WHEN TO SELL
I started a company called Midwest Silver Distributors in the early 1970s when silver was under $2.00 an ounce. I would cold-call successful businessmen and try to get an appointment with them to explain the potential of silver. One of my first sales was to my mom and dad. They bought three bags of 90% silver coins for $1,200 each. The face value of a bag was $1,000 so their maximum risk was $200 a bag. By 1980, silver had risen twenty-five times. My dad called me on the day silver hit $49 and asked if they should sell. That thought was farthest from my mind because we were all sure that silver was going to $100 an ounce.
My parents could get over $100,000 for their silver and that was a lot of money at the time. It would be enough to maintain their modest life-style for the rest of their lives. I called my dad the next morning and told him to bring the silver to my office and we would buy it. We were buying huge quantities of silver coins, silverware and gold jewelry at the time. Thinking about my parents selling influenced me and I sold my silver too. By 1980, Investment Rarities had over 100 employees and most were mad and disgusted when they heard I had sold my silver.
Unfortunately, I didn’t have the good sense to tell our clients to sell their silver. It was just too radical at the time. Only a few weeks ago silver was at $16.00 an ounce. If it went up twenty-five times, from there it would be $400 an ounce. I think we would all agree that if that happened within a few months as it did in 1979-1980, it would be a good time to sell. However, that seems unlikely, so the question remains, when is it time to sell? Some people argue that if something goes up ten times (a 10-bagger) it should be sold. On the other hand, a newsletter I read suggests never selling your silver coins and bars and passing them on to your heirs. I’ll probably follow that advice because the economic future is so cloudy.
One thing you should not do is sell too soon. We have clients selling back to us every week because they have patiently held silver for many years and are tired of waiting. However, it’s good to remember there isn’t much silver available and investment demand is accelerating. I also suspect that industrial demand could be greater than we are told because of its use in billions of cell phones and millions of automobiles, to say nothing of computers, electronic devices and solar.
The goal with silver is to make a large profit rather than a small one. When you consider the vast increases in newly created money to offset the economic contraction caused by the virus, the future gives cause for concern. Holding on to silver should give you comfort.
Finally, what do you do with your money if you sell? There may not be better options. Interest rates are low so bonds and savings can be diminished by inflation. Stocks are risky. Real estate requires expertise as do art and antiques. The more you ponder what to do with your money the more uncertain the answer. For me, until silver rises to much higher levels, it’s a great asset to hold. At some point in the future we can revisit the question of when to sell. I don’t think it’s now.