What would you do?

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Indentured_Servant
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What would you do?

I have a feeling this is a no brainer but I'd like to ask anyway. My wife and I have no children. We are both gainfully employed. We live below our means and prep continuously for the impending collapse. Our debt consists of a first mortgage of $63k, HELOC line of $50k with $12k owed and about $20k in student loans used to obtain a now largely useless degree. Total debt=$95k.

We did not begin contributing to our 401k's until late so there is only $40k total that we cannot access. No more contributions are being made. That $ is now buying physical. We started buying silver in the $6 range and gold at about $600. We could easily sell part of our stack today to be debt free but payments are easily made out of our paychecks and as long as creditors will accept fiat that is what they'll get.

Last summer we decided to go "all in" on silver and literally put every spare penny into it including short term savings. I have never regretted a minute of it even when I bought at $46 in May and watched it fall to $33. I bought all the way up and down and now back up.

For several years now I have wanted to tap the home equity to buy PM's but we are very debt averse. We did go through with the HELOC loan which closed last month and used $12k to purchase physical and a used scooter for $1400 that gets 105mpg for my wife to commute to work instead of driving a V6 ford truck. Our intent was to go "stupid in" on silver with the HELOC but now that we have it I'm apprehensive.

I'm certain that PM's are going higher and had I cashed the equity out when I could have got $125k I would have already been up nearly $200k, debt free AND had a much nicer stack of physical. So, the million dollar question is, given the parameters outlined would you go "stupid in" with the rest of the HELOC ($38k) at this time?

I_S

Edited by admin on 11/08/2014 - 06:06
Red Pill
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I personally would split that

I personally would split that 50/50 gold/silver at current prices. 

sounds like you already have a substantial pile of silver, so thinking about eggs, baskets etc.

I do think we've likely got a big silver rally imminent, but I personally use the leverage silver supplies and convert profits back to Gold again. 

just my .02, and I am certainly not a financial advisor, disclaimer yada yada yada, but I am also 100% (balls deep) in on G/S since 09, so possibly appreciate how you feel :)  

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Indentured_Servant
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If.....

If.....my silver stack were equal in dollar terms to my gold stack would you still go 50/50 Au/Ag? If so, why? I still think the upside to silver is greater than that of gold in percentage terms.

Red Pill wrote:

I personally would split that 50/50 gold/silver at current prices. 

sounds like you already have a substantial pile of silver, so thinking about eggs, baskets etc.

I do think we've likely got a big silver rally imminent, but I personally use the leverage silver supplies and convert profits back to Gold again. 

just my .02, and I am certainly not a financial advisor, disclaimer yada yada yada, but I am also 100% (balls deep) in on G/S since 09, so possibly appreciate how you feel :)  

Mike7.62
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Indentured Servant

If it were me, I would pay off the student loan and the HELOC, and keep the mortgage, at least as long as you have the income to service the debt. The mortgage gives you a tax write off for as long as that lasts, and if your interest rate is low enough you're likely making money when you take into account the real rate of inflation. Think utility cost of shelter. If I'm not mistaken, student loans will follow you around like cancer, and are unable to be resolved in a bankruptcy, and will get your wages garnished and other unwanted attention from the authorities should you default on it. I'd lose that ASAP. Same with the HELOC. It can give you flexibility in regards to spending, but it can make you less flexible because it counts against the equity in your home should you have to sell rapidly, or you decide to move elsewhere for a job etc. I don't know how housing and RE in general has been affected in your area, but if you have taken a hit in your property value, having as much equity as you can may cushion the blow if you do have to sell, and keep you from having to cough up a large quantity of fiat in the event of a short sale.

Then I would average in, and/or buy dips in PM's. The way I would look at it, you're getting rid of unproductive debt, increasing your flexibility, getting a tax write off on your rent, and saving in real money without having to consider liquidation of everything to settle debts. Just my .02, but you did ask.

Red Pill
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If.....my silver stack were

If.....my silver stack were equal in dollar terms to my gold stack would you still go 50/50 Au/Ag? If so, why? I still think the upside to silver is greater than that of gold in percentage terms.

Yes I think so. although the potential upside of Silver could be greater, it comes with higher risk of downside too. how would you feel if their shenanigins managed to get silver back to sub $20 at some point?  if you could cope with that then maybe go ahead on silver.

I started out at 78/22 Gold/silver and have "cashed in" silver profits for gold along the way a couple of times and am now more actively "trading" the ratio, and by trading I only mean swapping gold for silver (both bullion) at oportune times. 

So I happen find myself at approx 50/50 currently, hoping for another big silver push (on the ratio) but that's not why I suggested that, its because I heard Jim Sinclair asked this exact question, what ratios to buy at on an interview the other day, and he said something along the lines of

"fifty fifty, nobody knows how this is going to go, why try and be clever and outsmart the market? " 

obviously I was happy to hear this at this exact time as well, but if JS doesnt know what he's talking about, quite literally, who does? 

but sorry cant find the exact link immediately, will post when I next see it.

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