$1500 to spend, what should I buy?

[Free Moral Agent]

Alright, so I have never bought precious metals in my life. However, I've been keeping my eye on the gold and silver charts for about two years now, waiting to jump in when the time was right. I now have enough discretionary income so that I could start investing in PM...

I live in CA and I have read that if you spend $1500 on PM, you don't have to pay sales tax. (I intend on purchasing from a local dealer straight cash). What would be your buying suggestions for someone new, that is interested in bullion?

Note - I am certainly concerned with SHTF scenarios and being able to barter, however if I could avoid high premiums for lower denominations I will.

Thanks!

 

[Seraphim]

Junk silver seems to be a great idea based on your concerns.

Junk silver= Pre 1964 American coins in dime, quarter and nickel forms.

Typically the premiums are very low, barely over spot and in the case of SHTF is in very tradeable denominations and are legal tender.

Junk silver generally comes in bags of face value of 100$, 250$, 500$ and 1000$


A 1000$ bag is roughly 17,000 dollars right now. A 100$ bag is well within your reach if you can bundle another 200$ or so.

 

[cubical]

about 50 shares of GDXJ

 

[Matt Collins]

Pay off or down your debt first.

 

[thx1149]

Pay off or down your debt first.

That's the responsible thing to do, and I'm all for being responsible, but is it really that simple here? If you truly expect inflation to happen your debt may get devalued. If you have debt in specific areas, like in a mortgage, there is a good chance the government may even "help out." If I was in the situation I'd still probably opt to pay off debt over playing those games, but I'm not sure it really would be the best choice. I agree with you Matt, but I just wanted to point out that there is an alternate view that possibly could work better.

 

[Seraphim]

That's the responsible thing to do, and I'm all for being responsible, but is it really that simple here? If you truly expect inflation to happen your debt may get devalued. If you have debt in specific areas, like in a mortgage, there is a good chance the government may even "help out." If I was in the situation I'd still probably opt to pay off debt over playing those games, but I'm not sure it really would be the best choice. I agree with you Matt, but I just wanted to point out that there is an alternate view that possibly could work better.

Price inflation does not in any way shape or form garuntee that wages keep up. In fact the last 100 years of American history shows that real wages are FALLING in relation to the cost of living. So debt held by the public is likely to get HARDER to pay off unless there is full blown hyperinflation with GOVT regulated price increases to deal with the issue. In that scenario debt will be very easy to pay off, short of that however expect debt to get HARDER to pay.

Pay off your debts at the fastest pace you can and any scraps you have left over that you do not need to live now, use that underconsuption to buy PM's.

If you have consumer debt (credit cards, high interest) paying those off is just as smart as buying PM's. Well, almost as smart anyway.

 

[brandon]

buy low; sell high

Notice how the line ends in the top right corner of every graph for every time frame.
http://www.kitco.com/charts/livegold.html

Don't buy now.

 

[Seraphim]

buy low; sell high


Don't buy now.

What makes you think prices will drop?

 

[brandon]

What makes you think prices will drop?

I have no clue what will happen to the price. I can't predict the future. It's just foolish to put 100% of your investment portfolio in something that is at an all time high.

That would be like rushing to buy extra gasoline back when it was $5/gallon. Just not a smart idea.

 

[Seraphim]

I have no clue what will happen to the price. I can't predict the future. It's just foolish to put 100% of your investment portfolio in something that is at an all time high.

That would be like rushing to buy extra gasoline back when it was $5/gallon. Just not a smart idea.

Silver nor gold are anywhere near all time highs. Gold is nominally, but in terms of inflation adjusted value it is no where near all time high's...Silver is even further away from it's all time highs...Silver has been severly underbought/under priced for a while and it is STARTING it's correction upwards.

We're talking about 1500$ going into a very good base savings/investment. It is one of the lowest risk moves you can make going into PM in this type of market.

 

[acptulsa]

That would be like rushing to buy extra gasoline back when it was $5/gallon. Just not a smart idea.

