Pep talk: don't sell your PM now

[vand]

As we hit new highs, I am putting out another reminder - do not sell your metals. 

The bull market is now transitioning from its early adoption phase to its main phase. This will last for years during which time the gain in PMs will be in multiples. Those with patience to ride the long term bull market will be rewarded with real gains in the hundreds of percentage points - those so greedy to bag quick profits will be left behind at some point when the market takes off higher and they never manage to get back in.

Do NOT dance in and out of your main position. Trying to time the market is how people miss out of life-changing bull markets. The time to consider selling is still years away.

Edited July 13, 2020 by vand

[Roy]

With this in mind, would you consider selling some shares and buying more gold?

[5huggy]

4 minutes ago, Roy said:

With this in mind, would you consider selling some shares and buying more gold?

YES - @Roy

I am skimming profits off the top of my Jr miners in PM's and swapping that "fiat" into Physical - 😉👍 

(Permanent store of wealth 😉)

[Roy]

At our age, perhaps equities are too risky eh? 🤣

[AuricGoldfinger]

2 hours ago, Roy said:

At our age, perhaps equities are too risky eh? 🤣

Not everyone shows of their age in their profile picture 

[Robb]

If you are carrying debt selling your Gold to pay it off will give you a guaranteed return.  For example, if you owe $150K USD on a mortgage with a 5% rate, selling the Gold to pay off the loan guarantees you an annual return of 5% equal to the term of the mortgage (5, 10, 20 or more years).

Or, another way to think about it is that your gold is costing you 5% per year to hold so the first 5% of appreciate (per year) that it "might" rise just keeps you even.

Deciding to sell is complicated and one size does not fit all.

 

 

[Abyss]

Come on Spot Gold price give me one last pullback I promise this time I will pull the trigger and load up....

[5huggy]

We are at the "Media attention line" IMHO -

I wouldn't wait - better to be a "YEAR" early than one second LATE! 😉👍

Bert wert duz aye NO!? 😉🤣🤣🤣

[vand]

24 minutes ago, Abyss said:

Come on Spot Gold price give me one last pullback I promise this time I will pull the trigger and load up....

Nice overlay.. but it's wrong. We are not yet anywhere near the general mania phase. We are only entering the awareness/take-off phase.

 The highs from the last cyclical bull should not appear on this iteration. The start of the stealth phase corresponds to about 2015 when PM prices were bottoming.

 

Edited July 14, 2020 by vand

[Martlet]

1 hour ago, Robb said:

If you are carrying debt selling your Gold to pay it off will give you a guaranteed return.  For example, if you owe $150K USD on a mortgage with a 5% rate, selling the Gold to pay off the loan guarantees you an annual return of 5% equal to the term of the mortgage (5, 10, 20 or more years).

Or, another way to think about it is that your gold is costing you 5% per year to hold so the first 5% of appreciate (per year) that it "might" rise just keeps you even.

Deciding to sell is complicated and one size does not fit all.

On the other hand, gold has been rising about 12% pa average the past 5 years. That would lose you 7% if the trend continued.  So much for "guaranteed" return. 

Paying off debt is popular idea, it overlooks time value of cash.  If money is worth less in the future, its easier to obtain, it may be beneficial to pay then rather than now.  Depends on what you do with cash in between.  It is, as you say, complicated.  

[Robb]

4 hours ago, Martlet said:

On the other hand, gold has been rising about 12% pa average the past 5 years.

On the other hand, Silver has been averaging 0.8% over the last 10 years... 😉 

Gold was $1155.51 on July 14, 2015

Gold is $1817 on July 14, 2020

I think that is more like a tick under 9.5% per year in what is arguably a great bull run.  Paying off debt guarantees the return. Hoping the great bull run continues doesn't 😉 

I agree that for some, the time value of money should be in their calculus but for the majority with debt, it is the opportunity cost of their PM investments that might be more critical.  Paying six, seven hundred dollars in interest  month after month after month for a decade or longer can erode any "potential" PM profits.  Quickly.

Again, it all depends on one's goals and their view of the future.  Holding PMs now might be a good move for some.  For others, selling will be wiser.  In the case of silver, who knows?   They can probably buy it back in a decade for the same price with those less valuable Fiat dollars 😉

Edited July 14, 2020 by Robb

[vand]

9 hours ago, Roy said:

With this in mind, would you consider selling some shares and buying more gold?

