Buying Real Silver and Gold (Not Bitcoin)

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by grayfox » Thu Jan 11, 2018 11:41 am

With all the preliminary stuff out of the way its time to get down to brass tacks.

Suppose you want to have 10% of your portfolio in Precious Metals. 5% in Silver and 5% in Gold. What would you have to buy? Here are some ideas for portfolios from $1,000 to $100 million.

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Portfolio    5%        Silver                      Gold

$1,000       50      2x 1oz SAE *                1x 1-gram Gold Bar *
$5,000      250      12x 1oz SAE *               1x 1/10 GAE *
$10,000     500      1x Mint Tube SAE *          1x 1/4 GAE *
$20,000    1000      2x Mint Tube SAE *          1x 1/2 GAE *
$50,000    2500      6x Mint Tube SAE *          2x 1oz GAE *
$100,000   5000      12x Mint Tube SAE           1x Mint Tube 1/10 GAE *
$200,000  10000      1x Monster Box SAE          1x Mint Tube 1/10 or 1/4 GAE *
$500,000  25000      2x Monster Box SAE          1x Mint Tube 1oz GAE *

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$1M       50000      5x Monster Box SAE          2x Mint Tube 1oz GAE *
$2M        100K      10x Monster Box SAE         4x Mint Tube 1oz GAE * 
$4M        200K      20x Monster Box SAE         8x Mint Tube 1oz GAE *           
$10M       500K      50x Monster Box SAE         17x Mint Tube 1oz GAE
$20M        1M       100x Monster Box SAE        1x Monster Box 1oz GAE
$50M       2.5M      250x Monster Box SAE        3x Monster Boxes 1oz GAE
$100M       5M       500x Monster Box SAE        6x Monster Boxes 1oz GAE

* should fit in extra small safe Deposit box (2" tall x 5" wide x 22" long)
Someone starting out with $1,000 portfolio could buy 2 1oz Silver American Eagles and a one 1-gram gold bar. But I would skip the gold because there is too much markup on the tiny bars. They are more of a novelty item or for giving as gifts. Instead wait until you can afford at least a 1/10 or 1/4 oz GAE.

As far as Silver, I would probably not have more than about a dozen mint tubes of silver eagles. More than that takes up too much space. So beyond the $100,00 portfolio, it would be more convenient to only have Gold.

The canonical Bogelhead $1 million retirement portfolio could have 2x Mint Tubes of 1oz Gold American Eagles and that would be 5%. You would probably not want to have 5 Monster Boxes of 1oz Silver American Eagles. So you might instead double the amount of gold.

Even up to about a $4 million portfolio, you can probably fit 10% as gold (16 mint tubes of 1 oz GAE) in an extra small SDB that costs only $50 per year. Beyond that, you will need either a bigger box or multiple extra small boxes. Maybe you could get a second box at a different bank at a different location.

When you start getting to Monster Boxes of Gold Eagles ($10M+ portfolio), I don't know if there are big enough boxes at the bank. Maybe their biggest box, but there is a waiting list for the larger boxes. You might have to come up with other arrangements. There are private vaults that might work, but the fees are higher than your bank. I'll just cross that bridge when I come to it.

:?: We are taking orders now. How many Monster Boxes of Gold Eagles will that be, sir?

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Re: Buying Real Silver and Gold (Not Bitcoin)

Post by grayfox » Fri Jan 12, 2018 1:19 pm

That's basically the story of how to invest in Silver and Gold, the physical metal not the paper ETFs.

One other thing worth mentioning is Harry Browne's Permanent Portfolio. If you recall, this has 1/4 in Stocks, Gold, long-term Treasuries and Cash.

If you want to go with the Permanent Portfolio and have physical Gold, you would have 25% of your investment portfolio in Gold bullion. You can just take the 5% numbers in the previous table and multiply by 5.

That is quite a lot of bullion. The canonical $1 million retirement portfolio would have $250,000 in Gold. That would be about 10x Mint Tubes of 20 1-oz Gold American Eagles (GAEs). It may or may not fit in a $50 per year extra small Safe Deposit Box (SDB). But I would probably divide it up anyway into 2 or more boxes. If one box becomes compromised, you only lose 1/2 or 1/3 of your hoard.

And I would definitely insure that amount. How much does that cost? I don't know.

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