Precious Metals

Historically, 1 oz of gold could buy somewhere between 12-15 oz of Silver.

Right now, the price of gold is 86x the price of silver. Does that mean gold is priced 6x too high? Or, is silver priced 6x too low? Somewhere in the middle, I expect.

I would say the ratio of silver to gold for 1000s of years is no longer applicable. I don't know why. Supposedly, gold can retrieved by mining 15 times more easily than silver. However, perhaps that was true in ancient times, but not with modern technology.

Another possibility is that market forces greatly exaggerate the value of gold, beyond the ratio of their actual availability. If so, I expect this condition will continue for a long time to come. I don't expect to be able to buy silver for 1/86th the price of gold, and see it appreciate profitably.

We live in strange times.
 
^PM market is just a mystery. The more one follows it, the more inexplicable most of it is. Guys learn to play GSR arbitrage, or a few given stocks, might be able to day trade. How they do it, with all the premiums, is another mystery. As a general market, it has been so heavily manipulated for so long (JPM even had 2 guys sent to prison this year), that true price discovery is masked. Maybe the Chinese moving their trading more heavily to the Shanghai exchange will change that in time. Not that they are any more trustworthy than US banks.
 
I've got some savings kicking around that collects interest - from which the Australian government taxes at around 50% - and I'm wondering if it's worth converting some to gold and storing it in a safe or doing a savings plan where some of my money is converted into gold every month.
I'm kind of new to this type of investing so any advice would be appreciated.
 
I've got some savings kicking around that collects interest - from which the Australian government taxes at around 50% - and I'm wondering if it's worth converting some to gold and storing it in a safe or doing a savings plan where some of my money is converted into gold every month.
I'm kind of new to this type of investing so any advice would be appreciated.
First of all I don’t think you should look at gold as an investment. It’s a solid storage of value/wealth that outlasts fiat currencies, empires, governments or banks while increasing in value at the pace of inflation, at least.

Be wary of the forecasters and especially the ‘pumpers’ who are always calling for gold to shoot to the moon. I’ve been paying close attention to gold for a few years now and very little of what the forecasters said would happen has happened. When the conditions were ‘right’ for gold to go up dramatically, it didn’t, and when it did go up it was due to unforeseen circumstances (mainly the wars in Ukraine and Gaza). Although they are calling for it to shoot up late this year… and last year it was supposed to shoot up early this year, haha.



The problem with physical gold and the price shooting up is that I’d bet that gold buyers would stop buying. They’re not going to be shelling out $3000 an ounce until they’re sure the price will stay up. It’s more likely that gold would shoot up stay there for awhile and then slowly come back down to earth. Gold takes an elevator on its way up and the stairs on its way down… and I see very little buying when it’s in on the top floor and you might not be able to sell.

You’ll pay a fee (‘premium’) when you buy and take a small hit when you sell. Coins have higher premiums than bars but are trusted more and you should get some of that premium back when you sell.

This isn’t even getting into how the comex and big banks manipulate the price. It’s a deep rabbit hole once you get into it.

The Australian mint makes nice gold coins available and recognized internationally, even if i don’t like the animal graphics personally.

The beauty and weight (density) of gold will grab you. Start by buying one coin and once you hold it in your hand you might be hooked.
 
Historically, 1 oz of gold could buy somewhere between 12-15 oz of Silver.
There was an upwards correction of silver in around April 2020 from ~US$15 to US$25 per ounce not sure why.

Palladium is at a 6 year low but I would not know what it will do next. I have one physical piece of it (coin) for a long time but this situation makes me wonder whether to get more.
palladium.png
 
We've got to catch up to the bitcoin thread. 😆
There was an upwards correction of silver in around April 2020 from ~US$15 to US$25 per ounce not sure why.

Palladium is at a 6 year low but I would not know what it will do next. I have one physical piece of it (coin) for a long time but this situation makes me wonder whether to get more.
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Palladium is interesting at this price I agree, but good luck finding a local dealer who will want it. You'd have to send it off to JM or something to unload it, and I don't like that constraint. Possibly a case where a Pd derivative could make sense for a shorter swing trade.
 
