New Here

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happydaze412
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Joined: Thu Aug 27, 2020 3:37 pm

New Here

Post by happydaze412 »

Hello Boglehead community hope you all are having a blessed day.
So I have a different portfolio it mostly consist of gold and silver. I however was offered a 401k through my employer which I started and it has a company match of 3%. My portfolio that is of gold and silver I have no plans on selling I plan to hold from now until I retire and use that to compliment whatever social security income or other income I may have in the future.

My question to you is what is the absolute floor for Gold and Silver in the bearish scenario?

Gold/oz: $1970 10 year high: $2060 10 year low: $1050
Silver/oz: $28.30 10 yr high: $48.50 10 year low: $12

Thank you all for your input and I have enjoyed seeing the other post in this forum. You all are awesome so again much appreciated.
Luckywon
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Re: New Here

Post by Luckywon »

I don't think anyone on this forum (or any other) knows the answer to your question. if you are open to a discussion of the merits of your strategy, you might get more valuable input. What's your rationale behind investing mostly in gold and silver? In what form are you holding them?
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MillennialFinance19
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Re: New Here

Post by MillennialFinance19 »

If gold/silver is your preferred method of investment, you're on the wrong forum (I'm not even sure what the right forum is).
For the love of God, stick to your plan!!!
tibbitts
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Re: New Here

Post by tibbitts »

Nobody knows the future for any commodity prices, or equity prices for that matter.
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arcticpineapplecorp.
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Re: New Here

Post by arcticpineapplecorp. »

the absolute floor of any asset is $0.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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hand
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Re: New Here

Post by hand »

arcticpineapplecorp. wrote: Mon Aug 31, 2020 12:09 pm the absolute floor of any asset is $0.
Unless.... there is a storage cost associated - Oil was negative for period of time earlier this year.

https://www.bbc.com/news/business-52350 ... 20in%20May.

I'd agree that for all practical purposes, for the individual investor, floor is $0
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CyclingDuo
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Re: New Here

Post by CyclingDuo »

happydaze412 wrote: Mon Aug 31, 2020 11:49 am Hello Boglehead community hope you all are having a blessed day.
So I have a different portfolio it mostly consist of gold and silver. I however was offered a 401k through my employer which I started and it has a company match of 3%. My portfolio that is of gold and silver I have no plans on selling I plan to hold from now until I retire and use that to compliment whatever social security income or other income I may have in the future.

My question to you is what is the absolute floor for Gold and Silver in the bearish scenario?

Gold/oz: $1970 10 year high: $2060 10 year low: $1050
Silver/oz: $28.30 10 yr high: $48.50 10 year low: $12

Thank you all for your input and I have enjoyed seeing the other post in this forum. You all are awesome so again much appreciated.
Start here: https://www.bogleheads.org/wiki/Getting_started
And here: https://www.bogleheads.org/wiki/Main_Page
"Save like a pessimist, invest like an optimist." - Morgan Housel
Topic Author
happydaze412
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Joined: Thu Aug 27, 2020 3:37 pm

Re: New Here

Post by happydaze412 »

Silver and Gold isn’t my only holding. But it is the majority of my holdings. I also hold fiat paper money and the broad index for stocks in my 401k.
Topic Author
happydaze412
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Re: New Here

Post by happydaze412 »

arcticpineapplecorp. wrote: Mon Aug 31, 2020 12:09 pm the absolute floor of any asset is $0.
If Gold hit 0 then there would be no point in mining gold even though that has been around for thousands of years as real money. Gold will be around well after us too.
000
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Re: New Here

Post by 000 »

I will echo the others and say we do not know what the floor is. I personally think it is above zero, but it could be zero. There could be a situation where Gold and Silver lose all or substantially all value to society. Anything is possible.

Although I hold some Gold, the bulk of my investments are in stocks and REITs. I don't think Gold and Silver have attractive growth prospects long term.

I will note it is probably possible to buy Gold and Silver put options that would guarantee a price floor.
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bottlecap
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Re: New Here

Post by bottlecap »

000 wrote: Wed Sep 02, 2020 9:02 pmThere could be a situation where Gold and Silver lose all or substantially all value to society. Anything is possible.
I am not picking on this particular post, but taking issue with this expressed sentiment in general.

I certainly agree with the overall sentiment that the future is unknowable. But gold and silver have been a store of value for more than 2,000 years. They have never gone to zero and have outlasted 99% (admittedly, I'm surmising at this percentage) of currencies.

So there is absolutely no evidence that gold and silver would go to zero. I only slightly hesitate to say it's even theoretically possible. Unless all humans were dead. It's the only thing that checks the boxes of a store of value that politicians can’t undermine.

In full disclosure, I own no gold or silver outside of what is included in the total stock market index.

But thousands of years of history essentially guarantees that the U.S. Dollar (for example) is more likely to be worth zero before gold and silver ever is. Even being a Diehard Boglehead doesn’t blind me to that fact. Even the mighty U.S. Dollar (originally worth one ounce of silver) is after all, just paper.

