Why I Just Doubled Down on Silver

Why I Just Doubled Down on SilverBack in late June, I went against Dave Ramsey’s advice and I bought silver. Actually, I bought a silver/gold motif (see my reasoning here), but I’m sure it still wasn’t Ramsey approved. Within the first 12 days of my investment, the silver and gold motif soared and I was up 23% on my investment. Within the next month or so, my earnings climbed to 33%!

Related: What is Motif Investing? A step-by-step sign up guide

The initial plan was to invest in silver as a hedge against the market. Once the stock market crashed (I’m suspecting early 2017), I was going to ride the monstrous wave of silver earnings into late 2017, then cash out and buy a severely discounted rental property. I definitely didn’t expect the early windfall 12 days after the initial purchase.

Fast forward four months and silver has tumbled once again…(doh!). At this point, I had three choices. I could:

  • sell like everyone else and take my minimal loss
  • do absolutely nothing and hope that my investment would rise again, or
  • invest in MORE silver since it was now on sale again

Why I Just Doubled Down on Silver

The title kind of gave it away, huh? Instead of selling out like a loser, I decided to double-down and invest another $1,000.

So what made me decide this? Why would I risk twice the amount of money as I did before? Why not decide to just sell and be done with it? Or why not decide to ride out the storm without upping the ante?

Why I chose not to sell

Warren Buffett has said it a hundred times:

“Sell when others are buying, and be greedy when others are fearful.”

In other words, when everyone else is selling, don’t just follow the crowd. That’s how you earn little-to-nothing just like everyone else. If I were to sell, I would guarantee my loss of roughly $50.

At this moment, the only reason for selling would be if I thought that the value of silver was going to zero….which is obviously not going to happen. Silver will always have value and I’m willing to ride out the troughs to get back to those peaks.

Why I decided against doing nothing

I could have sat idle and just let my thousand bucks ride the ups and downs without selling or buying more. So why did I decide against this? Why did I decide to actually put more money into my silver investment?

I doubled down on silver for three reasons:

  • partial arrogance
  • I firmly believe that silver will spike within the next year
  • it’s not going to break me if something catastrophic happens

I admit it, I’m a little arrogant sometimes. I’ve been successful at almost every single thing that I’ve tried, and suddenly my very public (since I told all of you) investment was tanking like a rock. Either I lower my head and sheepishly tell everyone that my investment is at a loss, OR I can consider this a win and buy the silver that’s now on sale. Calling this a win is wayyy easier on my ego.

Secondly, I firmly believe that we’re going to see a spike in silver again soon. Based on the chart below, silver is back in its trough and will soon have nowhere to go but up. Buy low sell high, right? No one has any idea when the next spike will happen, but if it’s over the course of the next year, then I’m going to win big, realize the profits, and pull them toward our next rental property.

Investing in Silver - the Trends

Third, this is still a very small part of our overall investment plan. We own our home outright, paid for a rental property with cash, and have tens of thousands of dollars invested through our 401k’s. Putting $2,000 into silver is more of a game to us than anything. If we win, that’d be awesome. If we don’t, our lives don’t change at all.

What would you have done?

So what would you have done if you were in my situation? Silver was at $17.50 an ounce, I bought in and it soared 33% and then tanked back to $17. Would have sold and taken the loss? Done nothing? Or would have puffed out your chest like me and doubled down on silver?

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6 comments to Why I Just Doubled Down on Silver

  • Jc

    I am compelled to comment because in reading it, I remembered when I first started buying silver and gold.

    It was sometime in mid 2011 and my first batch of silver coins was priced at around $40 a piece. From all my research, historically the silver to gold ratio has been 15 to 1, whereas today we are looking at roughly 71 to 1. Based off of that, one could conclude that at some point it will get closer to the historic ratio. Depending at what point of historical timeframe you are looking at, the average ratio can range from 35 to 1, 47 to 1 and any other ratio so who knows what is realistic. What makes this even more confusing is how the price is actually impacted because there is such a huge scale effort to manipulate the price. If you look at the amount of gold, silver and etc traded on paper via various exchanges, it far outweighs the current and future physical amount of precious metals. Having come to understand this, I built up a good amount of mainly silver with a bit of gold for when the possibility of the dollar crashing. At some point it becomes a challenge to store and transport your precious metals. I have gradually built up as silver has tumbled and at times buy more while it’s down so I can bring my cost per ounce down while I can.

    Personally I don’t buy precious metals for a huge gain because if that happens, we have much bigger economic problems. It’s more of a hedge to ensure that I have some type of “currency” of value to exchange if it is ever needed.

    • Hi JC. Thanks for the comment. Have you ever thought about how you’ll sell your silver in the future? From what I read, it’s not easy to sell actual silver and gold at their value. Typically, you’ll have to sell it to a dealer that will want a discount so they can resell for a profit. This is why I went with the Motif. Makes for an easy sell down the road.

  • Kathy

    Dave Ramsey has great advice for getting out of debt but I don’t particularly care for his investing advice. We, too, have both gold and silver. We bought gold at around $1000 an oz. and watched it go up to nearly $1900 and fall back to where it is today. We still have it because we aren’t truly looking at it as investing but more like insurance.

    • I’m with you Kathy. It just makes sense to buy something that goes up in value when the economy is struggling. I mean why not? Why put all your eggs in one basket? Thanks for the comment!

  • The votes are coming in!! So far, it looks like the majority of you readers would have doubled down too! Good! Looks like we’re all smart. 😉

  • […] fund slowly fell back down to my original purchase price, so I doubled down and bought $1,000 more dollars’ […]

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