On the bright side, you could join the Blue Man Group without resorting to makeup.
The OP makes several bizarre mistakes, but I’ll just focus on this one:
Wait, why can’t you sell it? It doesn’t matter what you bought it at, it only matters what it costs now and what it’s going to cost in the future. The old purchase price is gone.
You shouldn’t buy silver because it’s a pain in the ass to polish.
I love silver. I think it’s prettier than gold. If I were rich as Croesus I would have silver everything, and a host of people to keep it gleaming and pristine. But I’m not, and I don’t, so I don’t have any. Because polished silver is gorgeous, and unpolished silver is not.
There are a lot of factors that go into the price of a commodity. But let’s take gold as an example. One is the currency you’re trading in. If the dollar starts to weaken relative to other currencies, then you can expect the cost per ounce in dollars to go up even if nothing else changes. That’s why gold is considered an inflation hedge. Although that’s based on inflation expectations, and as we’ve seen in recent years, when those don’t come to pass, the price of gold can drop precipitously.
You also have the fact that no one is making any more of it. Sure it’s possible that someone will find some rich new deposit somewhere, but that hasn’t happened AFAIK and it’s becoming increasingly expensive to pull it out of the ground. I forget what the breakeven price for miners is but I think it’s at least $400-600 per ounce and I believe gold is currently selling at over $1300.
Finally you have global demand. As you have more people in countries like India and China entering the middle class, you can probably expect global demand to increase. Recently demand has probably dropped with the price as there have been huge net outflows from gold funds but long term I would expect that to turn around. However ‘long term’ in this context probably means decades, not months or years.
edit: in fact recently India recently had to institute an 80:20 rule that requires 20% of imported gold to be exported before more can be brought in.
It’s so flawed it’s hard to believe it’s not some kind of a joke or a ploy to make a point. But I think investments with no potential for intermediary cash flows (i.e. none except the terminal cash flow when you sell the asset) can be confusing. Compared to owning something that actually generates cash, like a business. For the sake of argument, if I were trying to explain the basics of how businesses function to a small child, I might explain it like this -
That businesses acquire materials for one price, do something to the materials to change them in some form, and then sell them for more money. That doing something is what makes the materials more valuable than they were when they bought them. That’s what makes the process so obviously repeatable. You don’t say to a silversmith, “hey no point selling that $20 spoon you made from $10 silver - you’d just have to buy another $20 spoon.”
No, you’d say, “good job silversmith, buy more $10 silver and make more $20 spoons to sell. Other people need spoons too.”
When you buy stock in a company you’re implicitly getting in on the silver to spoon conversion. That’s why owning equity in a company isn’t in any way an illusory deal based on a fabricated deception of “ownership.”
If you just buy silver and hold a piece of paper that says you bought silver until it’s worth more it’s harder to understand how you made any money, or how you will continue to make money in the future. I wouldn’t bother trying to explain it to a small child.
I need tungsten to live. Tungsten!!!
Because the money you made would have to be invested in something else, it cannot be reinvested into silver. If silver goes up, your best bet is to stay in the silver you have. Selling the silver you have means you will buy less silver back.
There is no guarantee that silver you bought at 20 and sold at 30 will be 20 again. also, even if it does, it may or may not beat inflation. I bought a comic book in the mid 80s at 20, today i can sell it at 30. Did i beat inflation? Silver was at 30 two years ago. When will it hit 30 again?
Diversify! Invest the profit in something else. Your scenario still isn’t justification for “never buy silver. ever.” You sold it for a profit. Go on a vacation with that money. Pay off some high interest debt. Take a chance on a “sure thing” on the market. Go to Vegas. Do anything with it. You made profit, which was exactly the purpose of buying silver in the first place.
If, down the road, silver goes back down or you believe the market will send the price up higher in the next couple years, then buy some more if you want. Or don’t. You still did good to buy it back then when you did. So your statement of “never buy silver” doesn’t hold up.
That’s how investing works.
OP, can you please answer these two questions…
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Are we to suppose your question assumes you bought silver for investing in the first place? Or some other reason?
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You do realize a lot of people make (or have made) money from flipping houses and investing and selling silver don’t you? Years ago I bought silver as an investment and ended up making a profit on it.
It’s bad because you’ve sold a thousand ounces at a profit of ten dollars an ounce, but you’re ending up with only a thousand dollars less costs instead of the ten thousand you should have had.
I’m actually curious and not trying to be mean - are you trying to play devil’s advocate or do you really believe this?
It doesn’t HAVE to be invested in something else. You just keep the cash and reinvest when the price is right.
What do you mean by “selling the silver you have means you will buy less silver back”? You mean because if silver is say 20 this month, 21 next month, and so on for say so months ending at 40 - if you sell at 30 then you’ll be out of the market for ten months + the time for it to fall under 30 or 20?
Well if that is what you mean - of course you will - this is the case for everything. You can’t have your silver and sell it too.
The rule is buy low and sell high. Or at least the goal. You are never going to predict the bottom or top of a market. Some people will sell only some of their silver as it goes up.
