Do I buy silver and gold based on OUNCES or DOLLARS SPENT???
I've had a lot of individuals and my Blog Readers ask me: "How Much Silver and Gold Should I own"? Of course, I ALWAYS tell them: "It Depends". The "DEPENDS" is based on: "Why are you BUYING Silver and/or Gold". Remember the 4 basic reasons to buy Silver and Gold.
1. Pay Down Debt / Buy goods at a discount (Saving to pay off a big loan or saving to buy something)
2, Supplement Retirement / Preservation of Wealth (A self made annuity during retirement years or to protect your wealth/assets during inflationary periods)
3. Economic/Currency Armageddon (These are mostly preppers who think the economy, dollar, country, etc. are going to crash; and silver/gold will help in the aftermath)
4. Investing (Just as the name implies. People buying silver and gold hoping to sell it and make a profit).
I won't go over these 4 reasons in-depth; I've written enough blog posts about that. Go back and look through my blogs or email specific questions. I will go over how much each category of "Stacker" should purchase. And whether you should be looking at how much you purchase, in "Ounces" or in "Dollars Spent".
I will also say, as I ALWAYS DO, that the final decision is yours. ALSO, there is nothing wrong with stacking silver and gold for MULTIPLE REASONS. I do suggest however, if you do buy silver and gold for "Multiple Reasons", that you at least try to keep the stacks SEPARATE on Paper. If not, you may be too high or too low on your goals. Or it may take you too much time to reach one of your goals.
So, how much should you buy?
1. Pay Down Debt / Buy good at a discount: It obviously depends on the size of the debt or item you are trying to pay for. Similar to #4 (The INVESTOR), you obviously don't want to sell your silver and gold if it's LESS than you bought it for. "That would be pretty stupid". That's why, with this category, it's always important that "TIME IS ON YOUR SIDE". Yes, we'd all love to pay off our 30 year mortgage in 5 years. But the price of silver and gold may not be in place to make that happen. But silver and gold has almost ALWAYS maintained the "COST OF LIVING". As such, just take the extra money you WERE going to put towards the mortgage or other high loan, and use it to buy silver or gold. Then, when the amount of silver or gold reaches the value of the debt, or the item you wanted to buy, convert it back to cash and purchase your item or pay off your debt. Remember 2 things. (DON'T SELL AT A LOSS). If your debt is paid off before silver/gold increases in price, no big deal. Just hold it and sell it later when the price is right, and basically "Pay Yourself Back". Sort of like loaning yourself money. No biggie. 2nd thing to remember. Paying off debt is for long term debt like mortgages, long term student loans, 5-6 year auto loans, etc. NOT FOR HIGH INTEREST LOANS like Credit Cards. I've always said: Becoming Debt Free is your BEST INVESTMENT. Anyone who says it's GOOD to have debt, and you should instead INVEST your money, either has their head stuck in the 90's or they are idiots. At one time, you could make 5% on a savings account; 8-9% on a CD, and a mortgage was around 6-7%. You could make more money investing than you paid on debt. That's no longer true. Today, you MIGHT get 0.5% on a savings account and 1-2% on a CD. The average home loan is 4-5% and the typical credit card is around 12, 15, 18, or 21%. PAY OFF YOUR DEBT!!! Obviously, a mortgage, car loan, long term student loan, etc. are different. So, simply take any EXTRA money, you were going to put towards the debt or saving for an item each month, and buy silver/gold with it. Whatever that amount is. Then, when you have enough in current day dollars (To pay off the debt or buy the item), then do so. But again, don't sell at a loss. If the price of silver and gold is down below what you bought it for, simply keep paying the debt as normal, keep putting money into the silver/gold, and wait. You can always look at it as 'Paying YOURSELF back for a loan".
