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How to Buy Silver and Gold

Updated on August 13, 2013

Gold and Silver Review

If you read my other blog called Financial Advice for a Stock Market Crash you will see how I take the common sense approach to being prepared for a possible stock market crash. As an overall strategy I am not a gold and silver hoarder. But as we look at the fundamentals of our economy it appears that we could be in for a major correction.

IF we are, and that could be a big if, then gold and silver might do very well during this correction. I emphasize "this" correction because gold and silver doesn't always do well when the market corrects.

The reason that these precious metals don't do well when the market tanks is because many investors find themselves losing money in the markets, facing margin calls, and needing to recover loses so they sell their metals to raise funds. This brings more supply to the market which brings the prices down.

However, this time it may be different. Where the US Dollar has been the standard bearer for as long as we can remember we are now in a time where many are fleeing from the dollar. The dollar has become very weak and many think that it will become even weaker.

If these two factors coincide we just may see a rapidly declining stock market and a run to the metals. This would have the reverse effect on the price of gold and silver. The prices would go through the roof as the supply dwindled to nothing.

In my other blog referenced above there is a three minute video from Bloomberg where some statistics are given about insider selling. Right now insider selling is at an all time high with virtually no insider buying. This is significant when we try to build our confidence in what the market is going to do.

But let's get back to gold and silver. In just the last few trading days silver has gone up nearly (if not over now) a dollar an ounce. This is a significant move considering that nothing has happened in the news that we can point to and say, "This is the reason for the jump."

So what's pushing gold and silver up? Gold and silver work like any other market. Supply and demand has a strong influence on whether the price goes up or down. If, in the absence of a specific event that would effect the price, we see a strong move up as we have done it is a fairly safe bet that there is heavy buying going on reducing the supply of silver and gold.

If this is an accurate assessment then large buyers are seeing something within the markets that causes them to think either the dollar is going to tank or that something is going to drive the price of these precious metals sky high.

While we don't have a way of seeing into the future and know what to do when it comes to investments like this we can use some common sense to protect our financial interests. Our personal financial security should be at the forefront of our thinking. We must preserve what we have for our families and so that we can continue to increase our wealth no matter what the financial conditions are.

Gold and Silver As An Investment

What should we consider if we are going to look at gold and silver as an investment option?  First of all there is one thing that I think should be in the forefront of our thinking.  Gold and Silver can never become worthless.  Stocks can go to zero, currencies can become worthless, and options can expire but gold and silver have value within themselves.  They NEVER go to zero.  We do understand that the price fluctuates, but there is always a price.

This is the same thing that is true with real estate.  While the price may go up and down there is always a value because you can shelter yourself from the storm.  So when considering gold and silver as an investment option factor in that it will always be worth something meaning that a long term holding is always a possibility.  If you are wrong when you buy some gold or silver and the price moves against you there is always the option of just waiting.  It will eventually move back in your direction.

The next thing we are going to look at is how we will buy it.  By this I mean with what money will you use if you want to buy gold or silver.  If you have money in a CD right now, a passbook savings, Christmas fund, or Money Market account you are losing money!  After calculating the extremely low interest rate you are receiving, deducting taxes and inflation you are in a losing game.  In addition, with the current instability of our banking system do you really want your money sitting in losing and dangerous place like a bank?

By simply doing the math you can see that it makes far more sense to put your money into something more secure for the time being such as gold and silver.  You can use any reputable dealer to make a purchase.  Many experts have predicted that Silver could be trading as high as $50.00 an ounce and gold at $1,500 an ounce by the end of this year.  There are even some saying that silver will go as high as triple digits within the next six to eight months.

I don't know who will be right, but gold and silver appear to be a pretty save place right now with some strong possible upside.  Taking actual possession is always the best plan.  Get a safe in your home (not a safe deposit box because if the bank closes you won't have access to it) and properly secure your holdings.

With gold presently just under $1,000 an ounce and silver at just over $16 an ounce most people would be better served to buy silver.  Unless you have a lot of money sitting around silver seems like the best deal.  Remember, if you are going to take possession of gold or silver you are interested in the silver value not the numismatic value.  You want to buy what is called "Junk Silver." 

Don't misunderstand this term.  It is not junk.  It's silver is just as silver as another, but the coin has no inherent value.  Unless you are wanting to become educated in coins then you are only interested in the content.

Coins also seem to be better than bars.  It gives you the ability to sell in smaller quantities should you want to.  This gives you much more flexibility along with a stronger ability to place your holdings in different and smaller locations.

You can purchase random 90% silver coins for very cheap.  There are also bags of 1/2 dollars or the ability of purchasing individual silver dollars.

You can also paper trade gold and silver.  This is more risky because there is far more paper claims to silver and gold then there is silver and gold.  In other words if these precious metals go crazy the quantity of available gold and silver will diminish quickly and could leave the paper claims worthless.  To trade these you should pay attention to what is going on in the markets.

You can find shares traded under the stock symbol SLV for Silver and IAU for Gold.  You can also trade options on these for more leverage.

My Personal Opinion

Understand that my opinion is just that.  I am not a registered dealer, nor do I give financial advise.  I am simply posting my opinions.  Even the link I provided as a reputable dealer is simply a dealer that I have done business with and am satisfied.  I make nothing for posting the link - even if you click on or buy from them.

If you read my other blog that I linked in the beginning of this post I see a major correction coming.  As with anyone else I could be absolutely wrong, but all the signs lead to a strong correction coming.

I believe that within the next 8 weeks we will know if we are going to chop around or hit a major down trend.  Therefore, I am willing to risk missing any upside move in the markets to make sure that I don't lose what I presently have. 

I am preparing for the worst and willing to change my position within the next two months should I be wrong.  Holding Silver and Gold or getting my money out of the market will only cause the loss of some potential gains if I am wrong, but if I am right will not only protect but greatly profit my holdings.

My suggestion is that common sense should prevail.  Prepare and make the necessary changes in order to protect your family and your wealth.


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      9 years ago

      Another great hub, thank you for all this great information


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