get into a bad situation and have to start my life over again.

"I saw that there comes a point, in the defeat of any man of virtue, when his own consent is needed for evil to win-and that no manner of injury done to him by others can succeed if he chooses to withhold his consent. I saw that I could put an end to your outrages by pronouncing a single word in my mind. I pronounced it. The word was ‘No.’" (Atlas Shrugged)

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