Investing in gold and silver? (questions)

Right now times are tough for my family. I have very little money to invest for my child's future but want to put away something for her future.

Would investing in gold and silver be the smart thing for me to do or should I look into something different? I really don't know much about it and I thought that maybe a few posters on here would know what to do. My own future is screwed-there will be no money for retirement. I don't want the same for my child. I want her to have at least something, even if it's just a little.

Any ideas?

I have seen both rise to multiples of their respective values from 1969 to 1980, fall in the '80s, tread water in the '90s, then rise again since 2002 or so. They aren't something you can just jump into-- you have to do your homework. You have to know who you can trust, and who to avoid (Hint: Don't buy from the TV or a non-numismatic magazine ad).

That just seems like a bad idea.

I want something that I can hold on to for many years to come. This would be a very long-term investment-think 20+years. I'm thinking with an investment of that length of time I might be ok in investing in the area.

I have no plans to get rich-it's not even for me. I just want something to set aside for my child when she is an adult that might help her out later.

like Coin World or Numismatic News (or both), in order to get a feel for what is happening in the world of precious metals, from not only sources that are fairly objective since they are not trying to sell you anything, but also from collectors (that is, people who hold for the long term). There are also a few coin forums on the Internet where you can chat with people who are knowledgeable about gold, silver, and bullion in general.

afford to invest. Precious metals can be found sometimes at decent rates still, which might be a bit more affordable for me to put away.

I like index funds, from what I've read, but cannot afford what seems to be the average to invest. Silver can still be picked up in the hundreds, which is something I could purchase at tax time and put away. This is all very long-term investment-at least 20+years.

can be picked up for the cost of a trade -- about $10 depending on your broker. Compared to the commission (implicit probably) on precious metals, that is nothing.

Look for an exchange traded fund like VOO -- an S&P 500 ETF created and maintained by vanguard.

How would a DOW index fund bought at 14,000 be doing today? How would a gold or silver investment of equivalent value, bought from a reputable source at the same time, be doing today?

Of course, for any investment, past performance is no indication of future results.

Instead of going all into one basket

Of course, do your homework on all investments

I'm far too conservative with finances to do something like that. (Wow-something that I can call myself conservative about!)

I just want something to put back for the long term, many years in the future. This wouldn't be used in five, ten, or even twenty years from now. The investment would be very long term.

Teach your kid how it all works. If you don't know yourself.. learn. Invest in your child now. It's almost free and those skills will be priceless in the future.

She's grown up with small-scale backyard gardening. She has been taught some basic skills.

I want to give her a small cushion.

I think the best thing would be to prepay (if your state allows) college tuition by buying tuition vouchers. I'm not sure that all states do this and it's been some time since I looked into it. College tuition increases 8%-10% a year (including fees) and you'd be lucky to find an investment that earns those rates.

That said, gold and silver prices are pretty high now due to many reasons. End of the world/Fall of tbe dollar hype, commodity speculation, and nervous investors have boosted the values of precious metals. Of course they could go higher but I think it's risky.

Of course you should seek out professional financial advice or at least consult many different sources before making a decision.

I wish we did, since I work in a state-run university.

I plan on speaking with someone about what to invest in. I just want a number of smaller options around for long term investment into her future-20+ years from now. This would be after she has completed her education.

Stay away from precious metals. Please read the book A Random Walk Down WallStreet by Malkeil. There is solid advice in that book.

I hope they have it at the library.:)

I want multiple sources for her, all long term investments. I don't want her to be stuck with nothing.

(And this will not be for her education. This is for, hopefully, long after she finishes her education.)

Don't buy it from a radio or magazine ad and definitely not from Ebay. Check it out here:

https://www.apmex.com/Welcome/Default.aspx

I like the idea of buying a few coins at a time and just putting them away. I plan on making other investments over time but want to do something that might be easier budget-wise at this time.

I've purchased plenty of silver from ebay sellers with no problems at all, and you can get it at a very good price if you watch closely.

It's a hell of a lot cheaper than Apmex. :shrug:

there has been a rash of fake Chinese-made "coins" being offered for sale. If you don't know who you're dealing with, ebay purchases can be risky.

easy to buy, easy to sell. If you buy coins the commission really take a big bite.

