Any precious metal investors around here?

I have been buying gold and silver coins.  

Bought a Canadian Maple Leaf apiece for myself and my sister last year. Nothing else since then.

I invested $7000 in a gold mining company and made a $9000 dollar profit from it...does that count?

 

You might want to look at investing in Avalon Rare Metals Inc

all my "precious" metals are sheathed in rubber, plastic and fabric

I'll take a swing at the hornet's nest!

Yes, I'm hedging, but not with precious metals. I don't think they have enough utility and, further, they're in a hell of a bubble.

There is some limited utility in electronics, but other than that, precious metals are mostly for jewelry and decoration. A bar of gold really doesn't have any utility to its owner. You can't use it for the basics - water, food and shelter. It mostly has decorative value.

Another consideration is that production is through the roof. Thanks to the demand, they're mining precious metals like crazy. Usually, when supply goes up, prices go down. But not in a bubble.

Also consider that whatever "investment" is considered a safe bet because "everyone" is buying it is always an indication that something is overvalued and possibly in a bubble. Tech stocks were unbeatable about ten years ago. Remember when real estate was going to continue going up forever? Same thing is going on here - the smart money has already pulled out or is hedging their bets against precious metals.

Me? I like cash, blue-chip tangible goods and real property.

We're set for hyperinflation, but it hasn't kicked in yet. So it's still safe to hold cash, even at low rates. Good tangibles wouldn't be speculating on a particular rare car. But if you can find a nice old Mustang or Corvette for $5,000, that's safe. If inflation kicks in hard, the Mustang might end up worth $15k-$20k in a few years. That wouldn't be so bad, would it? A nice return and you'd get to drive it in the meantime. I've also bought some nice tools, since those hold value and will shoot up with inflation. Same with some old radios, fountain pens and watches I have. I've been into those for years and know the market - I wouldn't recommend collectibles unless you've been watching the market for some time.

Real property is very good right now, believe it or not. In some markets, you can actually collect rents that provide a profit over mortgage and expenses. My family and I are closing in on seven units. We can put down probably 50% or better and they'll gross around $4,000 a month. If inflation kicks in, rents might double. But the mortgage will be the same. It'd be paid off fast and would then mostly generate cash.

Also looking at buying a wreck of an old house. It needs everything, but could be bought cheap. Thing is, if you get it on the National Historic Register you get a 20% tax credit on all expenses. Also, in Arizona (where it is), the Registry will result in property taxes at 1/20 (!) of the normal rate. That makes all kinds of sense.

Further, real property gets you a mortgage deduction and you get to expense all repairs. Precious metals don't give you any kind of tax benefits. You have to consider taxes in the mix - they can make an investment much better when you consider the whole picture. Rents also give you unearned income. For me, unearned income is the alpha and omega of investing. The goal is to get where you don't have to pull 40 hours weeks to put food on the table.

I'm also considering a piece of agricultural property. I've only scratched the surface but, my word, there are a host of benefits to owning a gentleman's farm. Not the least of which is an opportunity to buy cheaper gasoline.

I'll get back into securities when the market dumps. It's being propped up with funny money (bailouts, etc.) right now. But when it goes, it'll undershoot. When that happens, I'll buy into heavy industry, mining, pharma, utilities, tech (basic producers, not end products like Apple or Microsoft), and possibly defense. But stocks are overvalued right now.

Anyhow, with $300, I'd sit on it in cash right now. If the market dips, I'd roll it into something like an electric or natural gas utility. Many of those pay dividends and they're not going away no matter what. They will always have a market to sell to.

 

I'd say if you really expect to see returns off of precious metals, you're gonna wanna invest a lot more than just a grand into it. That's exactly why I don't invest a whole lot. I bought my sister one maple leaf as a single big present for an entire year (that way, I don't have to think about what to get her for every occasion for the coming year), and frankly, she can do whatever she wants with hers. When my parents were younger, they bought some gold and silver bullion coins and while they still have a couple, they melted a couple down for the metal so that they could make jewelery, etc at cost for my mother. Likely, that's what the fate of my maple leaf will be in the future. Once I had enough money sitting around in my accounts, I went straight to my Dad's investment banker, as well as another my mother knew personally at Wells Fargo, gave them each a portion and told them to open up mutual funds.
 

This is something I really need to start looking into. Investing is something I never really had much interest in...all I wanted to do is spend any cash I had...still do, but times are certainly changing and I am getting older and with a family I need to really start looking towards the future. My oldest will be heading off for college in 14 short years, my youngest just a few year after that...if I don't start doing something soon...well...it's going to hurt. It would also be nice to have some money for when I retire. Right now I don't have much to invest but next summer I'll be starting a new job that pays decently so I'll have some extra cash to play with.

 

Can anyone suggest some good, easy to understand reading for someone just starting to look into such things?

I do some. I buy a little silver each month. Usually 3-5 ounces. That's the nice thing with silver, it's relatively cheap. Over the years I've sold some and and bought some gold. Slow and steady. You don't need to start big. Just start buying a little at a time. It adds up. Most of the money I use is money I don't miss. My change jar accumulates about $300 every few months. I use it to buy silver. Don't forget about old silver coins either. A 90% silver quarter (1932-1964) is worth a little over $5 in silver value. Not too shabby. My advice is do some research and start slow. Deals that seem to good to be true usually are. If you buy gold or silver (or palladium or platinum for that matter) don't fall for the "numismatic value"  angle. I collect coins as well and when I buy precious metals that is all I want. Those gold and silver sellers on TV will sell you stuff at very high premiums. DON'T BUY FROM THEM! You can buy  online from very reputable dealers  at modest premiums. I have dealt with Provident Metals. Monarch Precious Metals, ans APMEX. Just google them. All have very good reputations. I buy for long term. If you are buying short term then that is a whole different ball game.

Edited by KCrabbe - 1/12/11 at 10:29am