JT
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bluquark
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Re: New Here

Post by bluquark »

The reason for talking about zero is because of the word "absolute".

To make some attempt at a napkin estimate, let's consider if the attraction to gold as an asset becomes outmoded but it retains value for its industrial uses. An example of a useful and somewhat uncommon metal is copper, which is worth $6000/ton. Gold is worth $60 million/ton. That is a difference of 10000x, so we could set an absolute bottom of 20 cents an ounce.

My estimate is a rounding error away from zero as well, and it demonstrates that the value of gold is almost entirely based on culture. And the vagaries of culture are extremely unpredictable so it's impossible to set a bottom. Similarly, how could an investing forum tell you what is the absolute bottom possible value of a Klimt painting? Depends on whether he continues to be seen as a great painter or falls out of favor and is removed from the canon.
70/30 portfolio | Equity: global market weight | Bonds: 20% long-term munis - 10% LEMB
000
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Re: New Here

Post by 000 »

bottlecap wrote: Wed Sep 02, 2020 11:26 pm
000 wrote: Wed Sep 02, 2020 9:02 pmThere could be a situation where Gold and Silver lose all or substantially all value to society. Anything is possible.
I am not picking on this particular post, but taking issue with this expressed sentiment in general.

I certainly agree with the overall sentiment that the future is unknowable. But gold and silver have been a store of value for more than 2,000 years. They have never gone to zero and have outlasted 99% (admittedly, I'm surmising at this percentage) of currencies.

So there is absolutely no evidence that gold and silver would go to zero. I only slightly hesitate to say it's even theoretically possible. Unless all humans were dead. It's the only thing that checks the boxes of a store of value that politicians can’t undermine.

In full disclosure, I own no gold or silver outside of what is included in the total stock market index.

But thousands of years of history essentially guarantees that the U.S. Dollar (for example) is more likely to be worth zero before gold and silver ever is. Even being a Diehard Boglehead doesn’t blind me to that fact. Even the mighty U.S. Dollar (originally worth one ounce of silver) is after all, just paper.

JT
The OP asked us what we thought the absolute floor is. I think my post was reasonable. I can think of at least a handful of ways for Gold or Silver to lose substantially all value to society. I'd be happy to share if you like.
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prudent
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Re: New Here

Post by prudent »

I have no idea what precious metals might do, but I think you have a lot of concentrated risk in having the majority of your assets there. Diversification is important.
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bottlecap
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Re: New Here

Post by bottlecap »

000 wrote: Thu Sep 03, 2020 12:00 pm The OP asked us what we thought the absolute floor is. I think my post was reasonable.
I neither stated nor implied that your post was unreasonable.

I also didn't realize the OP wanted a literal answer.

The literal ”absolute floor” for any asset expressed as a non-negative integer is zero. No further discussion is necessary.

If you want do discuss what the OP was aactually looking for, what happens to gold and silver in a ”bearish scenario”, I can say that scarce and non-reproducible precious metals will never hit that floor in any semblance of a human civilization.

Granted, I'm data-mining by choosing a small time frame of say, the most recent 2 to 3,000 years of human history, but I think that's forgivable as records are sparse before that.

JT
000
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Re: New Here

Post by 000 »

bottlecap wrote: Thu Sep 03, 2020 1:37 pm If you want do discuss what the OP was aactually looking for, what happens to gold and silver in a ”bearish scenario”, I can say that scarce and non-reproducible precious metals will never hit that floor in any semblance of a human civilization.

Granted, I'm data-mining by choosing a small time frame of say, the most recent 2 to 3,000 years of human history, but I think that's forgivable as records are sparse before that.
There is deep risk in every asset. For precious metals, some big risks are:
1. People just stop caring about them. Many things come and go. Some estates are now having trouble giving away formerly prized valuables.
2. Their role is replaced by a cryptocurrency.
3. High quality fakes become commonplace.
4. New claims are discovered, causing a huge increase in available supply.
5. Institutions choose to "disrupt" the metals markets.
6. A physical process is discovered to synthesize atomic elements from other elements, allowing the creation of synthetic Au and Ag.
dvvader
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Re: New Here

Post by dvvader »

MillennialFinance19 wrote: Mon Aug 31, 2020 12:04 pm If gold/silver is your preferred method of investment, you're on the wrong forum (I'm not even sure what the right forum is).
There is a forum called "Gold is Money 2" that would probably be right up the OPs alley. It's an interesting place...
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MillennialFinance19
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Re: New Here

Post by MillennialFinance19 »

dvvader wrote: Fri Sep 04, 2020 10:05 am
MillennialFinance19 wrote: Mon Aug 31, 2020 12:04 pm If gold/silver is your preferred method of investment, you're on the wrong forum (I'm not even sure what the right forum is).
There is a forum called "Gold is Money 2" that would probably be right up the OPs alley. It's an interesting place...
I love it when someone comes with a suggestion versus my empty comment! :sharebeer
For the love of God, stick to your plan!!!
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