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Investing in precious metals

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Re: Investing in precious metals

Postby jfg » Wed May 04, 2011 5:14 pm

Yeah, don't cash out your 401k for silver. That's a huge tax hit. The only way to make this work I think is if you have savings in the bank and exchange that for silver. Or build a savings on silver. I have a friend who is doing that. I have no savings to speak of, all my money goes to student loans. Maybe those thorns in my side are converting that to silver.
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Re: Investing in precious metals

Postby Madison » Wed May 04, 2011 5:44 pm

lastingsgriller wrote: Silver, right now, is worth over 5x was it was in 2007. This reaks of unsustainable growth and due to regress.


This is why I didn't buy gold and silver. And then it just kept going up, so at the time I considered it and decided against it, I could have made some pretty decent money. :~( Too late now, maybe next time. :*)
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Re: Investing in precious metals

Postby perlick29 » Wed May 04, 2011 7:45 pm

It seems that my fiancee is pushing me to do this because the value of the U.S. dollar is rapidly declining and silver and gold have yielded much better returns. She thinks that in 2 years time the federal reserve will run out of funds to put in the financial system, and our economy won't rebound, so not investing now would be a huge mistake. I don't know what to make of this since I'm kind of caught between a rock and a hard place. She doesn't seem to get the concept of "reeks of unsustainable growth due to natural regression".

I told her to come up with a percentage that we can discuss to invest but with the high stress level we're under, (ie. wedding in 4 months, she's a teacher graduating from grad school in 2 weeks, working another job, looking for a teacher gig even though there is uncertainty in the teacher job market, my over-enjoyment of the new Mortal Kombat and fantasy baseball, etc.) Something tells me I'm in for an emotional roller coaster here.
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Re: Investing in precious metals

Postby RugbyD » Wed May 04, 2011 8:21 pm

perlick29 wrote:It seems that my fiancee is pushing me to do this because the value of the U.S. dollar is rapidly declining and silver and gold have yielded much better returns. She thinks that in 2 years time the federal reserve will run out of funds to put in the financial system, and our economy won't rebound, so not investing now would be a huge mistake. I don't know what to make of this since I'm kind of caught between a rock and a hard place. She doesn't seem to get the concept of "reeks of unsustainable growth due to natural regression".

I told her to come up with a percentage that we can discuss to invest but with the high stress level we're under, (ie. wedding in 4 months, she's a teacher graduating from grad school in 2 weeks, working another job, looking for a teacher gig even though there is uncertainty in the teacher job market, my over-enjoyment of the new Mortal Kombat and fantasy baseball, etc.) Something tells me I'm in for an emotional roller coaster here.

Emotions and stress ==> worst things to have when making an investment decision.

First off, there is no effing way you should be taking out your 401k from what I've seen you post so far; i don't care what it is you're thinking of investing in unless its the only way to fund a great entrepreneurial venture. If there is no chance of investing in silver unless you take the tax hit and withdraw, there is nothing to discuss.

I personally don't feel that mean regression is a big concern here. The US, and the world for that matter, is not suddenly going to get unprofligate. Govts almost always opt for default and/or inflation to fix their debt problems b/c it the politically feasible thing to do. I think the shift upward in gold is semi-permanent, but have no clue what the new bottom will be. One thing to try and convince her of is that with wedding expenses and grad school loans (if any) and an uncertain job situation, this is no time to let everything ride on a high vol asset. If she wants to play the lottery there are cheaper ways to do that.
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Re: Investing in precious metals

Postby jfg » Wed May 04, 2011 8:50 pm

Explain this to me though, only because I'm not very good at financial stuff. If the economy tanked and the dollar was worthless, would having silver and gold really matter? You'd probably be better off than the next guy, but I think by buying gold or silver you have to also plan to get out of the country if it tanks, (or probably before because airfare would go through the roof as well) because all that planning would be made useless by the crazy inflation.
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Re: Investing in precious metals

Postby Mookie4ever » Wed May 04, 2011 8:53 pm

The number one rule of investing is to never take investment advice from your fiance. Even if she is an unemployed teacher.
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Re: Investing in precious metals

Postby fezzik » Wed May 04, 2011 9:08 pm

perlick29 wrote:It seems that my fiancee is pushing me to do this because the value of the U.S. dollar is rapidly declining and silver and gold have yielded much better returns. She thinks that in 2 years time the federal reserve will run out of funds to put in the financial system, and our economy won't rebound, so not investing now would be a huge mistake. I don't know what to make of this since I'm kind of caught between a rock and a hard place. She doesn't seem to get the concept of "reeks of unsustainable growth due to natural regression".

I told her to come up with a percentage that we can discuss to invest but with the high stress level we're under, (ie. wedding in 4 months, she's a teacher graduating from grad school in 2 weeks, working another job, looking for a teacher gig even though there is uncertainty in the teacher job market, my over-enjoyment of the new Mortal Kombat and fantasy baseball, etc.) Something tells me I'm in for an emotional roller coaster here.


As others have said, it would be a pretty huge mistake to take penalties and pull money out of your 401k in order to purchase Silver, a precious metal that seems to be begging to be sold high right now...not bought low. Think fantasy baseball. ;-)

Also, echoing others...you're young and have the most important factor for long term growth potential on your side...time. The market has rebounded quite a bit in the last year...perhaps too much too soon. Will it drop in the future sometime? Sure. Substantially drop? Probably, but you will be able to ride it out, because over the long term the market has proven to perform quite well despite it's ups and downs. Plus you're young and can't take it out without a penalty until you're 59 and a half anyway. And diversification is key to minimize your non-systemic risk, so investing all your money in a single precious metal would be folly.

Yes, factors in the economy point toward inflation, rising interest rates and a weakening dollar...but these are just the natural ebbs and flows of the US economy, perhaps amplified by the recession...and you have that all important variable, time. It sounds like your girlfriend has some doomsday predictions for the economy. Perhaps the best way to sway her would be to find out where she got this information and debunk the source...or else suggest that if indeed everything completely crashes, you and others will have much bigger concerns.

I don't believe you can predict the future of the stock market, so maybe Silver will keep going up and up and up...not likely IMO, but possible. As far as investment strategies, market timing has been shown to be less effective when compared to a disciplined strategic asset allocation.
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Re: Investing in precious metals

Postby RugbyD » Wed May 04, 2011 9:33 pm

jfg wrote:Explain this to me though, only because I'm not very good at financial stuff. If the economy tanked and the dollar was worthless, would having silver and gold really matter? You'd probably be better off than the next guy, but I think by buying gold or silver you have to also plan to get out of the country if it tanks, (or probably before because airfare would go through the roof as well) because all that planning would be made useless by the crazy inflation.

in theory, the price of gold in your native currency would move inversely with the currency itself, which is why you hear precious metals being promoted as a 'store of value'.
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Re: Investing in precious metals

Postby urbanbreez » Wed May 04, 2011 11:34 pm

Take it from a guy that did it once and lived to regret it, do NOT take cash from your 401k unless it is absolutely necessary. Like you don't have enough money to feed yourself necessary. You will be taxed when you pull the money out, and taxed again when you file... that's in addition to whatever penalty you have to pay 30-40% gone. Taxed twice and penalized. If you don't use it like its designed to be used, it's a money pit.
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