2. Supplement your retirement / Preserving wealth:This is relatively "SIMPLE MATH". For the supplementing retirement, just determine how much you want to supplement. After you figure out how much you'll have each month from retirement, IRA's, 401k, social security, etc. determine how much MORE you'll want to supplement your income with. REMEMBER HOWEVER: This supplement, is to be ICING ON THE CAKE. It's the type of supplement that allows you to SPLURGE and ENJOY your retirement. This is not to be considered part of your BUDGET. Not part of your MONTHLY INCOME that you Must Live on. Once you figure out how much you want to supplement, figure out what you THINK inflation will be, and therefor how much silver and gold you'll want. For me, I believe that the AVERAGE price of silver in the future, will be around $40-$50 an ounce. I say that, because I believe that Silver and Gold have held with inflation for as long as I have researched. As such, today, as I write, I believe Silver SHOULD be in the mid-to upper $20's. I think in 10-15 years, with the economy and inflation, that the average price will be about $40-$50. Of course, there will be times when silver can reach OVER $100 and Gold could be OVER $5,000 an ounce. But for an "Average, I like to use $40-$50 an ounce for silver and $1800-$2000 an ounce for gold. If it's MORE, that you are REALLY IN GRAVY!!! I don't think it will be less. So, if you want to supplement $1000-$2000 per year for vacations or to SPLURGE, That would be about 20-40 ounces PER YEAR. So, if you want to supplement 20 years of retirement, you'd need 400-800 ounces of silver. Or, a combination of Gold. Mind you, I believe silver and gold hang in with inflation. An ounce of silver in the early 1900's would buy what an ounce of silver will buy today; and will buy the same thing in 20 years.
That theory goes along with the preservation of wealth. The amount of silver or gold doesn't matter. Simply decide what percentage of money you want to save each month, (FOR THE FUTURE), then decide what percentage of THAT you want to be in silver and/or gold. Personally, I think 10-15% is a perfect number. If you decide you can save $500 a month, then take $50-$75 of that, and use it to buy silver. You need to consider your retirements, IRA's, 401k, etc. So, if you figure out that between your 401K, a ROTH IRA, and a saving account, you can save $1000 per month; (I use that number for simplicity); then make sure $100-$150 of that is for silver and/or gold, and the rest is in the IRA's, 401k, etc.
3. Economic/Currency Armageddon: These aren't JUST the preppers. This could be individuals, similar to those "Preserving their wealth", that are trying to prepare in case there is an economic crisis, dollar devaluation, Hyper-Inflation, etc. If you're old enough to remember, there were times when home loans were 10, 12, 14, 16%. There's times when gasoline was over $4 a gallon. Every economy has major financial breakdowns eventually. Whether you're a prepper who thinks movies like "THE POSTMAN" could be reality; or you're like back in 2007-2008 (Or even this week with the stock market tanking), you might want to prepare. One of the WORST THINGS that happens, and did happen, in times like 2007-2008, was people who lost their jobs and wound up going through their savings and cashing in their IRA's and 401K, and similar. If they could have left their 401k and IRA's alone, they would have gotten back ALL of their money, and would be AHEAD TODAY. But, they didn't have any other choices. If you have silver and gold, just like in the 2007 time frame when silver was around $10 an ounce; then around 2011 when things were going HYPER, silver went to almost $50 an ounce. You could have been using a few ounce per month to offset your expenses while you were looking for a new job or getting you through. As long as you were tapping into your long term savings and retirement. I would say that a good AVERAGE for the Non-Prepper, but the person wanting to protect them (INSURANCE) from destroying their long term savings and investments, is approximately 500 ounces. This would allow about 8 ounces a month; at $50, that's about $400 per month, for about 5 years. It doesn't matter what the cost is today. It's insurance. Simply set a plan to buy "X" amount of silver per month until you reach the 500 ounce mark. It will take about 2 years to save that much. But remember.... IT'S INSURANCE. The best part however..... is if you NEVER NEED IT for hyperinflation or similar economic reasons to hold you over, then you can use it later to supplement your retirement and enjoy your life. Or, leave it to your kids as THEIR insurance. When have you ever seen an "Insurance Policy", where you NEVER LOST YOUR PREMIUM?????? Never. You normally buy insurance, and if you don't die or get into a car accident, etc. you lose your premium. Not with silver and gold.