Agreed. Stop and think what becomes of lemmings in the end. Sometimes playing 'follow the leader' is the worst thing you can do.

I'm not guaranteeing that they won't go up, and I'm most certainly not advising to buy into the even more inflated stock market this October (known on Wall St. as 'Crash Month'). I'm just saying that there are some things that you could invest in that will likely go up soon--like canned food, if nothing else.

 

[hillbilly123069]

Buy dehydrated foods, a half dozen 5 gal. water jugs, batteries, strike-anywhere matches, etc.
What good is having gold if there's no basics to buy with it?
I know you are aware of the recent ascent in prices for varies store products. It will continue.
Things go worst case, you have things that will be more valuable than gold for a time.

 

[Free Moral Agent]

Pay off or down your debt first.

I have zero debt.

 

[hillbilly123069]

Silver nor gold are anywhere near all time highs. Gold is nominally, but in terms of inflation adjusted value it is no where near all time high's...Silver is even further away from it's all time highs...Silver has been severly underbought/under priced for a while and it is STARTING it's correction upwards.

We're talking about 1500$ going into a very good base savings/investment. It is one of the lowest risk moves you can make going into PM in this type of market.

Just what do you think the record high for gold is?
When was that record set?
Any links as to where any of your info is coming from at all?

 

[Cowlesy]

Find a company you like, with a product you understand, and use some free online tools to scan for a reasonably valued company.

I bought Hormel stock with some Christmas bonus money because they manufacturer food that people seem to eat, not to mention Spam.

The stock is not going to do anything whacky, but it is up around 15% for me and pays a small dividend (about 2% yield).

The last thing I would buy right now are PMs. If I had $1,500 of cash right now, I would wait until people are freaking out about the stock market falling, and watch as a good stock like Hormel gets dragged down with the dogs, and buy it then.

If we get some herd selling, good stocks get taken along for the ride, and that's when you can buy some good companies with great yields.

 

[tpreitzel]

Junk silver seems to be a great idea based on your concerns.

Junk silver= Pre 1964 American coins in dime, quarter and nickel forms.

Typically the premiums are very low, barely over spot and in the case of SHTF is in very tradeable denominations and are legal tender.

Junk silver generally comes in bags of face value of 100$, 250$, 500$ and 1000$


A 1000$ bag is roughly 17,000 dollars right now. A 100$ bag is well within your reach if you can bundle another 200$ or so.

Take this advice as you're looking to preserve some wealth. Even $23 for an ounce of silver isn't a bad investment. True, it's not $7 per ounce any more, but you shouldn't be purchasing this silver as speculation anyway. You should purchase this first batch of silver as an investment to hold and which to add at some later date.

 

[fgd]

Tools to do your current job independently.

Gold and silver makes no sense unless you literally cannot find any durable goods left to buy or debt to pay down.

If you are buying PMs but would be homeless after a couple months of no job, then your priorities are completely backwards. Job loss is way more likely to happen to you than the detonation of the dollar.

 

[Matt Collins]

I have zero debt.

Do you have 6 months worth of expenses in savings? If not that's your next step.

 

[Seraphim]

Just what do you think the record high for gold is?
When was that record set?
Any links as to where any of your info is coming from at all?

Adjust for inflation the 835$ or so top in 1980 and you get about 2400$ in current dollars. I'm going home now and must leave, if your interested look it up yourself, if not I'll find the data when I get home or tomorrow.

In terms of real value silver and gold are no where near their record highs and silver is undervalued and will probably see 30$ spot quite soon. Invest all your money based on that information and opinion? No, not unless you do your own research and come to the same conclusion and are confident/can afford X amount of loses if it does not pan out.

 

[Seraphim]

Tools to do your current job independently.

Gold and silver makes no sense unless you literally cannot find any durable goods left to buy or debt to pay down.

If you are buying PMs but would be homeless after a couple months of no job, then your priorities are completely backwards. Job loss is way more likely to happen to you than the detonation of the dollar.

Keep in mind PM's are VERY liquid. They are a non banking sector savings plan. Just a thought.