Johnny writes:

I am stacking and i am coming close to my goal of physical.
I have gotten advice to go into mining shares with the rest of my investment money. The advice i have been given is to buy shares, because they tend to go 5 to 40x even higher then the physical metals do.
Do you recommend buying mining shares or just putting it all in physical metal?

I also get perplexed around what to do  if shares do go parabolic…
Do i hold the shares until a new currency gets flipped(amero). When should an investor get out of the mining sector?
Am I in danger of losing the shares completely in the face of government intervention..
I guess I’m asking for a recommendation about physical metals vs. the shares and what my potential exit strategy would be from mining shares.

Appreciate the input
Johnny
Johnny,

Personally I am almost completely out of the mining shares and into physical gold and mainly silver.
Yes, the mining shares have the potential to have exponentially greater gains than the underlying metals, and in the coming manic phase of the bull market they will likely be bid up indiscriminately by the general public, similar to the dot com start ups in the late 90′s.

However the main risk as far as mining shares is broker re-hypothecation risk, and nationalization of the mine.  I would recommend holding no more in paper assets than you can afford to lose.  If you do choose to own the miners, it is imperative to take delivery of the actual stock certificates if you are able, or at the very least, register your shares in your own name rather than in street name, which allows your brokerage unlimited lending for shorting purposes of your own stock, and re-hypothecation to the Nth degree.

In my opinion, nationalization of mining companies is a MUCH greater risk than a door-to-door confiscation of gold or silver.  Millions of below ground ounces of gold and silver could be confiscated by nationalizing the mining sector with the stroke of a pen.  A door to door confiscation effort of gold and silver would result in extremely little phyzz for the DHS Nazi’s, and an average life span of about 15 minutes for an agent in that line of work considering that probably 90% + of PM investors also are gun owners and are about as likely to give up their wives or their virgin daughters as they are their phyzz.

But that’s just my opinion.  If you do want to trade paper, do your research and buy established companies in good political climates with brilliant execs and leadership.  Never underestimate the capability of dumb management to burn through investors cash.

Be prepared to sell 1/3 of your holdings when your stock’s weekly chart resembles a rhino horn, and buy when its weekly chart resembles a fishing pole.

Sell it all and walk away when the first of your wives’ friends gives you a hot tip about a gold or silver stock. 

Hope this helps.

-Doc

  1. In mho, with the size of the problem coming, silver & gold in the ground will be taken by governments with the stroke of a pen.  Argentina is already taking their industries over and things aren’t even bad yet.  Taking millions of ounces in the ground with a pen (to back your new currency), versus knocking on your door and taking a citizen’s property at gun point.  Which option do you think politicians will choose?  They will probably try and tax PMs but people only work to dodge those actions.  Physical in small demonations are a perfect choice.  Mining shares are the same as buying a lotto ticket.

  2. Johnny  I am with Doc on this question.  With his counsel we’ve  moved 75% of paper into phyzz, sold a building for more PM and am transferring our IRAs into a self directed LLC. This is and was not done for some quick pop in silver value. It was done for self protection against the potential events we talk about on this site (and to keep  DA my fingers off the computer stock traading buttons) 

     Once done, I’ll be 90% PM including junk bullion, 5% cash and maybe a couple of small checking accounts for our personal business account transactions.  The checking accounts I can afford to lose if the bank holiday or some exotic form of bank takeover takes place   At that time we  shift to plan B which is phyzz and cash. 

      Ann Barnhardt’s essay about holding the stock certs of any company caused me to realize that after MFG,  the impending JPM crash, even the unavailability of  a  marketplace for personally held stock certs is questionable since these Wall Street markets can and  have been shut down, like the cessation of Wall Street trading after 9-11.   To trade with an eye to timing is one thing and being able to liquidate before some black swan event does have its merits. Sticking with this and like minded sites will give you  more foreknowledge of that than most, but if it was me, I would not commit more than 5-10% of my net worth to that paper trading and if I did, it would be more for walk around money and not some illusive major gains to bump  one’s net worth.  IMO 

  3. Johnny

    Make a new goal for physical silver. When and if the ratio corrects to were it should be, then I would convert a percentage to gold. This would reduce weight & space.
    Your question on the mining shares. monitor, movement, worry. Why? To earn fiat and to be stuck in paper. One morning you will wake up and not be vary happy.
  4. With the current economic state of really the whole world and the political joke our country has evolved into it just wouldn’t be a sound move to make to paper right now… I would adjust your physical goals… You don’t control what you don’t hold…
    You also need to go with your gut… If you aren’t confident in going into miners and you are looking for someone to say it’s ok then your doubt is confirmed… You shouldn’t have to worry yourself or be concerned regularly that your investment may be gone when you wake up because of an executive order that was signed behind closed doors overnight with no notice… It just doesn’t make sense in the times we live to be in the paper market… It’s here today and gone tomorrow… Without a trace…

    Happy Stackin…

  5. WOW Doc! For just an opinion, I doubt better advice exists in this matter.

    427 I like your ratio thoughts which also sounds like excellent advice.

    AGX I appreciate your percentages. Thanks! Would you or anyone else care to expound on percentages of bars to coins to rounds to junk?

