Yesterday we discussed the fact that stocks and tax liens aren't really in the same camp. Noting that tax liens being more akin to a job than investing in a traditional sense, we focused more on stocks yesterday. Our consideration included some aspects of various trading methods and philosophies that the investor may, or may not, be interested in.
Today we turn our attention to precious metals, unique in the investment world in that they are a monetary asset. They can never be worthless. Nobody really manages them, though there is some manipulation in the markets. You can invest in them tangently, by purchasing mining stocks, you can take ownership via paper, such as ETFs (GLD and SLV), you can possess them in your IRA or in a vault, or you can take possession of them. And, because of various opportunities on the markets today, they can even be day traded in the stock market or FOREX trading.
In addition to these options, metals come in a plethora of forms. The opportunities are endless, only being limited by the investor's philosophy, resources and, in some ways, imagination. With jewelry, gold bars, various bullion coins and a range of semi-numismatic coins so vast and complex that few truly have a grasp of it, there is no danger in exhausting the opportunities.
Perhaps what's most important in discerning how to approach metals is to assess one's particular investment philosophy. For instance, if someone though they wanted to make some quick trades for quick profits, then physical metals aren't ideal. They're better off doing so through ETFs, options or FOREX trading.
Most investors perceive gold and silver as a hedge against both inflationary and deflationary markets. With this in mind, we are in total agreement that every investor should take possession of at least some precious metals. The next logical question, of course, is "Which metal?" followed by "What form?"
This venue is not the place for specific personal advice. There are simply too many factors involved in each person's circumstances. However, there are some basic principles to consider in your decision.
One is whether or not the form is readily recognized. This is where standard issue coins excel. While ingots and other non-mint forms of silver can be shaved quite readily, coins are rarely subject to such practices. Furthermore, the standardization of grading available through PCGS and NGC has eliminated much of the deception that once plagued the semi-numismatic market.
A consideration in semi-numismatics has to do with its stability in price in relation to its premium (price over spot) value. The greater the premium, the less the coin will move with current markets. Thus, with short-term gains or losses, the high premium coin may not budge in value. Such collectibles tend to respond slowly to market fluctuations to the upside, and even more slowly to the downside.
With this in mind, for long-term portfolios some advisors recommend semi-numismatics, but tailor them according to the investor's goals, current portfolios, personal philosophy and other factors. Short-term acquisitions may focus more on 90% silver coins (pre 65 U.S.) or other coins that are closer to spot value.
Because of the nature of these types of investments, it's best to get personal advice catered to your particular circumstances. Furthermore, over the next couple of days we'll consider some specific coins that might interest you.For your prosperity,
The Gold Informant