Strategies for Gold & Silver
Certain timing strategies can be utilized when investing in gold and silver. The return on gold and silver has been phenomenal and 300 % type returns do not need revamping. But what if I could using historical data, improve your returns by another 200%. I’m not suggesting you move out of gold and silver either, but I am suggesting you understand supply and demand works with different coins in the precious metals market.
What I’m about to recommend has been utilized with current clients. And one particular client benefited from the recent downturn from in silver. He had a particular coin that in early December fetched a “bid price” of spot +18. Now he used the sell for a particular trip, but imagine if he bought more silver with the proceeds. So buying 100 oz.s around 46 dollars (silver was 42) and selling it around 49 (silver was 31) you didn’t lose with the downturn in silver. You hedged yourself, but had a great reinvestment of picking up another 50 ozs. of common silver. So you now have 50 more ozs. that will appreciate in this current bull market.
There are different techniques that may be used in the precious metals market, but I’m going to recommend three, that going forward will tweak the portfolio you are building, and bring a bigger pot of money over the next number of years. Moreover, it is the best way of sharing valuable information with your colleagues and loved ones that may also benefit from your knowledge. Evoking curiosity in them to know more about what your doing will be crucial in returning this nation to an honest money system. My advice will prove to be excellent in
representing Hard Assets of Houston and hopefully using us as a vendor on who you choose to do business with in the future.
Top 3 strategies to maximize your precious metals portfolio:
Using Silver with Potential Numismatic Value
An interesting way to play silver is to use a portion in buying some with a low mintage. Now there are many silver coins out there, that may have a low mintage, but I would focus on the silver coins produced by the “official” mints of that particular country. I like all silver, but this strategy only works with the government mints. The first silver coin that has ratcheted up in price relative to silver is the “Canadian Wildlife Series”. http://www.hardassetsofhouston.com/blog/wildlife-series-canadian-maples-future-numismatic-upside/ Recently, using the same criteria, and finding recent mintage totals to being even smaller than the Canadian Series, I have reviewed and find the Perth Mint coins to have similar promise. http://www.hardassetsofhouston.com/blog/perth-mint-silver-high-numismatic-potential/ Really the only time to buy, is when they are being currently minted. That way you can buy close to current spot. In the case of the silver wolf, it was a good 4 months after mintage stopped, to begin seeing the coin move up in price versus silver. This is applicable to all coins mentioned.
Using Pre-1933 Gold and Gold Bullion to Increase Your Return
If you currently have gold in your portfolio, understanding the relationship between the Pre-1933 Gold, and regular gold bullion can very beneficial. My thesis on this is that Pre-1933 (using MS-61) Gold trades anywhere from 10% to 50% over bullion over the last 40 years. http://www.hardassetsofhouston.com/blog/the-barbell-strategy-between-gold-coins-and-20-gold-coins/ Utilizing this strategy over the last 10 years would bring an increase of 200% to the already existing 300% garnered since 2001.
Using Ratios in Deciding which Precious Metals to Buy
There are historical ratios that define the relative cheapness of one precious metal to the other. When the relationship becomes extreme, then it behooves one to buy the asset that is very inexpensive to the latter. Also, working over-weighting comes into understanding proper allocation of your metals portfolio. The historical ratio that governed gold/silver throughout its comparison was 15:1. So using beginning of 2012 numbers, one sees a (1666/32) 52:1 ratio. Giving a more historical relationship would be silver price going to 100+, and gold not appreciating. This is still a favorite, but here is one more relationship that needs revisiting. http://www.hardassetsofhouston.com/blog/using-ratios-to-decide-cheapest-metal/