As for the prepper, you pretty much will buy "X" amount of silver or gold each month, as long as you have time. You normally have your food, shelter, water, clothing, medicine, protection, etc. already saved up. If you truly believe in an economic armageddon, then there really isn't TOO MUCH silver or gold to buy. But, I would say the 500 ounce of silver, and about 5 ounces of gold, would be a real good place to be. That will get you through 5-7 years. It would be the new currency until a new fiat currency is developed. In this economic scenario however, we aren't looking at the buying power of silver being in the $50 range. We're looking probably at silver being worth around $250-$300 per ounce, and gold being worth around $10,000-$12,000 an ounce. And considering that only about 1.5% of all Americans have any sizable amount of silver or gold saved up, you're going to be in GREAT SHAPE. As a prepper however, you need to realize that you will be doing a lot of bartering. Silver and gold will be traded for certain goods. If silver is worth $250 an ounce, even if a loaf of bread is $15.00 a load, it will be hard to give someone an ounce of silver and expect "CHANGE BACK". You're going to want very small pieces. 90% silver coins (1964 and older quarters, dimes, halves, and dollars) are your best choice. At $250 an ounce, that 1963 silver dime, will be worth about $17,80, You can use that to buy that loaf of bread, or whatever it is you're buying. But you don't want to have just 90% silver coins. There may be some higher priced items. Machined parts; fuel; etc. So, I still recommend about 500 ounces in silver and 5 ounces of gold. But I recommend about 400-450 in silver rounds, eagle, maple leafs, etc. (all 1 ounce); and about $100 FACE VALUE of 1964 and older silver dimes, quarters, and half dollars. That's about another 70 ounces.
4, The investor. The answer to this is REAL SIMPLE. However much you feel comfortable in investing in. I don't buy silver and gold for investment purposes. Don't get me wrong; if I have 100 ounces of silver, and the average price I spent was $15, and over time, the price of silver is at $30 an ounce; I would definitely trade in my silver. AT LEAST HALF of it so I could get me initial investment back. I'd still have 50 ounces, but that would be 100% FREE SILVER. Same applies if I had 200, 400, 600 , 1000 ounces of silver. If the price was right, I'd be stupid to not sell some. Especially if I can get my initial investment back. Of course, if there's a total collapse of the dollar, and THAT IS WHY an ounce of silver is $1000 per ounce, (Because NO ONE WANTS DOLLARS), then no, I wouldn't be selling them. But if anout 2011 came around and silver went back to $50-$60 an ounce........ yes, I'd sell some. But remember, I NEVER BOUGHT IT with the purpose of investment in mind. I personally buy silver for supplementing retirement, preserving wealth against inflation, and "POSSIBLE" economic collapse. I have also in the "Past" bought silver because I had time on my side, to pay down debt and to buy items at a discount. So I've done 3 of the 4 reasons to buy. But I've never bought silver or gold as an investment. That's not to say I didn't sell some back in 2011. That was simply coincidental.
Anyway; I hope this explains a little better how much, (Whether in ounces or dollars) you should be stacking. For the #3 people, preppers and people who think the dollar is going to crash and result in hyperinflation; I recommend about 500 ounces. This can also apply to some of the #2 folks who are trying to preserve wealth so they can diversify their future. For the #1 and #2 group, look at the percentage of dollars being spent/saved for debt, purchases, retirement, etc. and make take the extra money you wanted to put each month towards reducing that debt or saving for an item, and save it as silver. Or, 10-15%. of your total monthly savings that you are putting into your monthly IRA, ROTH, 401k, etc...
Remember, it's your future and your choice. I'm only here to give you a perspective. You will NEVER lose money on silver or gold;,,,,,,,,,, BUT, you may have to WAIT for the right time to sell. Just like a 401k or a mortgage. People whine that they lost $30000 in their 401k or the value of their real estate.... NO THEY DIDN'T!!! Not unless they SOLD IT. Same with silver and gold. It doesn't matter if you paid $20 an ounce, and today it's worth $15. YOU DIDN'T LOSE $5 an ounce. Not unless you sold it. So again, you have to have time on your side. Don't buy silver with money you MUST HAVE AS CASH at a fixed time period. But again, with inflation, silver and gold always hang in there. Look at today. In 1964, gasoline was about $0.25. Today, that SAME 1964 silver quarter, is worth $2,50. The average price of gas in California is $2.80 and nationally, it's about $2.08. And a few years ago, when gas was about $3.00 - $4.00 a gallon, silver was in the $20's and that silver quarter would still buy you a gallon of gas. So if you're buying silver to PRESERVE WEALTH, to SUPPLEMENT YOUR RETIREMENT, or in case of ECONOMIC/CURRENCY ARMAGEDDON and Hyper-Inflation; it doesn't matter what the price does for silver and gold. It will MAINTAIN IT'S VALUE. For you investors, you're on your own. For those paying down debt or saving for a purchase, you simply need time on your side.