There is no rule that says you can’t sell and rebuy after it goes up even further. Yes it makes you FEEL like a loser, but anyone who has done lots of stock trading has probably done this. You reevaluate what you think something is worth all the time.
You may stay out of silver for YEARS - it depends on your investing style. Personally I think both gold and silver will probably crash. I’ll probably wait on the sidelines until it is down to $300 and $5 or so - or rather - I’ll be reevaluating my guessing all along.
All of this is educated guessing - no one KNOWS what is going to happen. Everyone has their pet theories.
Gold & Silver aren’t traditional income producing investments. Stocks are - as the profits they make will either be paid back in dividends or go to the basis price of the stock itself. Therefore the only real way (without doing leasing or stuff you and I won’t be able to do easily) to make money is to buy it at date x and sell it at date y - and hope that the price on date y is higher than x.
It is possible you will buy gold or silver today and it will only decrease in price - meaning you will NEVER make a profit. But let’s say it does take a 40% hit tomorrow. There is nothing to prevent you from buying more gold at that price and hope that it rebounds. In fact if you KNEW (which you can’t, but for the sake of argument) it was going to go back up the next day (which often happens with big shocks like that) - you would be silly NOT to buy it. The fact that you would be “losing” money on your purchase today only matters to your ego (in as far as what you should do).
There is no magic here. You buy low and sell high. If you do it any other way you will lose money. If it goes up 1% in 10 years - you probably won’t have beaten inflation. It could go up 200% in 2 years. You don’t know.
None of us know when and if it will hit $30 again. My guess is you are likely to see $10 before you see $30. It would not surprise me if I died without seeing silver at $30 again. I hope I am wrong, but I want to buy a couple monster boxes when/if panic sets and it crashes to $4.00. As long as I sell my current (much smaller) stock of silver first
I assume you’re still riding around in a '84 Toyota Corolla? Not necessarily the original one you bought in 1986, of course. You sold that in 1990. No, the fifth 1984 Toyota Corolla that you bought in 2010.
Because everyone knows that if you sell something, you have to buy the exact same thing again.
So what? Sell the silver you have, and then buy something else low in hopes of selling high. Maybe copper or bronze. Maybe autographed sports memorabilia, or vintage comic books; maybe you go in for Confederate money and Civil-War-era antique weapons, or maybe you buy shares of stock in some up-and-coming corporation.
Oh no money
The point of investing is to realize profit at some point, not to just accumulate more of the same stuff. SO, so what if you couldn’t buy more silver. You could buy other stuff (investments or not) with the profit you realized.
Now if you were specifically passionate about silver and you bought to collect and amass silver specifically, you’d have a point.
So what?
[QUOTE=IvoryTowerDenzen]
Now if you were specifically passionate about silver and you bought to collect and amass silver specifically, you’d have a point.
[/QUOTE]
No he wouldn’t.
If you’re buying silver as an investment, it makes sense to buy it if it’s a good investment. It’s irrelevant that you might not be able to invest in it again. If you’re buying something made out of silver because you love silver, you’re NOT buying it as an investment, and it’s irrelevant that you might not be able to invest it in again because that isn’t what you’re doing in the first place.
When you invest in something, like stocks or precious metals or Bitcoins or whatever, the purpose is to make more money, not accumulate more of the thing. So you invest in silver at $20 and sell at $30 and you have more money, so you win. If you’re BUYING it to keep it, its future value is irrelevant because you plan on keeping it. If I buy some fine silverware for $800 I’m not trying to turn that $800 into more money, I’m turning my $800 into beautiful and useful items that will make my home more attractive.
And thus, a new cartoon character was born:
Yes.
I got heavily into gold just before Obama took office, although for very very different reasons. Suffice it to say I’ve been rather happy with my investment choice.
No, they have not. And I don’t care where you live - I can say with 100% certainty that property prices and lease rates are not in lockstep - ever notice that your rental contract fixes your monthly payment for a set period of time? And what do you even mean by '10-30% difference? Difference between what and what?
This has to be a whoosh, right? Why are they buying the new home at a ‘higher’ rate? Why are you equating this to a ‘loss’? The price of the house is ‘higher’ than it was yesterday, yes…but they didn’t own the house yesterday; so yesterday’s price is meaningless as far as any ‘profit’ or ‘loss’ to the new owners. And the idea that they can’t sell the house when prices goes up because they’d ‘have to buy a new home’ is so ridiculous I’m not even sure where to start. Based on your reasoning there should be no housing market - no one will ever sell their house (and by that logic, no one would ever buy a house…every sale has to have both a buyer and a seller. Remember that next time when you hear some TV pundit talking about ‘massive selling’…someone’s on the other end of those trades, buying).
Actually…
And here, we get at the OP’s true question and underlying agenda. Ignore the ‘precious metals’ smoke screen.
In an earlier thread you asked for advice on starting a new business in trading precious metals. My advice is that you not attempt to make a living trading precious metals until you learn how trading and investing work.