Is purchasing physical metals (Gold, Platinum, Silver) ever a good idea?

[VFK57]

I know 2 persons who lived through USSR political and economic collapse. They told me that the only currencies acceptable for food, clothes, services of any kind was jewelry and Gold. I still think that despite the fact that Gold is not investment at all, it is worth to keep some coins, just in case. Also I heard a story like one businessman in early 1900s came to New York where 1Oz gold coin would buy a night in best hotel, nice dinner etc. Today, a century later, 1 Oz Gold = $1,227 what surely would buy you a nice hotel room, good dinner with some change. Of course a century ago $20 per 1 Oz vs $1,227 today - here is the 100 years inflation.

 

[braumeister]

Some modern mainstream 1oz coins can be purchased for as little as 2% above spot. That's because minting adds value. So the market value of the coin might 1.02 * spot price. If you end-up with the spot price in your pocket after all is said and done, you've paid a spread of about 2%. But that kind of deal is only available with the mail order outfits (kitco is an example). If you walk into a coin shop, they'll take you for about 3.5 or 4% (if they're not trying to rip you off). I was surprised to see that the spread was the smallest on old non-collectable quality english sovereigns.

I think you're right, in terms of what you're talking about, but let me give an example of what I encountered. Just a typical coin I have.

1885-O Morgan dollar, condition EF45. Should be worth about $28, but I'm offered $10. I can appreciate that the $28 is selling price and the dealer needs to make a profit, but I think he ought to be very happy with 75% profit (paying me $16).

There aren't that many coins, and it's not much money in total, but I'm severely annoyed at how mercenary some of these small coin shops can be.

 

[braumeister]

one businessman in early 1900s came to New York where 1Oz gold coin would buy a night in best hotel, nice dinner etc.

This is a well known comparison, and you're absolutely right.

The standard way of putting it is that an ounce of gold is worth the price of a good men's suit. This has been true for centuries.

 

[soupcxan]

I can appreciate that the $28 is selling price and the dealer needs to make a profit, but I think he ought to be very happy with 75% profit (paying me $16).

If he buys your coin, it may sit in the display case for a year, and meanwhile it is tying up his working capital, and he has overhead for the store to cover...rent, insurance, salaries, etc. So maybe his expected margin on your coin is not all that crazy. Or maybe he's just trying to rip you off, I don't know.

 

[GravitySucks]

I have no precious metals but am thinking I should hold enough to bribe a border guard if I ever need to get outta Dodge.

 

[CherylGrrl]

Back in 1999 we bought some physical gold and a generator and water purification tools and MREs and some .22 bricks and space blankets and all manner of fun stuff to seal in 5 gallon bug out buckets. Not an investment.

be.

I'm glad I'm not you.


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[calmloki]

I'm glad I'm not you.


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Me too! I like being me. Care to expand on why you feel lucky you dodged the being me bullet?

 

[dtbach]

Every major nation state keeps tone of gold on hand. Even China went on a massive gold buying spree several years ago to increase the amount they have on hand. The reality is that all governments view gold as the only true monetary standard. It's been that way for centuries. It ain't gonna change. If you don't get, you don't get it. Historically gold has caused huge armies to move into battle and launched thousands of ships. Large sums of cash have caused ... Well a few handfuls of robbers at any one time to pull off some noteworthy bank vault heists. You figure it out.


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Historical when? Medieval ages? Not true for the Revolutionary, Civil, WWI or WW2 (or anything since 1600). And when was the last time that armies or air forces targeted gold mines in a war? Last I checked it was always factories and oil fields/refineries.

 

[gerntz]

Gold does have very valuable properties as it relates to electronics and space travel (anti corrosive properties). Platinum as far as I can tell is really only used to catalytic converters.

Pt is made into jewelry. My mother's rings were of Pt.

 

[gerntz]

So I can't recommend a substantial amount in asset allocation, but the timing happened to be in my favor. Demand for gold is unpredictable as it is used in jewelry, industry and central banks, and is a hedge against the dollar. It is marketed as a vehicle for safety but it does not always respond that way.

Au isn't much "used" for anything. It's retained. Very high recycle rate - highest around.

 

[Big_Hitter]

I'm glad I'm not you.


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I could use a few more bricks of 22lr myself. I've got everything else.

 

[calmloki]

I could use a few more bricks of 22lr myself. I've got everything else.

Think the .22 bricks appreciated more than the gold. Haven't looked lately, but remember being shocked last year, being more accustomed to 2 cent/round common on sale pricing.

 

[Big_Hitter]

Think the .22 bricks appreciated more than the gold. Haven't looked lately, but remember being shocked last year, being more accustomed to 2 cent/round common on sale pricing.

I was being a little sarcastic but I think the market rate for 22lr is about 10 cents a round nowadays. When I was in Houston I did find a 525 brick for $25 but that was two years ago.

I don't even own a .22 but I could use some more 9mm and 7.62 commie ammo and mags.

 

[DrRoy]

I have some gold and silver in my coin collection as a hobby but do not recommend it for investing.

 

[dallas27]

I bought a bunch of coins 15 years ago when it was dirt cheap - like $280oz gold and $5oz silver. I guess I didn't time it correctly but still a pretty good ROR for that time period... 10%?


How is that a bad investment?

Because one data point does not make a trend. Hitler was a nice guy, once in a while.


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[VFK57]

Gold is not an investment but rather insurance from financial destabilization as many major Central Banks continue the "Easy Money" - negative rates policies. Of course do not listen to me but here is what the Deutsche Bank states:
http://finance.yahoo.com/news/deutsche-bank-time-buy-gold-090124307.html

 

[Big_Hitter]

Because one data point does not make a trend. Hitler was a nice guy, once in a while.


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how many data points do you want? I know several ppl that bought metal and or metal funds in 2000 and made bank. I sold my fund shares but ended up keeping the metal.