PMs: Paper vs Physical

[Immy]

Like to think I'm kinda knowledgeable in the area of PMs but when a buddy of mine said paper is better to own than physical (coins, bullion) I couldn't counter with a good reason on the spot, yet I know physical is the better way to go.

Anyone wanna school me?

 

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[Marchas45]

For me physical is better right now and in the near future for what I'm reading. I for one can't put into words what I feel so you will have to depend on JimForSilver and MTS to give their take along with a couple of others who are very knowledgeable on this topic. As for me I'm buying all the silver I can afford and getting rid of all my paper and my mortgage if I could for I believe and feel that's something is gonna happen very soon or not sooner. Good topic, now I'll sit back and learn something.

 

[jim4silver]

The question you ask calls for an opinion, so there is really no correct answer. However, if you look at the facts surrounding either choice, a person can draw their own conclusions.

Paper is a representation of physical, but it is not physical per se. There are different types of paper PMs, some better than others, ie allocated PMs vs. unallocated PMs. In allocated accounts there are supposed to be specific bars being held in your name that belong to you in a vault someplace. In unallocated you hold ownership to a certain amount of bars, but there are none specifically set aside with your name on them. I am not challenging the integrity of any bullion vaults anyplace and I am sure there are some very trustworthy institutions that handle such transactions, but when you own PMs this way you are trusting that someday if you decide to take ownership of the bullion that they will ship it to you without any problems. Further, there are fees associated with storage, even if what you own is unallocated in many instances. If things really fell apart, how would a person force the custodial company to turn over the metals, especially if they are held in another country?

The reason for owning physical PMs is so that you have something in your possession (tangible) that has had value as money for over 3000 years in the event the world financial markets turn to crap. You may need to pack it up and go without a lot of time to prepare. In such an event would you feel better with a suitcase full of gold and silver or a folder with pieces of paper that show ownership of PMs someplace in the world. If a worldwide financial meltdown happens I personally would feel much better holding my own physical PMs than holding pieces of paper that represent PMs.

The bottom line is that if you don't hold the physical PMs in your possession (in your safe or safe deposit box or hole in the backyard), you may not have them at the time when you really need them.

Paper PMs that are represented by ETF shares are good for flipping or trading short term because of the lower premiums (brokerage fees) and the entry and exit points are closer to spot. If a person had millions of dollars it might not be bad to diversify and hold some portion in allocated PM storage vaults in another country as a hedge in case some crazy stuff happened here. In that case, it would be nice to know you had some money stashed away in another country, but even then I would keep the majority in physical right here.

There is really no 100% way, without a doubt to know you own and hold your physical PMs unless you actually can hold them in your hands when you want.

PS In my mind the difference between paper PMs and physical PMs in your possession is kind of like the following: Let's say you have a beautiful girlfriend/wife. Would you rather have a photo of her in your possession while she lives in a foreign country or other state someplace and you never get to see her in person, or would you rather have her living in your house with you? Not on point I know but you get the idea.

All above is just my opinion.

Jim

 

[jeff of pa]

I Have to agree with Jim.

I Don't know anything Concrete about Paper,
but after one of the recent silver Drops,
I Believe it was Blamed on Paper stocks
Becoming Mature & Had to be sold off.

If I Got that right, and
this is true, how would you like Buying Paper Silver at
$50.00 an OZ
& Down the line being Told You have to Cash in
& Prices are at $35 ?

& Your Broker takes his 20% fee off the top to sell for you.

& adds 20% fee to buy more Paper for you.

Seems to me,
I Don't need no Stinkin' "wall street millionare
Middle man" to support

 

[Immy]

Thanks for the insight Jim. Think it's safe to say if you're going short, do paper. Long term, physical.

Taking this to the absurd, I wonder how the broker fees (paper) compare to the above-spot fees when buying physical.

 

[jeff of pa]

Thanks for the insight Jim. Think it's safe to say if you're going short, do paper. Long term, physical.

