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AKA the bullion thread:

so I was at a coin dealership yesterday, and the guy wanted 86 bucks+tax for a 2 oz kookaburra, which came to about 94 bucks. I changed my mind at the last minute because I tend to buy at market + 2-3 rather than market +7, which is what this guy wanted. I left the coin there and took my money home. Now I'm thinking I made a stupid mistake.

Have any of you made mistakes in the bullion business? The above was not nearly as bad as paying market price for a fake silver panda, something I did last summer because my fiance' thought pandas were pretty.

Well lets see, I had a crown put in recently, and it cost about 700 money, as Arthur would say. The crown was made mostly of platinum, palladium, and gold.

Silver and Gold can be used in making circuits, silverware, and dental. They can also be used for mirrors. Gold can be used for shielding in space, and silver can even be crafted into a bullet, although not quite as effective as lead or depleted uranium. Silver is also the active ingredient in the burn creams used at the Emergency room.

Point is, while you can burn paper money or wipe your a** with it, it has limited re-usability. Precious metals have that "well, I could just make something out of it" renewable aspect that fiat currency lacks. You'll note that my claims about precious metals has little and nothing to do with conspiracy or apocalypse.

in terms of paper currency you can spend paper currency more reliably than metals, which to get maximum resale value have to either be used by you as some kind of smith or machine trades, or you have to sell the stuff over the internet directly to would be investors (typically 90%-110% before shipping and handling).

Although, at a coin dealership bullion gets purchased at over 80% market value (not counting taxes), and even at pawn shops, you can get around 70%, which is significantly higher than just about anything else sold at a pawn dealership, and you probably know that.

Now here's the thing: if you are comparing a 20-30% loss with currency, unless you are in the middle of a hyper inflation period, you are losing more money by dealing in metals (today) to make purchases on a regular basis. However, if you are a Costco shopper or someone who makes large purchases only once in a great while, since the price of metals keeps going up 99% of the time, you don't actually lose 20-30%, its closer to 1-3%, and sometimes its actually profit.



Now there's one other trick to this kind of spending: if you have a good amount of reserve currency (compared with your standard of living), it makes sense to keep purchasing small amounts of bullion, even if it looks like its going into a bubble.

Because when the bubble bursts, you can buy several times more with your reserve currency, at the rate you bought your previous bullion.

say you buy 10 ounces of silver a month, and they begin at 21 Loonies a piece. You are now committed to spending $210 CAD per month. The next month they go up to $28 CAD, and your monthly goes to $280. This principle repeats until you are at say, $420 CAD a month, and then the bubble bursts - an ounce only costs 7 loonies, OMG! What do you do?

so you have spent
210
280
350
420
-------
$1320 CAD, you have 40 ounces, and they are only worth $280 CAD.
The answer is You buy $420 CAD a month.

That gets you 60 more ounces. You continue this trend until your market returns back to 42 loonies an ounce, and then you sell. Now look what happens:

420 at 7/ounce = 60 oz
420 at 14/ounce = 30 oz
420 at 21/ounce = 20 oz
420 at 28/ounce = 15 oz
420 at 35/ounce = 12 oz
420 at 42/ounce = 10 oz
sell.

420 x 6 = $2520 CAD, plus $1320 CAD, = $3840 spent.

But how many ounces do you end up having when you sell them?
you began with 40 ounces when the madness started, and you added 147 ounces, for a total of 187 oz.

When you sell them, they go for $7854 CAD, and even at a pawn shop, you get around $5497. So instead of losing 20-30% at a dealership, you stand to gain over 40%. You could even elect to sell only the profit (enough for a trip to Disney world or the Bahamas) and keep the reserve, and keep buying your 10 oz again.

Now these numbers aren't likely to happen in the real world, or at the speed I've listed, but the principle of bouncing between currency and bullion, and having reserves of both is real. You never stick with one alone, because the other could rapidly devalue overnight, like in Russia, Jamaica, or Zimbabwe.

Michael, your post reminded me of those people that do super couponing for some reason. Probably because you mentioned Costco.

I think that's a pretty good investment strategy, personally. You could get literally months of non-perishables (and even perishables if you use them at a steady rate) for almost nothing. The downside is all the time spent planning and cutting coupons. You can't eat paper currency or metals.

