Tuesday, January 5, 2010

When should you sell your gold stash?

We’ve talked about buying gold but I’m sure a lot of people are asking themselves this same question, mostly those that attempt view gold as an investment (something can only make profit for you when buying and selling according to market trends ) instead of stocking it up like a little greedy leprechaun. Tell you want folks, the leprechaun won’t end up living under a bridge like that silly troll. Silly liberal, socialist troll... :-)


Question – Russell, you’ve been bending our ears about buying gold ever since the year 2000. Out with it, at what point or at what level do I sell my gold or silver?

Answer – An excellent and important question. The answer (and this may not surprise you) is that you NEVER sell your gold or silver (or platinum, for that matter). These precious metals are an integral part of your estate and net wealth. I don’t care what the current price of gold is, gold represents unencumbered wealth.

Let me give you an example from the rich man’s standpoint (and remember, this guy didn’t get rich by being stupid). The rich man accumulates and holds ten thousand ounces of gold. At one point (such as today) his gold holdings are worth $12 million dollars. He’s still rich.

Then gold declines to a price of $700 an ounce during a crushing world deflation. Bankruptcies rule, and the price of anything and everything with debt against it has collapsed. At this point the rich man is holding $7 million worth of gold. The fellow is still very rich. Next comes a run-away inflation and gold climbs to $2500 an ounce. Here the fellow owns $25 million dollars worth of gold. Now he’s almost embarrassingly rich, at least in relation to his neighbors.

You see the point. In holding ten thousand ounces of gold, this fellow is always rich, but let’s call it shades of rich depending on the economy. So the rich man isn’t trying to “beat” or “out-trade” the gold market. He holds his gold as an eternal store of wealth through good times and bad.

There’s only one argument against the above thesis. The argument is that gold becomes a “worthless barbaric relic” of a metal. And suddenly, nobody wants gold. How valid is that argument? Five thousand years of history say that argument is wrong. I’ve said before that the value of gold appears to be etched into the DNA of mankind. There’s never been an instance since pre-Biblical times when men didn’t lust after gold.

Conclusion – Learn from the rich man. Never mind today’s price of gold; mind how many ounces of gold you own.

I try hard never using the word never (damn paradigms ), but I’d agree on not selling your gold, not considering an investment.
Your stash of gold is something else. Think of it as a lifejacket, a flotation device. Then you have a bit more and you have a better one, an emergency boat, and so on.
Don’t sell you precious metals, at least not in any serious amount, until you really don’t have a choice.
My father in law sold his to save the family company in 2000. Even that was a bit too much. He should have declared bankrupt instead. He wasn’t thinking about himself and his family, he was thinking about the handful of workers, those families that would have been left unemployed. In the end no one was happy. Instead of being grateful, the most workers got mad because there were no more bonuses and raises, and the small company wasn’t doing well.
No, its better to save your precious metals until you really don’t have any other choice.



Patrick said...

I agree but I think it can be worth your time to buy puts for at least several months on GLD, when you would consider selling. This requires a sense of timing but if you give yourself a large enough window and don't buy so many contracts relative to your supply, it can be a good insurance policy.

Anonymous said...

I have about 56 ounces of silver and will probably cut that in half when the price goes up. It's too hard to sell where I live. Nobody wants it. A firearm is easier to sell, has a use, and holds its value. Dealers pay 90% if your lucky, pawn shops pay 50%. So to put it in numbers an American Eagle sells for about $22 + tax = $24, silver @ 17 dealer will pay about $15 and pawn shop about $10. Now if walmart would take it then i'd buy more.

Loquisimo said...

There was recently a discussion about this over on Homesteading Today (homesteadingtoday.com) and the consensus was that the man with egg laying chickens, rabbits, other meat animals, and veggies will be far wealthier than the guy with a bunch of metal.

Silver and gold is only worth what others are willing to pay for it. Legally, your silver dollar might be worth $800 in inflated USD, but if nobody has USD, or if they're spending it all on food (wheelbarrow of dollars to buy bread), then what's the point? Many people on that forum are Jeffersonians and believe that true wealth comes from agriculture.

So if you can trade a few eggs or potatoes for bread, you will be far better off than the guy with only worthless USD or even silver and gold. You can't eat gold and silver, after all, unless you find a man with food who is willing to take metals for it. But if you can't find such a person, you starve like everybody else.

Paraguay Insider said...


The idea of silver is not the exchange it for U$ - the idea of silver coin in a crisis is to pay with it INSTEAD of U$.

Right now there is no crisis, everything is fine and well. Sure there are unemployed people but overall everything is WORKING.

When the real crisis hit - i.e. when goverment declares bankrupcy or inflaton hits 200% per year...then you might find it difficult to buy certain important and rare things with the then worthless dollar.

Thats when you need a few small gold or silver coins.

Gold and silver as an INVESTMENT is a different thinking - you buy low ...say below U$ 1500 and you sell when you smell a peak at perhaps ~~U$ 5000 per once to go into real estate or purchase a nice mid company with your bars.

Two different uses entirely. With assets below U$ 300,000 you will most likely go for option #1 as you main concern will be to survive with a somewhat acceptable style of living (i.e. not living under a bridge) and use up all the resources you possibly have.

