Let’s Get Physical
A lot of people fall into the trap of thinking that they don’t have to physically own their precious metals. Either they think they can leverage their position better by buying mining stocks, or they think the futures contracts or ETFs they own are as good as gold. As I have mentioned, that’s just plain stinking thinking. First off, if you are reasoning “ Mining stocks give me leverage; I will just buy some stocks” then think again. First, if everyone just bought mining stocks, and no one bought physical gold and silver, then the price of gold and silver wouldn’t rise. In fact, it would fall because of a lack of demand, while all the extra funds available to the mining sector because everyone was buying their stock, would then spur increased supply. Second, mining stocks are stocks. They are not gold and silver. They are shares in a company that processes gold and silver. As such, they are subject to market conditions such as a currency crisis or stock market crash. Gold and silver, on the other hand, could rocket to the moon while the mining stocks fall. Go to the MattressesAs I have mentioned, the first thing you want to do to buy precious metals is to find a trustworthy dealer that will give you good services and advice. To purchase physical gold and silver there are basically two kinds of dealers to choose from online bullion dealers or coin shops. Form or FunctionOne of the most important decisions to make regarding gold and silver in your possession is, What form should I buy? Bars, old U>S> silver coins, Maple leaves or U.S. Eagles? To answer that you have to ask why you want to hold gold/or silver at home in the first place. For most people, the reason to have gold and silver at home is to have a private investment, and also as an emergency currency and portable wealth. Storing Your Gold and SilverOnce you have got your gold and silver you need to decide where you are going to keep your stash. This has always been a problem, and it is a good problem to have, but there is no easy answer. From the book: “Guide to Investing in Gold and Silver” by Michael Maloney
Who are you, and what’s your plan
You need a Plan!The more I study, the more I am absolutely convinced there is no better place to be for this portion of the cycle than in precious metals. I never doubt my choices anymore, and every question I come up with always has the same answer. Investing in precious metals is the safest and smartest investment for my plan. Develop a plan, write it down, and stick with it. Continuously refining and clarifying your plan is a good thing and if you discover that your plan is flawed, then modification is a must. Success or failure can hinge on not only the quality of your plan but also the continual refinement and execution of it. A plan should have a goal, a strategy (the big picture of how you are going to get from A to B) and a tactic (the specific methods to be employed to implement the strategy). Develop Your PlanTo develop an investment plan that is right for you, you first need to ask yourself, Who am I? Take a look at your own personality and determine what kind of an investor are you. Here are some good questions to ask yourself: As of the writing of this book, I am convinced that precious metals should offer huge gains and a good night’s sleep. A Good Team is part of a Good PlanAs Robert Kiyosaki says, “Investing is a team sport”. He also says, “Hire the best advisors and pay them well”. How do you hire a team to help you make investment choices in the precious metals sector? The simplest way to put together a great team is to subscribe to some great newsletters. However, you should get recommendations first, because some newsletters are not so great. You can get recommendations from the other parts of your team. And the other parts of your team don’t have to be people. They can be investment books such as this one, or any financial book that has a resources section in the back. Many good sources are listed in the resources section of this book. Start reading them to educate yourself, and you will slowly gravitate towards the better newsletter writers that fit your style. From the book: “Guide to Investing in Gold and Silver” by Michael Maloney
Beware the pitfalls
Treachery, Fraud, Scams, Cons, Rackets, Swindles, Hoodwinking, Chicanery, Flimflammery and Bamboozlement!In the precious metals sector most of the dealers are honest, hardworking people. However, there are a lot of cons and scams to watch out for. I have condensed a few of the best, most creative cons, to give you an idea of what to look for. But, be warned, it’s going to be different each time, and though these examples are creative, there will always be some cunning individual who comes along and shatter the old record of corruption, and take double dealings to a new level. Phone ScamsOne of the largest rare coin scams came to light when, on 24 May 2001, the New York attorney general announced the indictment of six New York residents and five corporations for running a rare coin scam that defrauded investors out of $25 million. It appears that six people who jointly owned five corporations, and opened five separate high-pressure telephone boiler room operations, were marketing rare numismatic coins nationwide. They would pressure customers into buying these rare numismatic coins. Of course, the salespeople would lie about the rarity and condition of the coins, but if a customer had any doubts, the salesperson would give the customer the phone numbers of several of their competitors so that the customer could get an “independent” appraisal. Little did the customer know that the company the coins were purchased from and all the competing coin shops were not actually competing….they all shared the same owners. TV and Magazine ADSAvoid TV and Magazine ads like the plague. There is just not enough profit in the precious metals field to support this type of advertising. Wait a minute, let me rephrase that. There is not enough profit for a dealer who is offering fairly priced precious metals to support this type of advertising. Commemorative CoinsAnother popular precious metals scam is the commemorative coin. When you see them offered on TV or in magazine ads, something is fishy. It’s most certainly a scam. CounterfeitsThis is another shady scam that revolves almost exclusively around numismatics. Almost 99 percent of all counterfeit coins are counterfeit numismatics, not bullion coins. This makes perfect sense because a bullion coin’s value is derived solely from its metal content, and a counterfeiter must therefore counterfeit the metal (substitute a far less expensive metal for the precious metal) to make a profit on the coin. This makes a counterfeiter’s job incredibly difficult because he must duplicate the colour, density (weight per volume) and sound (ring) of the specific metal he is trying to duplicate in order to pass it off as authentic to the unsuspecting buyer. Numismatic coins, on the other hand, derive their value from qualities that are far easier to replicate, like the specific design, rarity, age and condition. Therefore they can be made of the same metal as the original coin, making it far easier to duplicate the original look, sound, and feel. Do Your Due DiligenceSo now I am going to say it one more time. If you are going to buy collector coins, please do your due diligence and develop a relationship with a dealer you have researched. If you buy from a reputable dealer there should be nothing to worry about, other than the buy/sell spread (aka bid/ask spread) From the book: “Guide to Investing in Gold and Silver” by Michael Maloney
The Silver Lining Part – 3
The FusesThere are four fuses that will ignite silver’s prices: Likely events that will ignite the fuses: The Silver Safety NetOne last thing about Silver as an investment is it has a built-in safety net, at least at today’s low prices. Since I have been buying silver, I have watched the price climb from $4.25 to $21. I have also invested in many of the mining companies, and the whole time I have watched silver climb and the stock prices soar, most of the mining companies still don’t show a profit. This is important to understand because in a world that is running out of silver, one of the most sought-after industrial metals, it is impossible to sustain pricing that is below the cost of production for the majority of the producers. The price cannot go down and stay down. It must eventually rise significantly above the cost of production to encourage enough prospecting and new mining to meet demand. From the book: “Guide to Investing in Gold and Silver” by Michael Maloney
