Wednesday, November 24, 2010

When Will You Sell Your Silver? $100/oz.? $500/oz.?

This graph shows how fast currency can become worthless. It took 7 months.
At what price will you sell your silver? Do you have a game plan? Do you have a playbook for different scenarios? Joel the K feels it is crucial to have a playbook ready to go, in order to avoid making costly mistakes later on when things are happening so fast you don’t have time to weigh the possibilities. Better to look deeply into the matter now, when you have time. Better to ponder it now, instead of when the intensity level of global politics and economics are not at critical mass.

We buy silver as often as possible. That is play number 1. If you have not reached this elementary procedural concept yet, then allow me to direct you towards my “Invest in Silver” APMEX banner located to the right of this post. Buy silver as oft as possible. Joel the K recommends American Silver Eagle 1 ounce coins above all other physical silver devices. The American Silver Eagle is one solid ounce of 99.99% pure silver. The American Eagle is recognized and trusted everywhere on the planet.

Suppose the US Dollar were to lose 100% of its value, as many top economics experts are predicting. Let’s say this tragic event were to happen on a Friday. The following day, you need to buy gasoline for your vehicle. The guy in front of you in line at the checkout counter whips out a one ounce silver bar to pay for 20 gallons of gas and three cartons of cigarettes. The store clerk says to the customer: “sorry buddy, I cannot accept this silver bar for payment”. The customer is confused; he paid $40.00 for his one oz. silver Elvis Presley Art Bar off of E-bay only a year ago. The radio playing in the gas station is announcing current spot prices for silver and gold every 10 minutes since the dollar collapsed. And every ten minutes, when the spot prices are updated, the price for an oz. of silver has increased significantly. The last update had reported the spot price for silver to be the equivalent of $230 gold-backed dollars, easily enough to cover 20 gallons of petro and three cartons of cowboy-killers.

“What do you mean you cannot accept my silver?” says the panicked customer.

The store-clerk replies; “You must have something solid sir, something everyone knows to be consistent in purity, quality and weight. I am sorry sir. May I help who is next in line please?”

Then you step up to the counter: “I’d like to purchase 20 gallons of gasoline, 10 gallons of kerosene, and 2 cartons of Camels please.”

The clerk responds; “That’ll be one oz. sir.”

You take a shiny, brilliant, American Silver Eagle out of your pocket and hold it up high in front of you and the store clerk. “Will this be good for payment?” you ask.

“Yes indeed sir, oh yes. Silver Eagles are in the highest demand of all forms of money right now. Their weight and purity are beyond all doubt and not subject to opinion or conjecture.”

“Ah. Thank you sir, and have a great day.” You happily reply as you pick up your bag with the 2 cartons of Camels in it.

As you walk back to your vehicle to pump the fuel you paid for, that poor man with his Elvis Presley Art Bar approaches you in hopes of making a trade.

“Hey man, I’ll trade you three of these silver Elvis bars for two of your American Silver Eagles.”

Then you reply: “I’m sorry buddy, but how can I be sure of the silver content in that Elvis bar? It could be mixed with 25% nickel for all I know. I’ve never even heard of that Mint Company before. Sorry man, I just can’t risk it.”

This hypothetical scene could become reality in stores all over America in the coming months. Even though this dialogue was purely fictional, the lesson in it was not. The Silver Eagle is a rock-solid wealth medium, recognized everywhere, doubted by none, accepted by all. Of course there are other coins, bars and rounds which are also highly trusted and widely accepted, but in my opinion the Silver Eagle is bar-none the best you can possibly possess.

So when do you sell? Let’s say you have 200 ounces of silver stashed away in your lockbox. At what price will you sell? Will you sell it all or just a portion? Should you keep your silver even if it reaches $1,000/oz. and then begins to descend again? What are you keeping the silver FOR? You have to ask yourself these questions and come up with your own answers, NOW, before things get hectic and your judgment becomes influenced by outside forces.

One strategy could be to sell enough silver to cover your investment. For example: You have 100 silver dollars. These 100 coins cost you about $3000. So you plan on selling 10 ounces back to the market when the spot price reaches $300/oz., this way you are getting your initial $3,000 back. The peculiar thing about this plan is that the paper dollars you get back in return will be worth less or maybe even worthless. I cannot advise you, but I can tell you how I feel about it.

When the spot price of silver reaches $130/oz., I will convert a portion of my silver holdings into items with intrinsic value. I might have to convert the silver back into paper money, but only for a few minutes. I will immediately convert that paper currency into true-value items such as land, vehicles, livestock, hardware, power tools, and other such concrete, rock-solid buys. This way I am truly preserving my wealth and multiplying my wealth, while simultaneously limiting my exposure to risky, fiat paper currency to only a few minutes at most.

At what price will we sell our silver? We each must determine the answer to that question for ourselves. The important thing is that we ask it and answer it NOW.


Joel the K said...

Happy Thanksgiving.

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