If you struggle now in "wonderland" you will be fucked in any serious crisis. Sorry to say but that is the ugly thruth.

Anonymous said...

dude, you can sell online lots of places for a touch under spot......

take this guy for instance.....



Don Williams said...

As they say in the poker games, "Read 'Em and Weep, Rubes".

From http://www.reuters.com/article/idUSTRE6021LK20100103

"U.S. growth prospects deemed bleak in new decade
Pedro Nicolaci da Costa
Sun Jan 3, 2010 6:55pm EST

ATLANTA (Reuters) - A dismal job market, a crippled real estate sector and hobbled banks will keep a lid on U.S. economic growth over the coming decade, some of the nation's leading economists said on Sunday.

Speaking at American Economic Association's mammoth yearly gathering, experts from a range of political leanings were in surprising agreement when it came to the chances for a robust and sustained expansion:

They are slim.

Many predicted U.S. gross domestic product would expand less than 2 percent per year over the next 10 years. That stands in sharp contrast to the immediate aftermath of other steep economic downturns, which have usually elicited a growth surge in their wake.

"It will be difficult to have a robust recovery while housing and commercial real estate are depressed," said Martin Feldstein, a Harvard University professor and former head of the National Bureau of Economic Research.

Anonymous said...

For me, it's a retirement plan. Rather than losing value in a CD or bond, I'm stashing purchasing power in my safe. Someday when I'm ready to quit working for a paycheck, that stash will become what I live on, and that's when I'll start selling it-- to pay for my retirement. If there's anything left when I'm done with it, THAT will become part of my estate. I'm not putting it away for somebody else, though- that would be just gravy. Considering that just a year ago I would have sworn I would never have the ability to retire, I think I've made good use of my new-found interest in PMs.

Don Williams said...

Re Loquisimo at 7:59 "Many people on that forum are Jeffersonians and believe that true wealth comes from agriculture.

So if you can trade a few eggs or potatoes for bread, you will be far better off than the guy with only worthless USD or even silver and gold."

Those people are not Jeffersonians -- they are Peasants. Peasants who will become sharecropping Serfs when the sheriff sells their farm out from under them because they can not come up with the money for taxes.

Or the occasional necessary bribe for officials. Have you ever heard of an official taking a handful of chickens as a bribe?

Why do you think the US Government stockpiled $Billions in RED paper currency in an underground bunker under Warrenton ,Virginia during the Cold War? It was to manage the economy after a nuclear war -- including making existing caches of pre-war green money worthless.

How did the government plan on making the red paper have value ? By DEMANDING that all taxes be paid in it.

I have nothing against having a self-sufficient farm --but you need money to keep it.

The last cause said...

FerFal, check out this video in re "selling your gold":


Brain dead Suburban woman are heading to "gold parties" held at a private home werein a pawn broker/metals dealer robs them..err..purchases that nasty "old jewelry that I haven't worn in years".

And this was in Houston, not some NY enclave, those folks are clueless.

Joseph said...

Loquisimo, with all due respect that argument is usually put on by people with the resources to only make one decision (livestock or silver/gold). Currently I have approx. 80 hens, milk and meat goats...so should I just keep buying as well as the extra monthly liability of caring and feeding for additional livestock?

This post by FerFAL is good for provolking thought however I would disagree with never. Some of my PMs are purchased for what FerFAL discusses however some has been purchased for investment purposes as well. When/If my price points are reached I will sell those amounts and take a profit however if those points are not reached in the near future I will not be crushed either :)

Anonymous said...

I agree in part with what Loquisimo says, in that having a means of food production is very important. But the huge benefits of metals, besides those mentioned, are it's portability, and inheritability. If things get really bad in your area and you have to pick up and leave, the metals are a lot more portable form of wealth. And, when you get old, you can just hand your kids a box of gold coins as their inheritance, and the government can't steal half of it.

Anonymous said...

Richard Russell is the man.

He is over 80 years old, fought in WWII (B-25 front gunner, 30 missions over Europe), and is smart as a whip.

He is no "Johnny Come Lately". He made a 5% call on gold around 2002 if I recall, and then quickly upped that to 10% then 15% and eventually said to move 30% of your assets into precious metals. If you want to get a great education, buy his newsletter. It has more than paid for itself. Even if you can't afford the pricetag there are some fantastic FREE articles on his homepage. Read them, and learn.

Precious metals are NOT and should not be considered an "investment". They do not yield interest. PMs are a type of insurance plan, something you have but don't want to see the day when you have to cash in on them.

Don't look to get rich in precious metals. The low-hanging fruit was picked 6-8 years ago. Buy on dips and add to your position. Good luck!

Anonymous said...

be extra cautious when it comes to selling your gold and definitely do your research. I do think that mailing your gold in is the best way to get the most out of your money but you must do your research. When you sell to a jewelry shop or pawn shop, you are dealing with the middle man. Meaning that they have to give you less so that they make a profit when they sell it. One of the best and most reputable companies that I have come across is Empire Gold Buyers. You cut out the middle man and will make a great profit. They have a very loyal following and an excellent reputation. Best of luck with everything. Stash for gold