If only you have bought silver 10 years ago than a house !
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(This post was written in October 2007, I repost it because there is a great comment posted by a reader, so I would like you to read his comment).
These are 2 men with 2 investment strategies :
One buy a house and the other buy silver .
Men 1 : Buy house as investment.
Buy a $120k house in a mid size city , 3 bedroom, 2 bathroom (10 years old home)
House price = 120k, Capital = 30k . Bank loan = 90k, Interest rate on home = fixed rate 5% for 10 years.
Loan on 90k = (90,000/10)/12 = $750 repayment monthly
5% interest on 90k = about (90,000 x 0.05)/12 = $375 interest payment monthly
Total payment on the house for 10 years = 30k (down payment for the house) + Interest ($750+$350)x12×10 = 162k
Tax on home + closing close = $8k (for simplicity reason)
Total payment of house for 10 years = $170k.
iIn 2007, the house worth $200-$225k (reasonable house for a 20 years home in a mid size city).
If he sell his house now at 2007 at $215k, his net profit is :
(($215,000-$170,000)/170,00) x 100% = 26 %
Men 2 : Buy silver as investment.
In 1998, silver is less than $3 an oz, for simple calculation, we used $3 an oz.
He took out from his own pocket $30k to purchase 10,000 oz of silver.
He borrow $90k from the bank with 5% interest rate for 10 years to buy 30,000 oz of silver.
His total cost of 40k oz of silver = 120k+ Interest(90kx.005×10)= $165k.
In 2007, silver is $13.5 an oz.
Now his 40,000 oz of silver at $13.5 oz would worth = $540,000.
His net gain if he sell his silver now= (($540,000-$165,000 ) / $165,000 )) x 100 % = 227% gain.
Which one do you think is a better investment ? I let you decide !
If you want to learn more about silver investment, check on the silver guru , David Morgan’s site : Silverinvester dot com.
The other person you really want to read is Jason Hommel’s site on silver.
Nah, I am not paid by any of them. You can learn a whole lot about silver investment from their sites.
(New silver chart as of 2008)
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Buy shares lah!
More exciting!
Thanks for dropping by !
Jamy,
If that was my first home, I would still buy it bcos I can live in it and have the sense of security. Who would guarantee at that time that silver will shot up so high? Unless you are super rich, 90k is a lot of money to borrow to invest in something more risky than a house.
Things change of course if that’s an investment on housing Vs silver.
Thanks anyway for the analysis. It’s just amazing how you could be rich if you choose the right investment tool at the right time!
BE,
Yes, it might sound a bit crazy.
Jason Hommel sold his dad house and invest in silver in 2002.
His dad has been renting since then.
He started buying silver coin, then he bought a lot of private placement on many silver companies.
I was reading his free newsletter as early as 2002.
I was amazed by the amount of works that he put in in those newsletter series. It was like 100+ pages a newsletter.
He went into a great length in finding out silver companies that have good potentials. He called the companies, visited the companies, call the accountant, then he bought their private placement shares.
Then as he became more and more famous because every silver companies he recommended went up at least 300-500%. Now his newsletter is no longer free. You have to pay to subscribe.
In fact, when he stared, he has such a strong faith that silver and gold will go sky high the next 10-15 years and he believe silver is much better than gold.
Amazingly, his dad believe in what he believed. He sold his house and let his son buy silver.
And the rest is history. Whatever silver they have now worth millions.
The other person who sold his house in N.York to buy gold and silver was Taylor. After he sold his house in 2001 and rented a house in N.Y. A lot of people think he was crazy because houses prices were still rising. He was like a voice in the wilderness, most people think he is lunatic. 5 years down the road, this guy is laughing to the bank. He did not sell his house at N.York at the highest but he bought all his gold and silver stocks at the lowest.
Silver and gold price exceed my expectation. I knew it is going to increase but I have never have thought the magnitude !. It is just amazing. Even my 85years old father in law think I have very good insight in investment because he never have imagine a unknown Asian girl with no degree in finance or economics could beat his bank (a very established American bank) trust fund manager records in 5 years ! Yes, my gold and silver portfolio has beaten most morning star’s funds.
People always think to own a house is security like in the past where people think working for big and established companies are having a gold rice bowl, not anymore now. Now, the bottom line for any company is profit, they could not care less if you work for them 10 or 20 years, when times no good, sayonara lah. As far as house is concern, certain period of time, owning a home is good, certain time renting is a better way to go. You can channel the money that you buy house to other investment. And when house price slam, you can pick up bargain houses at your fancy !