Palladium is interesting at this price I agree, but good luck finding a local dealer who will want it. You'd have to send it off to JM or something to unload it, and I don't like that constraint.
Have you had the personal experience of taking metals into a dealer to sell them? I have not done that yet.. Be interesting to see what the experience is like. So do you think they are only interested in gold and silver? I have got some large bars of silver, not just coins..

Someone told me in terms of exit strategy, to stick to coins and smaller bars of gold. I don't have any large bars of gold yet anyhow and with all the wars in the world keeping the price so high will not be getting any either.
 
Have you had the personal experience of taking metals into a dealer to sell them? I have not done that yet.. Be interesting to see what the experience is like. So do you think they are only interested in gold and silver? I have got some large bars of silver, not just coins..

Someone told me in terms of exit strategy, to stick to coins and smaller bars of gold. I don't have any large bars of gold yet anyhow and with all the wars in the world keeping the price so high will not be getting any either.

 
Gold, in my opinion, is nothing more than a last resort store of wealth. It will not appreciate nor depreciate in real terms, only the value of the dollar will grow or wane in comparison to the gold. I never view precious metals as something to grow wealth with, instead I view them as easily holdable and transferrable wealth that inflation can’t touch.

In that regard, gold is a good vehicle for savings. Not investing, I would note. Only savings. Since the gold will maintain its value against inflation and outside pressure, I imagine $50 of gold saved today will be worth exactly the same in 10 years, in real terms (I tend to agree with the classical labor theory of value).

So gold will never make me rich. My other investments and work ethic will do that. Gold is just a good way to save and transfer value over long periods of time.
 
Have you had the personal experience of taking metals into a dealer to sell them? I have not done that yet.. Be interesting to see what the experience is like. So do you think they are only interested in gold and silver? I have got some large bars of silver, not just coins..

Someone told me in terms of exit strategy, to stick to coins and smaller bars of gold. I don't have any large bars of gold yet anyhow and with all the wars in the world keeping the price so high will not be getting any either.
I have a solid relationship with numerous local dealers. They're good friends to have.

Stay away from gold bars, even 1oz bars. They are by far the most counterfeited and you'll likely get less than spot for them at a local dealer, depending on current market conditions and the dealer's specific supply/demand/stock levels. Stick to sovereign coins of the country you live in if possible or a regional favorite.

Regarding silver, you're likely to get even less vs. spot compared to gold, again depending on stock and demand, but any decent amount is going to be cumbersome and hard for the dealer to deal with. He only needs so much in the shop and will look to larger buyers to move it to. Silver is what you keep on hand for barter and should be the last thing you sell off in a pinch, in my opinion.
 
Someone posted this on RVF regarding storing of PMs. Thought it was worth preserving.



The most secure safe is one bolted to the floor, or one cast into the floor. Few criminals know how to open safes quickly, but they will haul it off and beat it with sledge hammers until it opens. So unless it is too heavy to move, bolt it down or surround it with concrete.

The better safes are UL rated for fire and burglar protection. If you want one that can not readily be opened by a burglar, look for a TL rating by the Underwriters Laboratory. TL-15 means a semi-skilled burglar with tools will likely take 15 minutes to get into it, etc. TL-15 and TL-30 safes would typically be for jewelry and may be required to get insurance coverage of high-value collections. Run-of-the mill safes will not be UL rated at all.

A safe should be the last layer of security. No high security facility depends only on a safe, it is layer after layer to deter, detect, and delay.

Keep the safe a secret and give no one a reason to think there is a high value item in the house. Have motion lights, cut back shrubbery, etc. Interior lights on timers. Reinforce door jams. Make sure all windows lock securely. Upgrade locks--have a locksmith add mushroom and anti-bump pins to lock cylinders, have them go with maximum MACS (a locksmith will know what that means) for the pinning, and go with an odd-ball 6-pin keyway if possible--that will thwart most picking and almost all bumping attacks. A less common Sargent, Corbin-Russwin, Yale, etc., keyway can be substituted for the ubiquitous Schlage SC1 and Kwikset KW1 keyways in some deadbolts and some key-in-knob lockets. Go with a "paracentric" (i.e., wiggly) keyway. Or go with a better lock (Schlage Primus, etc.) There is an exploitable flaw with the Kwikset "Smart Key" locks and I would personally stay away from them. And go with grade 1 or grade 2 lock hardware. Make sure dead bolts extend all they way into door frames--they do not really lock until the bolt fully extends. Door knobs that lock need to have their strike plates adjusted right so the dead lock feature works so the can not be carded open. For doors that open outwards, there are ways to secure them so hinges can not be removed. For sliding doors, do not have them, but if you are stuck with one, put large-headed screws in above the sliding door so it can not be lifted up out of the track. And add an auxiliary lock to it. Personally, I would remove any garage door emergency release cords.

