How much silver vs gold should you own?
One thing about blogs. You answer one question, and readers come up with more great questions. The "Saga Continues".
So, a few posts back, I wrote about how much silver I recommended people to own. Remember, it all depends on WHY you are buying silver (and gold) and what you plan to do with it. The reader's digest version of that post was:
1. If you're a stacker, and believe without doubt, that there is going to be basically an "Economic Armageddon", then there obviously isn't a limit. You buy as much as you can always.
2. If you're buying as an investor, then I believe (as is generally accepted by heavy investors), that around 10-15% of the money you spend on investments, whether for retirement or to make money, should be in gold and silver
3. If you're buying silver and gold to reduce debt or buy items at a discount, the amount depends on what you're wanting to pay for. You might buy so much each month until it equals the balance of the debt you have or it reaches the price of the item you're wanting to buy. Remember however, to keep good records. If you bought silver and gold in 2011-2012 when the price was $35 for silver and $1600 for gold, and your dollar cost average is above today's spot price, you might not want to sell at this time.
4. If you're buying silver and gold to hedge against inflation and protect your assets so you don't have to liquidate your retirement accounts or deplete your savings account, then I recommend between 500 and 1000 ounces (Depending on your income). 500 ounces at $30 an ounce, cashing in 10 per month ($300 per month supplemental income), will last you about 4 years. That should be plenty of time to weather an inflation period without killing your savings or investment accounts. They in turn will be able to come back. E.g. 2008 stock crash. I am well ahead now 7 years later. The losses has been restored and I'm in the Black. Those who tapped their stocks, bonds, IRA's, 401K, etc. and stopped putting money into them when the market was in the toilet, are still in the negative.
Now, as most of my readers know, I usually very pro "Silver" when a choice between that and gold. But I've also said over and over again, that you need to diversify. The main reason I am more bullish on silver than gold; at least at this point in time; is because of the Silver to Gold ratio. As of today, it takes almost 73 ounce of silver to equal 1 ounce of gold. That is WAY UNDER VALUED!!! A normal and healthy ratio, since the dollar is no longer backed by gold, is around 40-50:1 ratio. That means today, silver should be at about the $30 an ounce range. That's why I'm so pro silver. It has so much more potential for growth.
But do I believe you should own some gold? Most definitely. So, the question was posed to me: "Ho Much". Well, based on the 4 types of silver/gold buyers I listed above, there will be different suggestions.
1. STACKER/Economic Armageddon: I suggest a 50/50 split in silver and gold. The silver portion should be broken down into 1/3 90% or some other micro-denominational amount. Good for spending as needed. 2/3 in 1 ounce rounds. Either eagles, maples, philharmonics, or even generic rounds. As for gold, I'd stay with one ounce government issued such as Eagles, Maple leafs, Philharmonic, Krugerrand, and even the Austrian/Hungarian 100 Corona pieces. These are all known and trusted and you'll be able to use the gold for the higher price bartering or purchasing
2. INVESTOR: I also suggest a 50/50 split. But you should be buying the least premiums possible. That usually means 10 ounce bars of silver and 1 ounce gold bars. If you're buying strictly for investment purposes, you'll find a source to buy and sell too. The best bang for the buck is the largest generic, yet recognizable that you can buy. This will be the lowest premium.
3. REDUCE DEBT/BUY ITEMS AT A DISCOUNT: I suggest 100% silver. (AT THIS TIME). Because most of these buyers have certain numbers in mind; such as paying off your house or buying a new car; it's a little easier to choose. Currently, silver is so undervalued, that it has the greatest potential for gain. Either gold has to go down, or silver has to go up. Based on my blog where I wrote what you could buy for an ounce of gold and silver over the last 100+ years, you'll see that gold is about where it should be. Silver on the other hand is quite undervalued. Now, if the ratio was to drop to 30-40:1 ratio, I'd suggest trading in ALL the silver for gold. And when the ratio hit back to 60-70:1, I'd say trade all the gold for silver. So today, buy 100% silver. If it gets around 50:1 go 50/50 gold and silver. If it gets to 30-40:1 go 100% in gold. Of course, it's not always easy to buy an ounce of gold. (NEVER BUY SMALL GOLD INCREMENTS) So if you can't buy gold when it's 30-40:1 ratio, but the silver, and when you have enough to trade it back for gold, do so.
4. HEDGER/ASSET PROTECTION/INSURANCE: I say 75% silver and 25% gold. Some can actually see this as a combination of #1 and #3. The difference is the STACKER/SHTF like in #1, will NEVER sell their silver or gold unless they have to, to survive. The "HEDGER/Asset Protector" needs to look at being able to sell the silver or gold back to supplement their income without raiding their Long Term Investments such as 401K, IRA, etc. or depleting their savings account. Unlike #3, these folks don't sell because the price is good and they are reducing debt or buying a new car or similar. They are holding it so they don't have to touch their savings and investments. Because they believe and know, that the gold and silver will hold it's value. They need increments small enough so they can sell back around 10 ounces a month. 10 ounce bars are OK. 1 ounce rounds are better. But only go for gold or incremental gold/silver, if you can get it at very low premiums. Same with 90% silver.
Of course, each person is different. Some combine parts of each category. I am mainly a #4 Hedger/AssProt/Insurance type of buyer. But I've been a #3 and bought silver specifically for using it over time to pay off debt and buy things at a discount. And even though I'm basically a #4, I also keep a bit of 90% American Silver currency on hand because it's such small denominations, that I can use it for spending if the SHTF. So it's ok to mix the reasons you buy gold and silver. And the #3 above can definitely own some gold. I'm simply suggesting the ratio that you should own as a minimum for your requirements. Hope this was helpful.