I have starting the gospel of silver and gold since I knew you online around mid 2005 (time flies, it is amazing we knew one another that long on line !). I started reading gold and silver around end of 2001 and I have never looked back ever since.
“Who would guarantee at that time that silver will shot up so high? Unless you are super rich, 90k is a lot of money to borrow to invest in something more risky than a house.”
If you study in depths those articles and URL (gold-eagle forum) that I often mentioned, you will come to a conclusion that gold, silver is the once of the life time opportunity.
If you understand why gold and silver is once of the life time opportunity investment, you would not think it is any more risky than buying a house.
Chinese people in China has used silver and gold as their standard of monetary system for a long time. Why is buying silver more risky than house. Silver is money in long time China and also biblical times.
A lot of times we can believe a lot of things we think is secure and truth but in fact, how do we know they are not secure and truth ? Heard of the story of the boy who tell everyone that the king has no clothes but because everyone has been lied to say the king is wearing clothes ? :):):).
I think most people in US realized that if they have bought their first home the last 2years, they most likely have done the most risky investment . [ I do not know about Europe situation , I am talking about US or Mal.]
No things have not change :”Things change of course if that’s an investment on housing Vs silver.”. In 2001, I believe gold and silver is an once a life time opportunity investment, 2002, I still believe, 2003, I still believe, 2004, I still believe and I still believe now. It is because in 2002, gold and silver went up a bit and so is 2003, 4, 5 (they crept up a little bit every year) and these 2 years, the magnitude has increased so much that the public knew they could not ignore anymore. No, things have not change but people thinking change ! From disbelief to starting to believe !
Many people believe that fixed deposit is the safest investment, but if you take inflation into account,fixed deposit is in fact giving you negative return ? Just imagine how much opportunity lost you have incurred by putting US$30k in the FD of US bank than buying 10k oz of silver in 2002.
5 years FD interest say is 5%
(30,000 x 5%) = 1500 a year, 5 year = 7500
5 years you get back $37,500
If you used $30,000 to buy 10,000 oz of silver at $3 in 2002
In 2007, you $30,000 would be worth $13.75 x 10,000 = 137,500.
$100,000 more !
Is Fixed D better than silver, might be not , sigh !
Jamy, silver is great as investment i agree…but as BEE says,if it is the first house and you don’t have any other house to live in, then one won’t sell it off to invest in silver when the price appreciation factor is unknown..
also while you calculate the return on silver,you must take into account the loss in opportunity to earn rent, from the house that you buy…
Hi Thank you for dropping by and leave a comment.
Yes, it might sound as bizzare as it is : “if it is the first house and you don’t have any other house to live in, then one won’t sell it off to invest in silver when the price appreciation factor is unknown..”
When I first read about Jay Taylor selling his home which he has lived for many years in N.Y and rent; and used the proceed to buy gold and silver , I thought he was mad but then over the last 5 years of much reading , I realized why he did what he did.
These are some of the posts that Jay Taylor had written :
http://www.gold-eagle.com/research/taylorndx.html
I would say the loss in opportunity if you have not bought silver out weight the loss in opportunity if you have bought a house. In fact, renting a house in certain period of history is in fact an investment than owing a house. I remember my maternal uncle bought a house during the housing peak period. My dad kept telling him to wait for the peak to slow down before he bought the house. He said saved the money so he can have larger sum for his down payment and pay less interest for the house. But, my uncle could not wait and went ahead and purchase the house. And my dad was dam right, if he had waited another 5 years and just go ahead and rent a house, he would have pay less interest for his over long haul and would have gotten a cheaper house. Every investment has its cyclical period. If you could catch those trends and periods correctly, there is no stopping from you become a wealthy men and women :):). I will post the name of a very good book from our home library about this investment cyclical tread. (he is a librarian and our home is like a library too :):)), I am not saying silver, gold or black gold (oil) are good investment all the times. But, for the next 10 years to come, they are the best hyperinflation hedge tools. Just my humble opinion and you don’t have to agree with me. Those who have follow my direction of gold and silver investment ( I would say advice cos I am not a certified investment consultant) would probably have acquired a sizeable wealth over the last 5 years.
I will continue to spread my gold and investment gospel for the next 10 years or so if I am still alive , of course :).
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Wow, I wish I had bought some Silver…
Hey, we got “Beer Stock Market” coming soon over at SiteHoppin, so it might be even better than silver.
After August gold and silver will start to rise again. Your best bet is silver which is very undervalued now.