Have a video system pushing notifications when motion is triggered, and have the DVR in a hidden area. Get a big dog. Have a security system. There are still some you can install yourself. Should have a sensor on every door and window and a glass-break detector on any large areas of glass. Go with cellular communications back to the monitoring company. If you go the do-it-yourself route you can get monitoring for around $10 a month.

If they get past all that, then for a safe, again, bolt it down. Hide it best you can. In one house we had, the safe was in a nook in the basement behind a stack of moving boxes. Beyond that, may want to secure any tools in your workshop that could be used to breach it (drills, angle grinders, cutting torches, etc.) Given a choice, put the safe in a corner where the door opens adjacent to a wall -- harder to use pry bars on it that way. For a better safe, get one that has thick hard plate and multiple relockers. Hardplate tears up drill bits and relockers will fire when a safe is messed with, and then it takes a safe tech, a pile of drills, and a lot of swearing to ever get the thing open again. When people go to the big box store to buy a safe they might be impressed by a lot of large diameter locking bolts. Those are not the issue. You need to take the back panel off the door and see what is going on under the hood. There needs to be a lot of hard plate to protect the lock. Thick steel is not really the issue--with the right drill bit you can go through steel like butter. Hardplate is what is needed. Hardplate destroys drill bits.

I would prefer a good quality mechanical combination over an electronic one. Nearly all electronic locks can be opened quickly by safe techs with certain tools. Those tools are only sold within the industry, and I have heard no reports of criminals getting them, but it could happen. A quality combination lock has no quick way to unlock it without the combination. Safe cracking in movies, where they dial in the combination by feel, is nonsense. Mechanical locks can be manipulated open, but it is not a quick process--it usually takes hours. If one is really worried about it, get an S&G 8410 -- rated for 20 hours of manipulation effort. Or get a Kaba-Mas X-10 lock, although it is electronic, there is no known method of getting past it other than destructive means. But unless you have something incredibly valuable those two locks would be expensive overkill.
The most important thing is to live in a low crime location to begin with. That will do far more to protect you than anything else you can do.
 

Would they do the same thing if you went to sell a bar of gold - ie drill a hole in it and test the shavings to make sure it was indeed gold all the way through. Or drill several holes in it and turn it into a piece of gold swiss cheese, so the asset you are trying to sell is now in two parts, a gold bar with holes in it and a small ziplock bag with very valuable shavings / swarf.
 
Historically, 1 oz of gold could buy somewhere between 12-15 oz of Silver.

Right now, the price of gold is 86x the price of silver. Does that mean gold is priced 6x too high? Or, is silver priced 6x too low? Somewhere in the middle, I expect.

I would say the ratio of silver to gold for 1000s of years is no longer applicable. I don't know why. Supposedly, gold can retrieved by mining 15 times more easily than silver. However, perhaps that was true in ancient times, but not with modern technology.

Another possibility is that market forces greatly exaggerate the value of gold, beyond the ratio of their actual availability. If so, I expect this condition will continue for a long time to come. I don't expect to be able to buy silver for 1/86th the price of gold, and see it appreciate profitably.

We live in strange times.
Do research into changes in the stock to flow ratio and you will see why the gold to silver ratio changed over time. Basically as more industrial uses for silver were found over time the stock to flow ratio went down. And in a commodity a falling stock to flow ratio exhibits downward price pressure and a rising to stock to flow ratio exhibits upwards price pressure. Hence why the stock to flow model is one model for valuing Bitcoin and is also part of the reason bitcoin price has moved up over time. There are other factors to consider also that explain the changes in gold to silver ratio but that is certainly a big factor.