What you invest in is probably dependent on your goals though.

ok so I looked into the copper market.

pound bars go for $12-14
kilo bars go for $25

you typically buy bulk bars, there's also half pound bars for $8. This is a metal that becomes useful if you have someone who can break it down and rework it, which is very apocalyptic or DIY, otherwise it's just a fancy paper weight.

The prices are too volatile to predict right now, since the market has yoyo'd over the past 5 years like a roller coaster, it's not a sure thing. What is sure is you can use it in a major reconstruction effort and sell it during a shortage. When copper mines cave in, prices go up and you can sell it, but it's very heavy so prices would have to sky rocket to make it a viable asset. That being said, a smart person with lower class income should invest in it because its incredibly hard to steal ($10,000 weighs about 800 pounds). Bars can also be very shiny and some are quite pretty, and by monopolizing as a poor person in something you can afford, it can provide wealth for you and your children toward retirement, even if no apocalypse or Chinese economic crisis hits.

So this is what I think:

if you are poor, working part time, or earning minimum wage, invest in copper bars.

if you are working class or middle class, you want about 10% of your metallic portfolio in copper, and about 85-90% in silver with the rest in gold, platinum, or palladium.

if you are wealthy, you want about 5% of your metal wealth in copper bars (in physical or paper/storage form), with at least 30% in silver, and the rest split between gold and probably palladium. Platinum is risky, I think more risky than palladium as a long term.

I don't know much about investing in Palladium, and would classify it is as more exotic than copper, and likely harder to sell. Gold is easier to sell than platinum and most people can't tell the difference between "white gold", platinum, and palladium.

Exactly, the bulk is the thing that keeps copper collection safe, because the amounts you need to make it worth it eventually become a logistic nightmare. I used to collect and sell copper wire as a kid. See, if you have a backpack, you might be able to get 40 pounds of copper in there, but that's only 500 bucks. It's actually much easier to steal someone's netbook, guitar, or console, and probably more profitable pound for pound. Even if you're young and working a part time job you can get into the copper market.

Speaking of profit, silver just went up 10% in the last week.

i'm just saying the effort required to steal copper bars (as opposed to wire which could be from anywhere) exceeds the value. When you try to sell the bars, people are going to ask questions, especially if there's been a recent report of stolen bars. Unlike Gold, or even silver, the 'haul' doesn't warrant organized crime unless you do it in a bundle exceeding hundreds of thousands, like the recent meat truck thefts.

Here's the numbers:

Swordfish: $14.99
Salmon: $12.99
Tenderloin: $11.99
Copper/bar: $10.99
T-bone steak: $ 6.99
Copper/bulk: $4.37
Round Roast: $2.99

I had some friends in the "trucking" business and as "a favor" they used to store a few hundred pounds of steak and lobster in our freezers, this is back before the oil spills.

I think the issue is people need to be able to store commodities they can sell in a timely fashion, and keep from theft, and fit in their price bracket. The meat market is far too risky for poor people because you need to guarantee the buyers, storage, and transport. Copper is safe because it can be stored indefinitely, and appreciates/grows in price over long stretches of time. pound for pound it's not worth stealing for most people, and the people who would be that hard up to steal it are going to get caught, because bars are labeled with deep engravings.

On average, automobiles are worth more pound for pound and easier to sell as stolen merchandise.

in other news, Silver has gone up considerably and Gold is set to hit $4800 by 2020, in 2011 dollars (i.e., before inflation).

I think The United states will probably start fracking for oil shale in Pennsylvania, digging in Louisiana and North Dakota, and making automobiles that can use methynol and natural gas, but that wont happen unless the government changes in some significant ways.

always tie stocks to gold and oil to silver. I'm not sure what palladium and copper are tied to, but it seems to me both are tied to cars and electronics.

I'd worry about stealing tomatoes because I'd have to have a buyer and freezing them is more complex than freezing meat. So instead of a 6-12 month window with a fridge, I'd have 6-12 days.

right now the silver prices are slumping, which is good. I hope they continue to slump so I can get a 2 oz kookaburra for less than the local coin guy wanted to sell them for. It's the principle of the thing.