Check out Permanent Portfolio, symbol PRPFX

Message board advice is free and usually worth the cost but this caught my attention lately: I read a piece that called for 5K gold due to supply concerns. Alarm bells were going off because it kind of reminded me of predictions that oil was going to moon in the summer of 2008 because we were at "peak production".

The argument that things are "different" this time and prices will go higher forever always seems to surface when prices are about to go down. If you have no experience with P.M.'s buying at record highs seems like a big risk.

Why not check out a high yielding stock like Waste Management? Everybody needs their garbage taken out and the dividend is about 5% a year.

Why not pick up a rental property?

If you aren't thinking of turning it over for 20+ years, you can get some foreclosure deals now (or other great real estate deals), keep the property up through your own handyman skills, and when she's 20+, you give her the property.

If this is truly a long term, 20+ year investment, I'd think real estate rather than gold or silver. In my experience, you'd have a lot more "fun" with a rental cottage, at a lake or area you love and enjoy yourself, than gold or silver.

Personally, my husband and I fell in love with Saugatuck, MI. We bought a rental cottage there, renovated it, rented it during the summer (which paid for the mortgage and taxes) and used it for ourselves during our "down time" - fall, winter, spring. We kept upgrading to "better properties" but we easily could have kept the first cottage we bought and stayed put.

Vacation rentals have a far lower degradation factor. And if you purchase in an area you can easily access, you can make repairs yourself.

Good luck.

You have to pay property taxes on them or risk losing them.
If you get a bank loan, you have to pay interest, among other concerns.
You have to pay a lot of money to keep them in good repair, even if you can do a lot of the work yourself.
You have to pay insurance on them.
You have to worry about tenants trashing them out.
If the property is in a transient area, you always have to keep looking for new tenants.
If you want to sell, be prepared to wait a while, unless you're lucky enough to be selling into a hot market.

I live in a college town and many of the rentals are torn up from the students. The students are the ones renting everything in this town so it's hard to keep them out.

I know people with rental property and they've all said the same thing in my town: it's more trouble than it's worth.

And I can't afford vacation property around here. It's too expensive for what I make.

If this were money that you had avail;ble to throw away, it may pay a good dividend or not, but ask yourself: "Can I go on with my life if I lose half or more?" if the answer is "no", or if you'd have to change your lifestyle, put the cash in a pillow case and live within your means.

Playing the market on commodities and precious metals is a crap shoot akin to putting all your chips on a roulette wheel unless you have the investment saavy, deep pockets, and capital acumen of Warren Buffet. Since you had to ask DU what to do, I'm guessing you don't.

And nothing against the person posting.

But either way is fine with me, but the answer is not no.

It is your choice.

Doc Holliday vs. Johnny Ringo
http://www.youtube.com/watch?v=JGpajGj07BU


And it is just and compassionate.

I am due beer and travel money, and many experiences.

Who needs a stinkin' badge to know right from wrong or why we need to watch out for ourselves?
I named my youngest after James Caan's character in "Rollerball", Jonathan E.

He sold silver when it was $7.50/ounce 5 years ago. It is now 5 times that.

A lot of times, "investment acumen" is just knowing the right people who have the right information. Precious metals (especially gold), on the other hand, are not as easily manipulated by insider knowledge becoming public because they are a world market, with many different factors affecting their price.

they're lying.

The only things guaranteed to be worth more in the near future are your tax obligations and the cost of your own funeral... to embellish an old saw.

There are many factors affecting the prices of gold and silver, which make it very difficult to predict the direction of these metals. But if (with emphasis on "IF") their markets reflect past trends, they will enter a period of "summer doldrums", and then start to rebound in September or October.

PMs generally underperform most other market sectors over the long haul. On most occasions they are bought as safe havens, not growth investments. The gains in this market were realized by folks who bought several years ago, and are quite unusual looked at from a longer perspective.

The fundamentals in silver are not favorable for growth because the supply of silver exceeds demand by roughly 200 million ounces a year. Sooner or later, this will drive prices back down.

from people who don't really understand the precious metals markets. The actual situation, however, is a bit more complicated than that. For example, for every period between now and 1969 in which "most other market sectors" (whatever that means) outperformed precious metals (gold and, to a lesser extent, silver), I can show you a similar period where PMs kicked other market sectors to the curb.

how much and what rough time frame?