Taking this to the absurd, I wonder how the broker fees (paper) compare to the above-spot fees when buying physical.

well when Buying Physical you can sometimes buy
gold & silver at or slightly below Spot.

I don't think any Broker sells you at spot,
Or will buy from you at spot
considering fees

 

[jim4silver]

Thanks for the insight Jim. Think it's safe to say if you're going short, do paper. Long term, physical.

Taking this to the absurd, I wonder how the broker fees (paper) compare to the above-spot fees when buying physical.

well when Buying Physical you can sometimes buy
gold & silver at or slightly below Spot.

I don't think any Broker sells you at spot,
Or will buy from you at spot
considering fees

I know some on here get good buys on physical at or below spot, but since I only buy from coin stores I can count on one hand the number of times I was ever able to buy anything at spot or below spot on bullion (junk silver is sometimes slightly below).

But say for example things get volatile and silver drops 5 bucks real fast, you can still get into the ETF at spot with a 7 dollar commission (or whatever your online broker charges) on lots of shares of the ETF you choose, where most coin dealers will jack up the premiums in that instance due to the sudden drop in price.

I have only purchased ETF options to gamble a little with double leveraged bear and bull plays. But I would never substitute my physical buying to play the ETFs or other paper plays.

Jim

 

[Cleetus]

Pull a long chart on physical, then pull a long chart on the paper. The answer will be obvious. Under no circumstances invest in the paper market . It's just a semi-legalized crime wave going on in the COMEX and fake GLD and SLV stocks. Ever heard of Naked Shorts? It is just too dangerous, too risky especially for investing. Get your money out while you still have it. The whole Paper market is now manipulated and they are selling silver that doesn't even exist sometimes. You can't do that with the physical because you have to have the gold in hand. Like I say, pull a long term chart for gold, and pull one for Paper Gold. 10 year chart on gold you made 700% on your money, silver 900%. How much did the paper make? Well, I guess you can only pull a 5 year chart on the paper LOL

 

[mts]

Pull a long chart on physical, then pull a long chart on the paper. The answer will be obvious. Under no circumstances invest in the paper market . It's just a semi-legalized crime wave going on in the COMEX and fake GLD and SLV stocks. Ever heard of Naked Shorts? It is just too dangerous, too risky especially for investing. Get your money out while you still have it. The whole Paper market is now manipulated and they are selling silver that doesn't even exist sometimes. You can't do that with the physical because you have to have the gold in hand. Like I say, pull a long term chart for gold, and pull one for Paper Gold. 10 year chart on gold you made 700% on your money, silver 900%. How much did the paper make? Well, I guess you can only pull a 5 year chart on the paper LOL

Where do I go to see a chart for physical prices? I always thought all prices were paper prices and physical just added or subtracted a premium from that. Is there a place I can go to see what these premiums have been for the past 10 years?

 

[jim4silver]

Pull a long chart on physical, then pull a long chart on the paper. The answer will be obvious. Under no circumstances invest in the paper market . It's just a semi-legalized crime wave going on in the COMEX and fake GLD and SLV stocks. Ever heard of Naked Shorts? It is just too dangerous, too risky especially for investing. Get your money out while you still have it. The whole Paper market is now manipulated and they are selling silver that doesn't even exist sometimes. You can't do that with the physical because you have to have the gold in hand. Like I say, pull a long term chart for gold, and pull one for Paper Gold. 10 year chart on gold you made 700% on your money, silver 900%. How much did the paper make? Well, I guess you can only pull a 5 year chart on the paper LOL

Where do I go to see a chart for physical prices? I always thought all prices were paper prices and physical just added or subtracted a premium from that.

What you said is true MTS. For now, paper prices control the physical prices, plus or minus any premiums when buying or selling.

Someday in the future if/when physical supply dries up or is in huge demand, there will be a split of physical prices from paper prices in my opinion.

Jim