10 mistakes many silver buyers make

There are plenty of posts on the internet that talk about mistakes when buying precious metals. All counted, I could probably find 20-30 mistakes. But I want to be practical and realistic. Below, I have listed 10 mistakes; or rather DO's/DON'Ts that many people encounter. I also finished with a though on when it's ok to sell some of that silver. Remember; we talk about buying to preserve wealth during inflation and economic armageddon; as well as to supplement our retirement. But I've also mentioned using it to pay down debt or to buy items at a discount. I don't however really mention these last 2. I did add a little about that afterwards.

So; these are my words. My warnings. Be smart with your silver accumulations.

CYA: SE:
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Some of the mistakes/Do's/Don't some people make. 

1. Chasing the Price: Too many people try to TIME their buying and selling of silver. That’s fine if you’re buying for INVESTMENT purposes; but remember, we don’t buy for investment purposes. So set yourself up a budget plan, and stick to it. DCA: Dollar Cost Averaging. Know how much silver you want to accumulate, and then plan on purchasing “X” amount every week or month or whatever you decide. DOESN’T MATTER what the price is. Don’t think because it’s cheaper this week than last week that you should buy MORE. Use Dollar Cost Averaging. Buy a set amount at a set time and stick to it.

2. Not Setting a Goal: I’ve spoken in the past many times about how much silver and gold a person should own. You need to set a goal on how much you want to buy. You will read some that say there is no such thing as TOO MUCH. That’s fine if you’re “Prepper” and you think the end of the economic world is coming. But for most people, you need to keep your silver and gold as your LIQUID savings. Same as cash at home or in the bank. Make sure you are still INVESTING in your retirement as normal. Don’t make silver and gold your retirement. You should still have a 401k, ROTH IRA, paying off your house, being debt free, etc. These are the areas that will set up your retirement. Silver and gold are there to preserve wealth and to supplement. Set your goal and reach it. If you want to readdress it after reaching it, and you feel you can buy more later, then do so. But don’t forsake your primary retirement by buying only silver and gold.

3. Buying too much: This goes in line with #2 above. Don’t have thousands of ounces of silver and gold, and have no cash on hand or in savings. Because silver and gold don’t make interest, and it’s price is tied to the economy, you could find yourself having to SELL it at a loss. If your average price that you bought over so many years is $20 an ounce, it’s not smart to sell it at $18; because you have no cash on hand and you run across a financial need. Make sure you have your 3-6 months of cash savings as a minimum. Then worry about buying silver.

4. Part of Investment instead of cash: Too many people consider silver and gold as part of their investments. No matter how many times I explain it and tell them differently. If you are buying silver and gold as an “Investment”, then this blog isn’t for you. Remember; the 4 main reasons WE BUY silver; and to an extent gold; is a) Supplement retirement; b) Preserve wealth during inflation; c) If timing coincides, use it to pay down debt; and d) If timing coincides, purchasing items at a discount. If bought as an investment, you’re going to get frustrated because the price is going to always fluctuate. Especially if you are continually buying based on #2 and #3 above. Silver and gold need to be looked at as part of your CASH holding. NOT as part of your Investments.

5. Obsessing or Stressing over the price fluctuation: If you obsess or stress over the current price, you’re in for a headache. Chances are, you’ll screw up in #1 above and buy too much at one time, or not buy any on a scheduled buy day because you’re worried about the price. If you have the amount you set your goal for, and you obsess or stress over the current price because you’re below the break even point, you make be tempted to sell and “Cut your Losses”. Or, if the price is higher, you may be tempted to sell and take the profits. Silver and gold WILL maintain purchasing power over time in the long run. We buy it for the future; not for today. Once you have your goal met, don’t even look at the price.

6. Not diversifying: I’m not talking about mixing silver and gold with your other assets and investments; like in #4 above. I’m talking about having all the same type of silver. I recently posted the TYPE of silver you should own. Just because Silver Bars; e.g. 10 and 100 ounce; are the cheapest premiums, doesn’t mean you should only buy that. Transversely, some think that they should only own American Silver Eagles because they are the most recognized. If you buy just the big bars, you’ll have a difficult time selling or trading them when the time comes. What if you only need/want to supplement a couple hundred dollars, but you only have a 100 ounce bar that is worth $5,000 when silver is $50 an ounce. Or even the 10 ounce bar worth $500. And what about paying all that extra premium for eagles and maple leafs, vs rounds. At $3-$4 an ounce over spot for eagles; vs $2 over spot for rounds; if you have 500 ounces of eagle, that’s another 10% in silver (50 ounces) you could have had by buying rounds. There’s pros and cons for every TYPE of silver. Diversify and have some of each.