Best of luck. Hope this helped.
CYA: SE:
1. Pay Down Debt / Buy goods at a discount (Saving to pay off a big loan or saving to buy something)
2, Supplement Retirement / Preservation of Wealth (A self made annuity during retirement years or to protect your wealth/assets during inflationary periods)
3. Economic/Currency Armageddon (These are mostly preppers who think the economy, dollar, country, etc. are going to crash; and silver/gold will help in the aftermath)
4. Investing (Just as the name implies. People buying silver and gold hoping to sell it and make a profit).
I won't go over these 4 reasons in-depth; I've written enough blog posts about that. Go back and look through my blogs or email specific questions. I will go over how much each category of "Stacker" should purchase. And whether you should be looking at how much you purchase, in "Ounces" or in "Dollars Spent".
I will also say, as I ALWAYS DO, that the final decision is yours. ALSO, there is nothing wrong with stacking silver and gold for MULTIPLE REASONS. I do suggest however, if you do buy silver and gold for "Multiple Reasons", that you at least try to keep the stacks SEPARATE on Paper. If not, you may be too high or too low on your goals. Or it may take you too much time to reach one of your goals.
So, how much should you buy?
1. Pay Down Debt / Buy good at a discount: It obviously depends on the size of the debt or item you are trying to pay for. Similar to #4 (The INVESTOR), you obviously don't want to sell your silver and gold if it's LESS than you bought it for. "That would be pretty stupid". That's why, with this category, it's always important that "TIME IS ON YOUR SIDE". Yes, we'd all love to pay off our 30 year mortgage in 5 years. But the price of silver and gold may not be in place to make that happen. But silver and gold has almost ALWAYS maintained the "COST OF LIVING". As such, just take the extra money you WERE going to put towards the mortgage or other high loan, and use it to buy silver or gold. Then, when the amount of silver or gold reaches the value of the debt, or the item you wanted to buy, convert it back to cash and purchase your item or pay off your debt. Remember 2 things. (DON'T SELL AT A LOSS). If your debt is paid off before silver/gold increases in price, no big deal. Just hold it and sell it later when the price is right, and basically "Pay Yourself Back". Sort of like loaning yourself money. No biggie. 2nd thing to remember. Paying off debt is for long term debt like mortgages, long term student loans, 5-6 year auto loans, etc. NOT FOR HIGH INTEREST LOANS like Credit Cards. I've always said: Becoming Debt Free is your BEST INVESTMENT. Anyone who says it's GOOD to have debt, and you should instead INVEST your money, either has their head stuck in the 90's or they are idiots. At one time, you could make 5% on a savings account; 8-9% on a CD, and a mortgage was around 6-7%. You could make more money investing than you paid on debt. That's no longer true. Today, you MIGHT get 0.5% on a savings account and 1-2% on a CD. The average home loan is 4-5% and the typical credit card is around 12, 15, 18, or 21%. PAY OFF YOUR DEBT!!! Obviously, a mortgage, car loan, long term student loan, etc. are different. So, simply take any EXTRA money, you were going to put towards the debt or saving for an item each month, and buy silver/gold with it. Whatever that amount is. Then, when you have enough in current day dollars (To pay off the debt or buy the item), then do so. But again, don't sell at a loss. If the price of silver and gold is down below what you bought it for, simply keep paying the debt as normal, keep putting money into the silver/gold, and wait. You can always look at it as 'Paying YOURSELF back for a loan".