Honestly, if the very small amount is really very small, you would probably do best to go with something low risk with a reasonable ROI, especially if you have a long time-frame. (Once you have a larger savings amount, opportunities with higher yields and comparably-low risk should open up to you.) Commodities investment is a very scary roller coaster for even seasoned investment professionals. Gold is more stable than most commodities, but the time to buy gold was years ago. Buying now, you might find yourself sitting on it waiting for the next spike to get out what you put in.

In all cases, I recommend the same thing as a (well...now, soon-to-be former) banker, sit down with a trusted financial professional and ask them what they'd do.

I've dealt with a few of them, and all of them ended up losing BIG bucks for me. But they still made their commissions.

I know a great many of them too, but I can count on 3 fingers the ones I'd take advice from and two out of the 3 wouldn't charge me $0.01 over their costs. (The third guy is actually my financial adviser and I don't mind paying him because he's pulling solid returns in this economy.) Doesn't have to be an investment representative either, just someone who actually knows their business.

Why in the hell do you want to dump money into something like precious metals at this point. Wait for the bubble to burst instead, and then buy low.

I know it's going to burst soon enough so I thought about waiting for it, then buying. I can't afford to really invest at these rates.

I was curious about if anyone here had done anything like that before the market went up.

Early last month, it was nearing $50. Now it is $35 or so, and essentially treading water.

The gold market, however, is a completely different animal. Whereas the silver price is influenced greatly by US demand, the gold price is influenced by global demand. I've seen people bragging about how they sold gold at $900 or $1000, only to see it rise up to $1500. I've also seen people claim that they'll get back in the gold market when it goes to $400 or $500 or whatever. Good luck with that. China and India are big buyers of gold right now, while European central banks have stopped manipulating the gold market, so it's doubtful the gold market will fall to anywhere near those levels.

whether it be precious metals or the stock market.

The only method that works is dollar cost averaging, or buying a certain amount at the same time every month (or week), for a long period of time.

right now. They are both very highly priced.

Go to any online broker such as www.sharebuilder.com and you can buy index funds for market value and it only costs as much as your brokerage fee, which I think is $7.99 per trade there. (maybe $9.99)?

For something long term for your kids I would get a small cap growth fund and then just add to it monthly or yearly or however you'd like. It should rise steadily over time but don't get freaked out and sell during the down periods. The down turns in the stock market are much less catastrophic than those with precious metals.

for the price to get to where it was when I bought it. It still has not got there. I was young and dumb (and lucky to have had very little money to invest), and I bought at the top of the market thinking it was just going to continue to go up. I think that the gold and silver markets are high now. Too bad you didn't buy a couple of years ago. But you didn't. The PTB would love for you to get sucked into the frenzy so they can take your money, but when there is a frenzy, always know that it is not the right time. Always.

So ask yourself, can I lose all this money? Do I have 30 years or more to wait for a return on my investment? Do I have any idea what the hell I am doing?

This is a good way to lose every penny you own.

they are not very well diversified and can see extreme price volatility, meaning you can see the value of your investment plummet almost overnight (or, conversely, soar).

So before you invest a single penny, ask yourself this question: how would you feel if the value of your investment plunged by 50% in a single year? So, for example, you invest $1,000 on January 2 and on December 31, that investment is only worth $500 if you have to sell it to meet some unforseen need. Think a 50% plunge can't happen? Check out what happened to high tech superstar Cisco from its height to its bottom when the internet bust happened back in 1999-2000. I watched colleagues who had bought at $85/share see the value shrink to below $20/share in the space of, IIRC, about 6 months. A lot of unhappy campers where I worked.

I do think there is an exchange traded fund that holds gold bullion that you can purchase small amounts of if you simply must own gold. (The ticker symbol is 'GLD'.) Advantages are that you don't actually have to store any gold yourself (a big pain in the ass) and because the ETF is traded on a stock exchange like any stock, it is highly liquid, meaning you can sell your shares any day the stock market is open. (There is also an ETF for silver whose ticker symbol is 'SLV'.)

Before you invest, though, you might want to check out Charles Schwab. Very user-friendly to the new investor and awesome customer service.