Good day gentlemen
I bought some silver in a metal konto many years ago and am still waiting for it to go to $50 an ounce. Am I wasting my time waiting for that magic moment and shall I sell and invest in something else rather? Any thoughts on that.
I would consider investing in precious metals as a defensive play, with silver being the more volatile, less conservative one. Expectations of oversized returns isnât what would drive my decision of buying commodities.
If the thesis you had when you bought is still valid, I would keep my investment. Otherwise, I would take some time to come up and consolidate my new thesis in a way that I would expect to hold long term, then do what comes out of that.
If you donât need the money, you can keep it as an insurance if things go really bad.
I will sell it if society collapse, capitalism model for main countries need to be reformed or if usd is massively dévaluantes with skyrocket thing inflation .
In my view, valuation of precious metals is very complex (if not impossible). I have never come across a good model to value these things. It is completely driven by what people / nations think at some point of time.
Itâs true for Gold, Silver etc.
It seems you bought it because you thought it would go up in value. But what was that assumption based on? Something specific ?
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If society collapses, I donât expect anyone will need the milion tons of silver everyone keeps around together. You canât eat silver.
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Unless the collapse is due to the rise of werewolves, vampires and witches and we have a war between humans and the supernatural harbingers of the apocalypse. In that scenario, your stash of silver is going to rocket in value!
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You could even leverage it to negociate being turned into a werewolf or a vampire if they happen to be winning but for that, youâd need it to be physical silver stored in an accessible place and not rights on a financial product.
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It made me chuckle picturing the scene of a man waving a bearer bond for silver at a vampire who recoils in disgust.
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Thanks for the reply Wolverine. I donât need the money right now so I guess I will wait until the day arrives and then make a new plan from there.
I would consider the need for immediate money on a different level. Short term needs warrant low volatility, liquid assets, which could be cash in a savings account or a money market (or the closest rung of a bonds/notes ladder).
I would not personally buy silver, though I might consider gold so my view of the financial properties of precious metals may not match yours. I would consider precious metals as a volatile asset with no productive value but a low correlation asset with stocks, bonds and fiat money. I would expect its value to react positively in many situations where stocks would crash (not all, it did react negatively to the Lehman Brothersâ bankruptcy) and where fiat money would loose value, while being wholly able to provide negative returns in times where all would seem to be going well.
As such, Iâd mainly take it as a way to somewhat tame volatility in a portfolio constituted mostly from stocks and bonds, by taking a small amount of it.
The idea you had about your investment when you bought silver may be akin to that, or you may have expected direct profits from the asset by itself, or a stable store of value (which it isnât). What I would want to do currently is reassess whether the idea I had of my investment matches what I am getting out of it and if it still matches my needs.
As a rough illustration of the behavior of precious metals in recent times, here are how they, US stocks and US bonds (mostly to be considered as an intermediate term bond fund) have behaved since 1987 (in inflation adjusted USD). Itâs not a perfect illustration but respective behaviors should match enough what you would have gotten in CHF with global stocks and CHF denominated or hedged bonds for comparison purposes:
Hereâs the link to play with it: https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=1IOLSN4wSkIU17SqcGODJ4
Hi it is scary what growth I could have had if the money was in stocks instead of silver. I will do some reassessment of investment. Thanks for the advice. Now the question is who to invest with. A lot of thinking and planning ahead.
Looking at that graph, âPrecious Metalsâ could just as well reach the US Stock market again over the next decade. The 2000s had some very aggressive growth, stronger than US Stocks in the 2010s (and those are considered strong already).
On the other hand I am not sure what this âPrecious Metalsâ is. If you use their Portfolio Backtesting (using real funds) it chooses GDX for the âPrecious Metalsâ asset class. GDX is âVanEck Gold Miners ETFâ. That isnât commodities but producers.
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You are right, I didnât do enough due dilligence on this one.
Portfoliovisualizer used âVanguard Precious Metals and Mining Fundâ until 2017, then the âVanEck Gold Miners ETFâ. It seems that the Vanguard Precious Metals and Mining Fund was actively managed and has been all over the place: Gold and Precious Metals - Bogleheads.org
It seems Portfoliovisualizer is making some pretty bold assumptions/adaptations when choosing the underlyings for their asset class allocation tool.
Here are silver futures (blue) vs the S&P500 (total returns - red) since August 2000 (I havenât found an easy way to show both and go further back):
The same since 2010:
The starting point makes a big difference. US stocks have skyrocketed in the last 15 years.
Whatâs important to consider for me is the behavior of the assets rather than just global performance. Iâd consider precious metals a good diversifier but wouldnât make them an investment in and of themselves (thatâs me, your mileage may vary).