Also even looking at the past 50 years the gold to silver ratio can fluctuate a lot over a 10 year period. In general when a precious metals bull market goes into its final parabolic stage silver will rise faster than gold and will likely hit somewhere in the 40s or even 30s for the GSR ratio (gold to silver ratio). At the bottom of a previous metals bear market the GSR ratio can hit 120 etc. So if the think the precious metals bull market will run for a while you might decide to buy Silver now and later when it hits a GSR in the 40s swap it for gold or sell it, etc. A lot of precious metals investors play the markets in this manner and own both Gold and Silver.
 
Would they do the same thing if you went to sell a bar of gold - ie drill a hole in it and test the shavings to make sure it was indeed gold all the way through. Or drill several holes in it and turn it into a piece of gold swiss cheese, so the asset you are trying to sell is now in two parts, a gold bar with holes in it and a small ziplock bag with very valuable shavings / swarf.

Are you sure this is a problem you really will ever really face in your life, or are you just subtly humble bragging ?

One single VERY SMALL gold bar of 1 kilo by itself costs (and is worth) around than 65,000 US dollars.
A larger gold bar (the type you see in movies and that international central banks have in their vaults) weighs between 11 to 13 kilos, and costs (and is worth) around 750,000 dollars EACH.

You will immediately attract a lot of whole lot of unwanted suspicion from any normal gold dealer if you walk into a shop with a gold bar weighing any more than half a kilo.
 
Are you sure this is a problem you really will ever really face in your life, or are you just subtly humble bragging ?

One single VERY SMALL gold bar of 1 kilo by itself costs (and is worth) around than 65,000 US dollars.
A larger gold bar (the type you see in movies and that international central banks have in their vaults) weighs between 11 to 13 kilos, and costs (and is worth) around 750,000 dollars EACH.

You will immediately attract a lot of whole lot of unwanted suspicion from any normal gold dealer if you walk into a shop with a gold bar weighing any more than half a kilo.
@Caduceus you should not be so concerned about the size of another man's bar

I've done a bit of background reading and there is indeed some concern among dealers of gold bars which actually have tungsten on the inside and gold on the outside and they don't have to be as big as even 1 kilo before this becomes a concern.

I just thought I'd ask in case someone in the thread knew what happens when you go to sell it.

I am a novice with precious metals if I knew all about it I wouldn't be asking.

But from what I briefly read today, it may be smarter to buy 35 one ounce coins rather than a kilo if you needed that much.
 
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Gold buyers have metalytic testing machines that test the gold without damaging it. Unlike the old days when they had the shave off a little bit and acid test it. That porn stars clip is made for tv stuff anyway and not an every day buying/selling interaction.
You definitely are better off buying many coins than one big bar for many reasons. The only positive is that you’d save a little bit of money on the bar.
 
@Caduceus you should not be so concerned about the size of another man's bar

I've done a bit of background reading and there is indeed some concern among dealers of gold bars which actually have tungsten on the inside and gold on the outside and they don't have to be as big as even 1 kilo before this becomes a concern.

I just thought I'd ask in case someone in the thread knew what happens when you go to sell it.

I am a novice with precious metals if I knew all about it I wouldn't be asking.

If you really have 65,000 to 750,000 dollars just laying around, buying 1 single gold bar is a dumb (and dangerous) way to invest it.
 
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That porn stars clip is made for tv stuff anyway and not an every day buying/selling interaction.
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Start watching at 6:15 to see a gold buy with testing.


Few takeaways from that :
  • Loved it how the store owner takes phone orders and avoids putting you on computers.
  • Probably better to pay cash for gold than use cards etc
  • 98% of people who come into his store have proof of ownership with them
  • Interesting how the machine can adapt for alloyed coins such as the American Eagle and Krugerrand.
I find hanging onto the 'proof of ownership' annoying but I still have it, will begrudgingly not throw them out.

A one ounce coin may cost the same as say an upmarket bicycle but somehow having the bicycle as a credit card transaction versus the one ounce coin may bother whatever three letter agencies are looking through your transactions.
 
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