Chicago Gold and Silver Investing Fan Blog

Decisions Made in Abundance are Generally Bad

"Decisions Made in Abundance are Generally Bad"
- Charles Hugh Smith

The worse decisions seem to occur when the times are best. Why? Because things go in cycles. Good times are always followed by bad times. Why? Because the decision one makes when the times are good are a great contributor to creating the bad situation.

People tend to overspend or overestend themselves during good times. This leads to a decline or a sharp collapse. Then they buckle down and are forced to make better decisions during the bad times  - leading to more good times.

The crafty are aware of this devious cycle and make the prudent decisions when the times are the best.

Sometimes Sitting and Waiting May Be the Way to Go

Despite the unprecedented currency printing and economic turmoil throughout the world, the price of gold is at a 28 month low. The price has plunged from $1883.86/oz in August of 2012 to now at $1384.04. That is an over 26% drop in less than a year. How could that be. There are many reasons. Some feel that there is some serious coordinated price manipulation by central bank, finance ministers, and those that have the power. Because of this manipulation, some feel the price of gold is manipulated. It is confusing people. Will gold go up higher due to increase demand, or will the powers that be manipulate it, confiscate it, supress it, or even steal it? No one knows for sure.

My feel is that with all of this turmoil something will happen. What that something is, no one knows. It brings an uncertainty in the gold market. To the average investor, frankly all of this uncertainty and confusion is not a good thing. I recommend to invest only in what you know. Gold and silver right now are an unknown to most people. When you don't know what is happening, it may be best to wait in the sidelines. Because if you get into this game and you don't know what is going on, you could set yourself up for failure.

Best Article on How to Sell Your Gold and Silver

How to Sell Your Gold and Silver by Michael Maloney

Asset Protection Lessons from Cyprus

We are taught to stuff our mattress with cash if you fear your money is not safe. Likewise, depositors are taught to hold cash and put it in the bank if they fear that their money is not safe in stocks, bonds, or other investments. However, the savers in Cyprus ended up the losers, because they lost a portion of their money that was not insured.

That Cyprus event will forever change the land scape of investing. If you had your money in real estate, the 2008 crash affected real estate prices and asset values. If you had money in the stock market, you are susceptible to stock market voalitility. Since 1996, the S&P 500 looks like a SINE curve- it keeps going way up, way down, way up, and down again. It's up now, but what will happen in the future?

But one of the lessons I learned from Cyprus is that a place that you think is safe, may actually be a dangerous place. That is why it is important to not have all of your money in one asset class - unless you really know what you are doing. Even thenm you ahve to approach with lots of caution.

Even a non-investor has to worry. We are entering a world where a saver who puts all his money in the bank is at risk of it being taken away. Leaving it all at home could be risky as well. There are dangers there like theft from both internal and external thieves, loss from fire or other disasters.

That is why one investment strategy is to diversify your investments. I don't necessarily mean to put your money in different stocks or mutual funds, but I mean in completely different asset classes. You could put some in the bank, some in precious metals some in numismatics, some in real estate, some in businesses, heck some in your home, some overseas, some in safe deposit boxes, and in other places. By doing so you safeguard your wealth. So if you lose big on one are it will not clear you up completely.

 

Online Websites to Buy Silver Buffalos

1 oz silver buffalos are very generic and selll for a very low price over spot. I've bought silver before from Gainesville Coins at a very low price.

I may buy it today from another source to see which is better.

Gainesville currently sells the above coin for $30.83 paying via credit card - or $2 above spot price of $28.83. I did a quick internet search and found out that Goldmart sells it for $29.71 or $1.12 over spot. My local coin store (Morton Grove Coin and Collectibles sells it for $2 over spot. So that is a savings of 88 cents per ounce. Plus I ahve to pay for shipping so let's see what is cheaper.

I found out that shipping and handling for 12 1 oz coins cost $19.47 if paid by credit card or $8.95 if paid by personal check or bank wire.

I'm going to try  paying by credit card for this transaction then maybe in the future try paying by check or bank wire transfer. Theoretically if I paid by wore transfer or check it would have cost me $8.95, that is a savings of over $10 if I paid by credit card.

Hard Asset Alliance

 

 

I discovered this website called Hard Assets Alliance. It is a place to buy and sell gold and silver. It is worth noting because it appears to be a very cheap and secure source to buy gold and silver. If that is the case, then it is worth taking the time to learn more about it.

I'm going to use this blog post to document what I've learned about it.

Squidoo Post

Here is a direct quote from a Squidoo post on the benefits of HardAssets Alliance:

Hard Assets Alliance is a new precious metals investment program designed for you to buy and store gold, silver, platinum and palladium with these benefits:

• Physical sovereign coins and LBMA bars allocated to you in storage or delivered to you - your choice!
• Lower prices when buying gold, silver, platinum, palladium, higher prices when selling, lower storage fees
• More choices for storing precious metals offshore including Australia and (soon) Singapore
• More account types available, including Living Trusts! Corporate accounts of all types welcome, too.
• More convenient, less expensive ways of funding your account. Forget those expensive, time consuming international bank wire transfers.