CYA: SE:
So, a few posts back, I wrote about how much silver I recommended people to own. Remember, it all depends on WHY you are buying silver (and gold) and what you plan to do with it. The reader's digest version of that post was:
1. If you're a stacker, and believe without doubt, that there is going to be basically an "Economic Armageddon", then there obviously isn't a limit. You buy as much as you can always.
2. If you're buying as an investor, then I believe (as is generally accepted by heavy investors), that around 10-15% of the money you spend on investments, whether for retirement or to make money, should be in gold and silver
3. If you're buying silver and gold to reduce debt or buy items at a discount, the amount depends on what you're wanting to pay for. You might buy so much each month until it equals the balance of the debt you have or it reaches the price of the item you're wanting to buy. Remember however, to keep good records. If you bought silver and gold in 2011-2012 when the price was $35 for silver and $1600 for gold, and your dollar cost average is above today's spot price, you might not want to sell at this time.
4. If you're buying silver and gold to hedge against inflation and protect your assets so you don't have to liquidate your retirement accounts or deplete your savings account, then I recommend between 500 and 1000 ounces (Depending on your income). 500 ounces at $30 an ounce, cashing in 10 per month ($300 per month supplemental income), will last you about 4 years. That should be plenty of time to weather an inflation period without killing your savings or investment accounts. They in turn will be able to come back. E.g. 2008 stock crash. I am well ahead now 7 years later. The losses has been restored and I'm in the Black. Those who tapped their stocks, bonds, IRA's, 401K, etc. and stopped putting money into them when the market was in the toilet, are still in the negative.
Now, as most of my readers know, I usually very pro "Silver" when a choice between that and gold. But I've also said over and over again, that you need to diversify. The main reason I am more bullish on silver than gold; at least at this point in time; is because of the Silver to Gold ratio. As of today, it takes almost 73 ounce of silver to equal 1 ounce of gold. That is WAY UNDER VALUED!!! A normal and healthy ratio, since the dollar is no longer backed by gold, is around 40-50:1 ratio. That means today, silver should be at about the $30 an ounce range. That's why I'm so pro silver. It has so much more potential for growth.
But do I believe you should own some gold? Most definitely. So, the question was posed to me: "Ho Much". Well, based on the 4 types of silver/gold buyers I listed above, there will be different suggestions.
1. STACKER/Economic Armageddon: I suggest a 50/50 split in silver and gold. The silver portion should be broken down into 1/3 90% or some other micro-denominational amount. Good for spending as needed. 2/3 in 1 ounce rounds. Either eagles, maples, philharmonics, or even generic rounds. As for gold, I'd stay with one ounce government issued such as Eagles, Maple leafs, Philharmonic, Krugerrand, and even the Austrian/Hungarian 100 Corona pieces. These are all known and trusted and you'll be able to use the gold for the higher price bartering or purchasing
2. INVESTOR: I also suggest a 50/50 split. But you should be buying the least premiums possible. That usually means 10 ounce bars of silver and 1 ounce gold bars. If you're buying strictly for investment purposes, you'll find a source to buy and sell too. The best bang for the buck is the largest generic, yet recognizable that you can buy. This will be the lowest premium.
3. REDUCE DEBT/BUY ITEMS AT A DISCOUNT: I suggest 100% silver. (AT THIS TIME). Because most of these buyers have certain numbers in mind; such as paying off your house or buying a new car; it's a little easier to choose. Currently, silver is so undervalued, that it has the greatest potential for gain. Either gold has to go down, or silver has to go up. Based on my blog where I wrote what you could buy for an ounce of gold and silver over the last 100+ years, you'll see that gold is about where it should be. Silver on the other hand is quite undervalued. Now, if the ratio was to drop to 30-40:1 ratio, I'd suggest trading in ALL the silver for gold. And when the ratio hit back to 60-70:1, I'd say trade all the gold for silver. So today, buy 100% silver. If it gets around 50:1 go 50/50 gold and silver. If it gets to 30-40:1 go 100% in gold. Of course, it's not always easy to buy an ounce of gold. (NEVER BUY SMALL GOLD INCREMENTS) So if you can't buy gold when it's 30-40:1 ratio, but the silver, and when you have enough to trade it back for gold, do so.
4. HEDGER/ASSET PROTECTION/INSURANCE: I say 75% silver and 25% gold. Some can actually see this as a combination of #1 and #3. The difference is the STACKER/SHTF like in #1, will NEVER sell their silver or gold unless they have to, to survive. The "HEDGER/Asset Protector" needs to look at being able to sell the silver or gold back to supplement their income without raiding their Long Term Investments such as 401K, IRA, etc. or depleting their savings account. Unlike #3, these folks don't sell because the price is good and they are reducing debt or buying a new car or similar. They are holding it so they don't have to touch their savings and investments. Because they believe and know, that the gold and silver will hold it's value. They need increments small enough so they can sell back around 10 ounces a month. 10 ounce bars are OK. 1 ounce rounds are better. But only go for gold or incremental gold/silver, if you can get it at very low premiums. Same with 90% silver.
Of course, each person is different. Some combine parts of each category. I am mainly a #4 Hedger/AssProt/Insurance type of buyer. But I've been a #3 and bought silver specifically for using it over time to pay off debt and buy things at a discount. And even though I'm basically a #4, I also keep a bit of 90% American Silver currency on hand because it's such small denominations, that I can use it for spending if the SHTF. So it's ok to mix the reasons you buy gold and silver. And the #3 above can definitely own some gold. I'm simply suggesting the ratio that you should own as a minimum for your requirements. Hope this was helpful.
CYA: SE:
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