I wouldn't do that if you don't need to. If your portfolio balance has got out of acceptable boundaries then just redirect where you money goes in subsequent months until it gets back to where you want it.

[vand]

If anyone is paying more than about 3% on any loan right now, they're paying too much. 5% mortgage? You should be aiming for sub-2% in the current mortgage market. Those low rates increase the risk premia of investible assets, making investing more attractive than paying off debt. 

 

Edited July 14, 2020 by vand

[Robb]

56 minutes ago, vand said:

If anyone is paying more than about 3% on any loan right now, 

 

Millions of people didn't get their loans "right now" but several years ago or longer  Many mortgages are over 4% and when including PMI (insurance if you don't put 20% cash down) are touching 5%.   The average rate today is 3.9%.  Some lenders are a bit lower, others are a bit higher.  Average new car loan (60 months) is 4.43%.

Loans at 3% and under are available for much shorter terms and to highly qualified borrowers.

The average credit card rate is 15.9%  

There are no sub 2% mortgages in America

Edited July 14, 2020 by Robb

[MrTT]

Only crazy people sell their pm's this time.🤠

Looks like the world, goes to hell more and more each year. 😱

Edited July 14, 2020 by MrTT
Words

[dicker]

Agreed.   

Whilst there is probably a bias by myself and other stackers and collectors to keep PM’s I am not selling, but have paused buying at the moment. 

Personally I am staying in cash as I don’t trust the stock market (think it is too high and due a significant correction)

Best

Dicker

[Roy]

13 hours ago, Robb said:

There are no sub 2% mortgages in America

It looks like things are in our favour for a change! 😀

Edited July 15, 2020 by Roy

[StackerCollector]

Central banks buy gold, JP Morgan buys silver - both never lose so I am holding until I can trade my pm for real estate (a farm that is) or until retirement. Yesterday JPM announced their latest quarterly earnings, a $5.5 million record. These guys know what they are doing and they keep buying physical silver :) 

 

[vand]

14 hours ago, vand said:

I wouldn't do that if you don't need to. If your portfolio balance has got out of acceptable boundaries then just redirect where you money goes in subsequent months until it gets back to where you want it.

belangp has also just put out a good video about the virtues of not being in a big rushto rebalance when considering a gold/equity mix:

 

Those efficiency frontier curves are quite remarkable; the "hook" shape should not even be possible according to modern portfolio theory.

Edited July 15, 2020 by vand

[vand]

Moneyweek are saying the same. Don't sell now, we have much further to run: https://moneyweek.com/investments/commodities/gold/601667/gold-price-mining-stocks-boom

[vand]

Another friendly bump, just in case anyone is tempted.

Yes, gold has just taken out its old USD highs. So what? The inflation adjusted equivilent would be about $2300 compared to its 2011 price. The Dow/gold adjusted price would be $4400.

If we are truly in a secular bull market then gold will easily take out both those targets.

 

 

[vand]

On 24/03/2020 at 14:19, vand said:

Is anyone still a believer?

Because we are going to see an unbelieveable move in the price of silver soon.

Remember the shakeout of 2008? Of course you don't. I don't blame you.. Silver was just another asset that got smashed as the economy went off the cliff, going from $20 to $8.

Silver has ALWAYS been incredibly volatile. That is why I never advise anyone to put all their money, or even the majority of their money into silver or even anything else, even if you believe it is the best buy in town.

We all know what happened in the aftermath of the financial crisis, as the economy reflated the PMs took off, and silver went all the way to $50. The world was a changed place.

 

Today the world is a changed placed. Fundamentally, everything the soft-money critics had warned about is now happening. Unlimited bailouts, and helicopter money. Sovereign default is assured. It will take another few years for non PM holders to finally understand that you can't print your way out of a crisis.

In this new world, money takes on a different meaning. 

^ ^ ^ For Posterity.

We're going higher still. Sit on it and do nothing. Yes there will be pullbacks. Who cares.

 

Remember this immortal passage from Reminisences:

Quote

"“It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine--that is, they made no real money out of it. Men who can both be right and sit tight are uncommon.”

 

[goldmember44]

In for the long haul...

[Happypanda88]

I believed Mr Wonger, sold all my gold and got stung !! 😂

Edited August 5, 2020 by Happypanda88
Typo

[Oldun]

I went on record at the start of the year when members were asked what their plans were in 2020 and I said I was going to buy the snot out of them.

Edited August 5, 2020 by Oldun