7. Paying too high of a premium: Similar to #6 above, but many people also buy commemorative silver rounds such as a star trek round, wizard of oz, colorized eagle, or any other “Commemorative”. Even today, at $18 an ounce spot, there are rounds out there selling for $28-$38 an ounce because it’s a “COMMEMORATIVE” something or another. Same with buying MS-70 eagles at $50 or similar. These con-artists are trying to sell you investments. If the time comes that silver is used as money, or has the value to offset a hyperinflated economy, that MS-70 silver eagle will be worth the exact same as a regular eagle or regular round. 1 OUNCE OF SILVER!!! Don’t get scammed into buying commemorative silver. Even morgan and silver dollars. You can find some decent deals, but don’t get suckered into buying the “Brilliant Uncirculated” ones at 2-3 times the price.

8. Paying with the wrong funds: This is a little tricky. If possible, the best way to buy your silver and gold, is with CASH. If you can buy it locally at a coin shop, in cash, there will normally be no trail of your purchase. Not trying to say you should hide your purchases; but at the same time, it’s no one elses business what you’re buying. Even the government. It’s ok to pay with a check also. If you have to use a credit card, because you found a great deal online or on ebay, then do so sparingly. Most times, your local coin/silver shop will have anything you need. They will also be your best source for selling it back should the time arise. If you want to buy $400 worth of silver, take your debit card to your atm machine and withdraw $400 and buy it in cash.

9. Paper is NOT Physical: This is the biggest mistakes some people make. Maybe because they think silver and gold are investments, but you are not buying silver when you purchase an ETF, Stock, IRA, etc. Companies will try and convince you that it’s the best way to buy silver; but they are lying to you. If you can’t hold it and take it home with you, then it is NOT SILVER. If you sell back an ETF, Stock, IRA, etc. they are NOT going to give you silver. They are going to give you dollars. And what happens if the dollar isn’t worth anything? And what happens when the broker says they have up to 90 days to get you your funds? And what happens when the broker takes another fee out of the funds he gives back to you? And what happens when all of this is reported to the IRS. Not saying you should avoid the tax man; but if you follow #8 above, and no one knows you bought it; then no one needs to know you sold it either. As long as you aren’t buying or selling more than $10,000 at a time. Plus, there isn’t enough physical silver on the planet, to cover the PAPER SILVER. So; if silver does become money because the economy took a dive; that PAPER SILVER will not be worth anything. Only the REAL SILVER that you can hold in your hand, will be worth anything.

10. Don’t buy Scrap: There’s a lot of people who think buying silver jewelry, silverware, sterling silver, etc. are all suitable substitutes for buying real silver. Yes, there is value in that silver; but no where near the same as bullion/coins. You probably won’t even get melt value for it. Plus, whoever does buy it, won’t be able to use it as jewelry or silverware. They will give you less because they will need to get it processed. Stay away from it. Now owning gold jewelry, assuming it’s 18K or better, is not a big deal. I wouldn’t buy it as part of my holdings; because jewelry has a very high markup. But if you’re buying or owning some as jewelry, and because you like it and wear it; there’s nothing wrong with counting it as part of your holdings.

Final Thoughts: This isn’t really a DON’T or DO thing. This is more of a background thought. Remember the 4 reasons we buy silver.

1) Protect our wealth and supplementing our income during inflationary times. (Or even economic Armageddon).

2) Supplement our retirement income when the time comes

3) Reduce debt (When timing coincides)

4. Purchase items at a discount (When timing coincides)

It’s #3 and #4 here that I want to mention. There IS a time to SELL some of your silver/gold holdings besides waiting for retirement or an economic collapse. Let’s say that you’ve been saving for a car. It costs $20,000. You could finance it; but you’re learning that being in debt isn’t something you want. Or at least, maybe you can save half and finance only half. Let’s say you have 500 ounces of silver and your average price for buying is $18 an ounce. Let’s say silver is currently $25 an ounce. That means you have $3,500 in Profit/Equity in your silver. You could sell 140 ounces and get $3500 for it, and use this towards the new car. That $20,000 car just because a $16,500 car. Maybe you don’t have to finance or save as much. That still leaves you with 360 ounces at $25 an ounce, worth your original $9,000 you spent. Obviously, your break even point is now $25 instead of $18. But that’s ok, considering you saved money on the car.

The same can go with debt. What if something happened, and you were forced to take on debt. Maybe you didn’t have enough of your emergency money saved. Maybe you had an unexpected expense that you had to charge. If silver is above your break even point, you can use some/all of the profit to take care of the debt. This helps you out so you aren’t paying interest. THEN…. The money you were going to spend on the debt; OR saving/paying for the car we mentioned above; you can use that money to replenish the silver you sold.

These are just 2 simple examples. The POINT IS: There is nothing to say that you have to wait until you retire or a total economic collapse, before using the silver. “If there’s profit in it”. If you do however; make sure you understand the pros and cons; what are you saving??? Maybe you used the silver profit and bought a new $2,000 TV you planned on saving for over the next year. You basically bought the tv for $0.00. Your silver is still worth the $9,000 you put out. Then, you can gradually buy back the silver with the money you were saving for the TV. You’re not in a rush. Just consider the NEW SILVER purchases a separate spending from the $9,000 for the other 360 ounces you have; and it will make sense.

Anyway; hopefully this info will help prevent you from making mistakes.

CYA: SE: