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Bullion Investing In a Weak Economy

Bill May Guest Writer for Investments/ Owner of
By Bill May Guest Writer for Investments/ Owner of

People get stupid in different types of economies. In a strong economy, bullion investors seem to be overly confidant and frivolous. In a weakened economy, those same investors seem to be timid and stubborn. I am sure this sounds all too familiar to many of you, and personally, I have been accused of being both. Such simple actions and behaviors may contribute to questions about the causes of a weakening economy, and its duration. In a strong economy, most bullion investors tend to over-spend for single bullion investments. When the economy inevitably weakens, these same investors are stuck with single investment items because other buyers are unwilling to purchase items that are either overpriced or that have a selling price that is too high for a single bullion item. Without a doubt, strong buying continues in the bullion market, even in a sagging economy; however, as collectors become smarter, they are staying with lower-end items to protect themselves against adverse economic situations. I am confident in stating that although the total unit numbers for bullion purchases has increased almost every year since I began collecting in 1975, the prices per item have only occasionally decreased, due to the sagging economy. This scenario of increases in total purchases as well as usual increases in overall prices per item has created huge investment potential. I am not suggesting you go out and be a bull bullion investor in a weak economy. I am saying that your bullion investing needs to be balanced and adjusted based on your own personal economic situation. Your investment strategy should always be the same, regardless whether you are buying stocks, houses, collectibles, silver, gold, rare coins or any other precious metal. Your strategy for purchasing bullion investments should contain two key components: assortment buying and buying lower-cost bullion. Both components will protect your bullion investment potential.

How does assortment buying protect investments? Buying assortments of bullion is your best tool for protection from the bad choices we can all make when buying the bullion we enjoy. Let me keep this strategy simple. If you buy one bullion item and it goes down in price, you are working at an investment loss. If you spend the same amount of money on ten different items and three go down and the other seven go up, you are working at an investment gain. In the ten purchases scenario, you can make three bad choices and still come out ahead, versus the one purchase scenario, where you will have an investment loss. Farmers are smart people. Remember the old adage: “Don’t put all your eggs in one basket.” An example of this, as it pertains to bullion, might be that if you spend all your bullion investment money on platinum coins, and that single metal market for some reason takes a huge hit in values, you could be broke! Think before you buy and try these two strategies, instead. Buy an assortment of your favorite metals that have performed reasonably well over a period of time, … gold and silver for sure, as well as platinum or any other exotic metal. Or, you can use part of your bullion investment money for buying new or rare coins either in raw state or, preferably certified and slabbed. Buying your bullion in a variety of different metals and coins serves to protect yourself from bad bullion investment mishaps that you cannot control.

The second component in your investment strategy should be the purchasing of lower cost bullion that protects investments … items like circulated Morgan dollars or modern Silver Eagles, for example. The reasoning behind this is simple. More people have one dollar in their pocket than one thousand dollars. I know this may be simplifying this strategy; however, you must think when you are buying bullion that one day you may want to sell the items you are buying. This does not have to be your total focus when buying, but it should be part of your decision making process. Let’s say, for example, that when the time comes to sell, your marketing strategy is to sell your bullion at a trade show. If you were to poll each buyer at the show on how much money they want to spend on bullion, you would have an assortment of different dollar amounts. Some buyers will be willing to spend a hundred dollars, a fewer number will be willing to spend a thousand dollars, even fewer will be willing to spend several thousand dollars, and so on. One thing remains constant with each of the trade show buyers. The few buyers who are willing to spend several thousand dollars will also be willing to spend only a hundred dollars; however, the buyers who are willing to spend only a hundred will not spend several thousand dollars. To conclude this simple point, if you have a hundred-dollar bullion item, say for example a small stash of Silver Eagles or Morgans, your potential greatly increases to sell them if every buyer at the show has that minimum amount to spend on bullion. If you have a five thousand-dollar item to sell, say for example, a one ounce slabbed High Relief Gold coin in a high grade, your pool of potential buyers decreases astronomically if that is the maximum amount only certain buyers at the show have to spend.

There are many strategies that come into play when dealing with bullion investment potential and I have only shared two. I believe these are the two main strategies that can help provide some potential now, as well as some protection against weak economic times. They can also help you capitalize on strong economic times in the future. The bottom line is that everyone will have possessions, and memories to go along with those possessions. Some of the key ingredients to bullion investing in a weak economy are the same key ingredients in life. If you balance yourself, you will find enjoyment and happiness. If you extend too far, you risk your balance and happiness. Think ahead. Live today. Cherish your loved ones. Enjoy your hobby. - Bill May