  6. 40 OZ     My ratio is 10% silver AE  and Canadian ML, 15% silver bars, 10% senior silver (junk bullion) and 65% .999 rounds.  This was more by accident than intention so I plan to increase Junk B a bit for purchasing if SHTF,  sell   bars when silver goes to $100 an oz to give me dry powder for some other commodity (maybe trade for gold since silver is heavy)   Once I get the LLC account set up for my Self Directed IRA, the regulations allow a purchase of silver or gold American Eagle so I plan to rotate that paper into those two types of coins.  From what I see in other posts, there is probably no right or wrong way to buy silver.  It’s pretty much a personal call.   If I had to do it over again, I would probably not buy 100 oz bars. They may not be as tradeable as coins etc. 

  7. Johnny,

    All these opinions are outstanding. 427 and Danno hit on a couple of good points and I think I need to take advantage. 427 – when you reach a certain SILVER point maybe a little gold would be nice. Easy storage and easier to hide. Danno – Going with your gut. Your first thought is usually the correct one. Even if you are taking a test, the first thought will bring you the correct answer much more often than the second thought.
  8. Johnny I’m with everone else on here. I am relatively new at PM’s and I was also considering Mine Stocks till I read a lot of comments on Doc’s Forum and others which has made me start Stacking Physical.

    There are a lot of Knowledgeable folks on here Johnny and I’m a person that takes advice on something that I don’t really understand but I have been blessed already with some great advice. Stack Physical.

  9. AGX   I first bought bars but quickly realized junk was the way to go if TSHTF since I was not prepared to pay the premiums associated with eagles and bread would be difficult to buy with a 100oz bar (in fact I feel most newbies won’t pay extra for eagles as their first major puchase and find they’re easy to spot when bashing the SAE premium). I don’t own any rounds because even though I like their lower premiums, I don’t like the thought of someone I’m trading them to down the road questioning who made them or what they’re made of. I have since decided the premiums on siver eagles are worth the extra money because they already bring more than spot when selling them back to the local coin shops I’m familiar with (I’ve never sold any of my stack) and for the most part won’t be questioned when it comes to their authenticity no matter who you’re trading them to. So thanks again Doc on that random dated silver eagle deal a couple weekes ago. $2.39 over spot was a deal I could not pass up.

    Advice on this topic today has made me decide to definitely trade silver bars for gold when the ratio gets much closer so thanks again 427 for that tip and thanks to you AGX for your thoughts, but now because you stated 65%, I’m very interested in your thoughts or anyone else’s on rounds.

  10. Johnny, I’m same stage as Marchas 45. Agree with everybodies input. 40oz I stacked up with DOC yesterday on Buff’s. I agree with your thoughts about rounds in issue with fake silver, right? SE’s are well recognized & unmistakable, but they can be counterfited too, wasn’t there a post awhile back about it? Anyway, my theory was since I was late getting started stacking, I needed to accumulate oz’s quickly, so bullion rounds from notible dealers I thought was the best way to do that. The only thing I lack is Can. silver maples, have everything else. I think Constitutional, Senior, (junk) is important and overlooked alot. I feel one should have at least 10% of stack, my opinion? Waiting on another Maple deal DOC, you’ve had them I know just haven’t been around when you did…

  11. Me likem 9999 maples…. hehe… They get me all mapley and canadian goosey… LoL…

    Hey Doc… I received the BEAUTIFUL Great Panther silver round today… MANY MANY THANK YOUS to you and BullRun for setting up the contest for all of us… Also thank you to the entire Silver Doctors family for the wonderful things we are able to share here!! SILVER DOCTORS ROCK!!!

  12. 40oz:

    You should be able to trade in the 100oz bars at any PM dealer. Thats if you think there to big, I would just keep them you might buy a new car with them some day. Just diversify your stack with high rated silver. You are right in buying well known high rep refiners like Johnson Matthey Engelhard, US Stockpile, American Eagles.  
  13. 40oz. and JMAC. Sounds like you guys have kinda of answered yourselves. That’s what great discussion does here. As far as the Buffaloes, I don’t think you’ll go wrong purchasing either. They are really getting worldwide recognition and yes, constitutional silver is a great way to go. My next larger purchase (If I can enough fiat before the crash) will be Buffaloes. Good luck to both of you.

  14. Hi! Doc I received my 60oz of AE’s yesterday thanks for the deal. Probably get some more next week as I am waiting to see what happens. I only collect AE’s and 90% junk coins and 1/10 on up gold coins. I have a few 10oz bars and rounds but my main focus is the AE’s and 90% as I read somewhere that our favorite Uncle Sam could Consfiscate our silver and gold but not the US Mint produced ones, so if and when the SHTF I’ll be prepared. Keep Stacking.

  15. Marchas45:

    Don’t worry about any Confiscation and dont fall into high price metals because of it. If our government tried such a thing all they would get is what you gave them. I would not have it in a bank safe deposit box ether. Thats what they did in 33 they had gards in the bank valut to look in your box.
    That said if confiscation happend it would be for coin & bullion. Well? Metal melts! simply cast it into something else. It just became a family heirloom, a hammer head, your personal property, not bullion. Most silver bars are industrial poured. To be bought, melted again and fabricated into something else.

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