2. Supplement your retirement / Preserving wealth:This is relatively "SIMPLE MATH". For the supplementing retirement, just determine how much you want to supplement. After you figure out how much you'll have each month from retirement, IRA's, 401k, social security, etc. determine how much MORE you'll want to supplement your income with. REMEMBER HOWEVER: This supplement, is to be ICING ON THE CAKE. It's the type of supplement that allows you to SPLURGE and ENJOY your retirement. This is not to be considered part of your BUDGET. Not part of your MONTHLY INCOME that you Must Live on. Once you figure out how much you want to supplement, figure out what you THINK inflation will be, and therefor how much silver and gold you'll want. For me, I believe that the AVERAGE price of silver in the future, will be around $40-$50 an ounce. I say that, because I believe that Silver and Gold have held with inflation for as long as I have researched. As such, today, as I write, I believe Silver SHOULD be in the mid-to upper $20's. I think in 10-15 years, with the economy and inflation, that the average price will be about $40-$50. Of course, there will be times when silver can reach OVER $100 and Gold could be OVER $5,000 an ounce. But for an "Average, I like to use $40-$50 an ounce for silver and $1800-$2000 an ounce for gold. If it's MORE, that you are REALLY IN GRAVY!!! I don't think it will be less. So, if you want to supplement $1000-$2000 per year for vacations or to SPLURGE, That would be about 20-40 ounces PER YEAR. So, if you want to supplement 20 years of retirement, you'd need 400-800 ounces of silver. Or, a combination of Gold. Mind you, I believe silver and gold hang in with inflation. An ounce of silver in the early 1900's would buy what an ounce of silver will buy today; and will buy the same thing in 20 years.
That theory goes along with the preservation of wealth. The amount of silver or gold doesn't matter. Simply decide what percentage of money you want to save each month, (FOR THE FUTURE), then decide what percentage of THAT you want to be in silver and/or gold. Personally, I think 10-15% is a perfect number. If you decide you can save $500 a month, then take $50-$75 of that, and use it to buy silver. You need to consider your retirements, IRA's, 401k, etc. So, if you figure out that between your 401K, a ROTH IRA, and a saving account, you can save $1000 per month; (I use that number for simplicity); then make sure $100-$150 of that is for silver and/or gold, and the rest is in the IRA's, 401k, etc.
3. Economic/Currency Armageddon: These aren't JUST the preppers. This could be individuals, similar to those "Preserving their wealth", that are trying to prepare in case there is an economic crisis, dollar devaluation, Hyper-Inflation, etc. If you're old enough to remember, there were times when home loans were 10, 12, 14, 16%. There's times when gasoline was over $4 a gallon. Every economy has major financial breakdowns eventually. Whether you're a prepper who thinks movies like "THE POSTMAN" could be reality; or you're like back in 2007-2008 (Or even this week with the stock market tanking), you might want to prepare. One of the WORST THINGS that happens, and did happen, in times like 2007-2008, was people who lost their jobs and wound up going through their savings and cashing in their IRA's and 401K, and similar. If they could have left their 401k and IRA's alone, they would have gotten back ALL of their money, and would be AHEAD TODAY. But, they didn't have any other choices. If you have silver and gold, just like in the 2007 time frame when silver was around $10 an ounce; then around 2011 when things were going HYPER, silver went to almost $50 an ounce. You could have been using a few ounce per month to offset your expenses while you were looking for a new job or getting you through. As long as you were tapping into your long term savings and retirement. I would say that a good AVERAGE for the Non-Prepper, but the person wanting to protect them (INSURANCE) from destroying their long term savings and investments, is approximately 500 ounces. This would allow about 8 ounces a month; at $50, that's about $400 per month, for about 5 years. It doesn't matter what the cost is today. It's insurance. Simply set a plan to buy "X" amount of silver per month until you reach the 500 ounce mark. It will take about 2 years to save that much. But remember.... IT'S INSURANCE. The best part however..... is if you NEVER NEED IT for hyperinflation or similar economic reasons to hold you over, then you can use it later to supplement your retirement and enjoy your life. Or, leave it to your kids as THEIR insurance. When have you ever seen an "Insurance Policy", where you NEVER LOST YOUR PREMIUM?????? Never. You normally buy insurance, and if you don't die or get into a car accident, etc. you lose your premium. Not with silver and gold.
