My Precious!!!
Anyone following my recent posts or comments on Silver will know just how passionate I am about this precious metal....
My love affair with it started back in 2014, via Mike Maloney's 'Hidden Secrets of Money' series. Following on from this, I watched video after video on 'Silver Stackers', in complete awe of the vast collections of bullion, bars and rounds......I dare say that I'd developed quite an obsession with the metal!
...And just like an 'Infomercial', I could only resist its allure for so long; by November of 2014 I'd bit the bullet and made my first purchase - 40 oz of Silver Britannia!! It was a nice feeling and I wanted more!!!
Mining Shares
Fast forward to March 2016. The price of Silver was on the rise (In the UK we have the added burden of VAT on top of the premium) and I wanted to take a pause. I decided to diversify and invest in mining shares instead.....
How long did the pause last? The answer may surprise you! .....I've not bought a single ounce of Silver since!!
I'd done some research and had discovered the following:
(1) Over the long run, gains from individual stock investments tend to massively outperform the underlying increase in the precious metals themselves.
(2) Miners give the investor the potential to receive dividends. Physical is more a hedge.
(3) It more convenient! Here in the UK, coin dealer shops are not all that common and so mail order tends to be the way it's done. With this in mind, trying to sell physical is far more difficult. Do you really want to put you assets in the post in order to sell them? Buying and selling stocks is quick and easy! You can buy and sell multiple times in one day
(4) In the UK physical Silver incurs an added 20% tax on top of the premium and delivery costs. This therefore means that you go into the 'red' as soon a silver is bought. On the other hand, platforms selling mining shares tend only to charge a small premium (price spread) and so the price doesn't have to rise much to be back in the 'black'
(5) There's more fundamentals that bring about rises in mining stocks. Simply bringing in a new management team can see the shares soar, even if the overall outlook for the metal is not good
The future...
I'm certain that I'll make another purchase of physical Silver sometime in the near future (I really want to own the 2017 Britannia pictured at the beginning of this post).
Also, I realise that holding shares can actually be quite risky:
(a) The mining company could collapse (The movie 'Gold' comes to mind).
(b) I might pick the wrong companies and see no growth or lose money!!!
(b) The trading platform could go under (rare). However, if this were to happen, whilst I'd be the ultimate owner, there's no guarantee that I'd still have access to the shares.
(d) I have no way of knowing if the platform actually holds the shares that I've bought from them
(e) A financial or banking calamity could prevent me from pulling out my funds or I could receive a 'hair cut' on my assets.
if you don't hold it, you don't own it!!!
The dilemma is therefore as above. Owing physical Silver means I have full control over my assets where as 'owning' shares means there's reliance on the system not collapsing or the mining company going into administration.
I hold what I believe to be the bear minimum silver required to truly gain from this upcoming bull market. But in order for it to be life changing ( i.e. more than just paying off the mortgage), I'd need the price of Silver to increase at least 25 times from it's current price. Don't get me wrong, this is possible but I think it's far more likely to happen with a miner.
I'd like to hear the thoughts of other Silver Stackers. How many of you only buy physical? Are there any who's taken a similar approach to myself?
(If you liked my blog, please consider upvoting)
