By John Fisher
If you take physical delivery of your gold and silver, you have the least risk of loss due to counter-party exposure (where you are depending on someone else to perform). It is a good idea to have at least some of your holdings in your own custody. This method of possession also affords the maximum amount of financial privacy available.
However, there are disadvantages to having personal possession:
- Buy/sell spreads for physical metals are usually wider than for paper/electronic forms of investment
- There is a risk of burglary or robbery
- Insurance may be higher than if held in a security rated safe, a private depository or a safe deposit box
Advantages:
- You can take action at a moment’s notice
- You are not dependent on the performance of any institution, depository, individual or government. You eliminate virtually all counter-party risk
- If a financial crisis gets so bad that gold and silver begin to circulate as currency, you will need it in your possession to be able to spend it
Precautions if you decide to hold metals in your personal possession:
- Rule #1 – don’t tell anyone except those absolutely necessary
- Use multiple locations inside and outside your residence if practical. Possibly consider a relative for part of your holdings
- A quality safe!! Quality safes are not what you buy at Office Depot or Home Depot. We also do not recommend gun safes – although they look larger and sturdier, they are not. Thieves don’t even bother with the combination locks on these safes. They simply saw a hole in the top with a metal saw. It takes less than 30 seconds to take the top off of one of these safes.Visit a reputable safe retailer. Plan on spending a minimum of $1,000 and allot approximately 2% of the value of your holdings to a safe. We would be happy to provide referrals.
Six Part Series Summary
Even those individuals who make their living dealing on the paper side of the metals market will say they consider physical metals to be the first, best form of metal ownership. If you are a conservative individual, stick with physical gold and silver. Keep some in a safe deposit box and some in a home safe, heeding the advice above as to an applicable safe.
If your holdings are substantial, you may wish to keep a portion in a Delaware depository, some in safe deposit boxes, and at least 25% held in your personal custody. For short term trading, a combination of physical metals and ETF’s makes the most sense.
After, and only after you have established a firm base in physical holdings, you may wish to add mining stocks. Only those who have money they can afford to lose should consider futures and options contracts.
Silver invariably outperforms gold in precious metals bull markets. Silver is a much smaller and “thinner” market. Silver should outperform gold in this bull market by at least four times. With the current ratio between gold and silver, we are recommending 67% silver and 33% gold. We adjust our recommendation as market conditions change. Please contact us for up to date recommendations.
Actions to take now: I will write more on the state of the market in the coming week. For now, continue to accumulate steadily. Buy on dips. Don’t try to pick a bottom!
What to buy now: The gold:silver ration stands at almost 71:1. That leaves silver extremely undervalued. There are fantastic buys at present in 90% silver coin and 100 oz. silver bars. Many items are available for overnight delivery at no additional charge. Load up now on silver! You will be glad you did – of that I am certain.