As for the prepper, you pretty much will buy "X" amount of silver or gold each month, as long as you have time. You normally have your food, shelter, water, clothing, medicine, protection, etc. already saved up. If you truly believe in an economic armageddon, then there really isn't TOO MUCH silver or gold to buy. But, I would say the 500 ounce of silver, and about 5 ounces of gold, would be a real good place to be. That will get you through 5-7 years. It would be the new currency until a new fiat currency is developed. In this economic scenario however, we aren't looking at the buying power of silver being in the $50 range. We're looking probably at silver being worth around $250-$300 per ounce, and gold being worth around $10,000-$12,000 an ounce. And considering that only about 1.5% of all Americans have any sizable amount of silver or gold saved up, you're going to be in GREAT SHAPE. As a prepper however, you need to realize that you will be doing a lot of bartering. Silver and gold will be traded for certain goods. If silver is worth $250 an ounce, even if a loaf of bread is $15.00 a load, it will be hard to give someone an ounce of silver and expect "CHANGE BACK". You're going to want very small pieces. 90% silver coins (1964 and older quarters, dimes, halves, and dollars) are your best choice. At $250 an ounce, that 1963 silver dime, will be worth about $17,80, You can use that to buy that loaf of bread, or whatever it is you're buying. But you don't want to have just 90% silver coins. There may be some higher priced items. Machined parts; fuel; etc. So, I still recommend about 500 ounces in silver and 5 ounces of gold. But I recommend about 400-450 in silver rounds, eagle, maple leafs, etc. (all 1 ounce); and about $100 FACE VALUE of 1964 and older silver dimes, quarters, and half dollars. That's about another 70 ounces.
4, The investor. The answer to this is REAL SIMPLE. However much you feel comfortable in investing in. I don't buy silver and gold for investment purposes. Don't get me wrong; if I have 100 ounces of silver, and the average price I spent was $15, and over time, the price of silver is at $30 an ounce; I would definitely trade in my silver. AT LEAST HALF of it so I could get me initial investment back. I'd still have 50 ounces, but that would be 100% FREE SILVER. Same applies if I had 200, 400, 600 , 1000 ounces of silver. If the price was right, I'd be stupid to not sell some. Especially if I can get my initial investment back. Of course, if there's a total collapse of the dollar, and THAT IS WHY an ounce of silver is $1000 per ounce, (Because NO ONE WANTS DOLLARS), then no, I wouldn't be selling them. But if anout 2011 came around and silver went back to $50-$60 an ounce........ yes, I'd sell some. But remember, I NEVER BOUGHT IT with the purpose of investment in mind. I personally buy silver for supplementing retirement, preserving wealth against inflation, and "POSSIBLE" economic collapse. I have also in the "Past" bought silver because I had time on my side, to pay down debt and to buy items at a discount. So I've done 3 of the 4 reasons to buy. But I've never bought silver or gold as an investment. That's not to say I didn't sell some back in 2011. That was simply coincidental.
Anyway; I hope this explains a little better how much, (Whether in ounces or dollars) you should be stacking. For the #3 people, preppers and people who think the dollar is going to crash and result in hyperinflation; I recommend about 500 ounces. This can also apply to some of the #2 folks who are trying to preserve wealth so they can diversify their future. For the #1 and #2 group, look at the percentage of dollars being spent/saved for debt, purchases, retirement, etc. and make take the extra money you wanted to put each month towards reducing that debt or saving for an item, and save it as silver. Or, 10-15%. of your total monthly savings that you are putting into your monthly IRA, ROTH, 401k, etc...
Remember, it's your future and your choice. I'm only here to give you a perspective. You will NEVER lose money on silver or gold;,,,,,,,,,, BUT, you may have to WAIT for the right time to sell. Just like a 401k or a mortgage. People whine that they lost $30000 in their 401k or the value of their real estate.... NO THEY DIDN'T!!! Not unless they SOLD IT. Same with silver and gold. It doesn't matter if you paid $20 an ounce, and today it's worth $15. YOU DIDN'T LOSE $5 an ounce. Not unless you sold it. So again, you have to have time on your side. Don't buy silver with money you MUST HAVE AS CASH at a fixed time period. But again, with inflation, silver and gold always hang in there. Look at today. In 1964, gasoline was about $0.25. Today, that SAME 1964 silver quarter, is worth $2,50. The average price of gas in California is $2.80 and nationally, it's about $2.08. And a few years ago, when gas was about $3.00 - $4.00 a gallon, silver was in the $20's and that silver quarter would still buy you a gallon of gas. So if you're buying silver to PRESERVE WEALTH, to SUPPLEMENT YOUR RETIREMENT, or in case of ECONOMIC/CURRENCY ARMAGEDDON and Hyper-Inflation; it doesn't matter what the price does for silver and gold. It will MAINTAIN IT'S VALUE. For you investors, you're on your own. For those paying down debt or saving for a purchase, you simply need time on your side.
Best of luck. Hope this helped.
CYA: SE:
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