 

How to use the Hard Assets Alliance Website Video (Buying and Selling Gold)

Initial Impression

After doing some quick research on the site, I noticed a couple of things. The biggest is that there seems to be a $5,000 minimum purchase requirement. The prices seem rock bottom. However, it seems to only work for the person who has the money to invest at least $5,000.

One option is to open an account for any amount since there is no minimum to open an account. Then add dollars to the account when available. Then, when the balance goes above $5,000 purchase the discounted price gold or silver.

Price comparison for gold

Here is the price of a 1oz, gold American Eagle.

Current spot price = $1591.16
At Hard Asset Alliance it is $1674.69 or $83.53 over spot.

At Morton Grove Coin Store - a local coin shop I recently paid $67.09 over spot for a 1 oz coin or $55 over spot for a 1/2 oz coin.

In short, the coin shop price is actually better for gold. For silver, I still have to evaluate the difference.

Price comparison for silver

Here is the price of a 1oz, silver American Eagle.

Current spot price = $28.91
At Hard Asset Alliance it is $31.92 or $3.01 over spot.

At Morton Grove Coin Store - a local coin shop I recently paid $3.50 over spot for a 1 oz coin

In short, the coin shop price is only $0.49 over spot more than the price at Hard Alliance.

Summary

Hard Asset Alliance has a purpose for someone. However, for someone that is looking for the best price, Hard Asset Alliance may be very competitive- but not necessarily the lowest. Hard Asset Alliance does provide some advantages like competitively low prices and some remote storage options that are worth looking into.

Acquiring precious metals is just one piece of financial plan

Is gold right for you? To help answer this question you gotta look at 5 broad areas:

1. Income
2. Asset acquisition/management
3. Asset protection and liability protection
4. Leverage
5. Information (be prepared to exit or move to another asset class at the right time)

1. Income- you gotta first have money to buy gold. So, if you don't have money, it may be best to make it before you buy gold.

2. Asset aquisition/management- Now that you have income, you can buy gold right? Only if you follow the pay yourself first principal. You gotta be able to pay yourself first by buying gold (or other assets) before you pay your mortgage, your car loan, food, entertainment, internet, phone, vacations, etc.

3. Asset protection and liability protection- Another are to consider is asset protection. What is the use of having gold if you lose it. You gotta make a plan not only to buy gold, but you also gave have a rock solid plan (and process for improvement) to keep it and prevent it from being stolen. And I don't just mean stolen from burglers. I mean from being stolen by the government and even own friends, family, or business associates.

4. Leverage-Just following the first 3 areas can lead to a prosperous life. However, to take it to another investment level, consider possible leverage plans to be able to acquire even more gold. What do I mean by leverage. You can think about acquiring gold through the use of other people, other peoples money, and other people's time, and other creative means.

5. Information (be prepared to exit or move to another asset class at the right time)- Gold is money. However, it does not mean you can't lose money. People can and will lose money if they don;t know what their doing. So in this area, you gotta decide if you are disciplined enough to educate your self on things like exit strategies for gold and buying and selling cycles for gold.

Sit and Grow Rich

SH photo

Gold hit a high of $1920/ounce on September 2, 2011. Since then gold has been going up and down from $1600-$1800.

Silver hit a high of $49.63 on April 15, 2011. Since then silver has mostly been in the $30-$36 range.

Only a few make it rich. Getting rich is not glamourous. It is not about making bgi market timing moves. Often times getting rich is about sittiing and holding on when you know it is right. For those who have been holding gold and silver, there could be a temptation to quit. But if you do, you risk the big payday when it jumps up in value in short period of time.

These times remind me of the following great quotes:

“The cowards never started. The weak died on the way. Only the strong arrived. They were the pioneers.
”

  --About Schmidt

“And right here let me say one thing:  After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this:  It never was my thinking that made the big money for me.  It always was my sitting.  Got that?  My sitting tight!  It is no trick at all to be right on the market.  You always find lots of early bulls in bull markets and early bears in bear markets. 

I’ve known many men who were right at exactly the right time, and began buying and selling stocks when prices were at the very level which should show the greatest profit.  And their experience invariably matched mine – that is, they made no real money out of it.  Men who can both be right and sit tight are uncommon.  I found it one of the hardest things to learn.  But it is only after a stock operator has firmly grasped this that he can make big money.”

-- Jesse Livermore

Using Covered Calls for Cash Flow

One weakness of traditional gold and silver bullion investing is that it does not provide cash flow. You buy the bullion and hope that is appreciates in value. I say the word hope because even if the fundamentals say that gold is undervalued, you do not make any money until you actually sell the gold.

It may be wise to buy gold, but you gotta raise the money someway to purchase the asset. One way to do that is to look into covered calls for cash flow. Covered calls - if you do it right give the investor the ability to earn regular cash flow. With the extra cash, you can buy your gold and silver to hold for your buy and hold strategy.

For more on Covered Calls see:

article #1

Book

The rich don't value money as much as they do aquiring assets

How do rich people become rich? The typical answer is because they have a lot of money. But contrary to that belief, the rich don't become rich because they value money. No, the rich become rich by acquiring assets.

Middle class and poor people work for money. They trade their time for money in a regular job or a self-employment situation. By contrast, the rich trade their time AND money to acquire more assets. The rich value the asset more value than money.