Erik’s Blog: Board Shorts and Business Suits

I opened up the business section of the local paper, The Honolulu Advertiser, today to find quite a shock. I was checking to see how the DOW and NASDAQ were doing, what were the big movers and shakers of the previous day and also how some commodities were fairing when I stumbled across an interesting and astonishing quote.

SILVER IS AT $14.00 AN OZ.!!!!!!!!!!!!!!!

Could that be right?

Sure is. A while back I posted about how if you had a decent source of 1, 5, and 10 oz. silver or gold bars you could stand to make a sure profit on EBay, so long as you bought at a few dimes over spot price. (spot is fancy for saying the quote, like a stock quote, measured in dollars per troy oz.) I had bought and sold several bars but didn’t have the time to track down a source, or which there wasn’t one on the island here in Hawaii. Shipping would kill my margins if not bought in huge quantities. At the time I was buying the bars oz. by oz. for $7.00 and oz. at a local jewelery store.

I had done some research into precious metal price trends and from what I could tell both gold and silver would be a strong buy, so long as interest rates continued to rise and the economy made an OK comeback. Everything the fed was indicating suggested interest rates were on the rise and the economy had already rebounded, precious metals just hadn’t responded yet.

My idea was to keep buying silver and eventually gold and selling it on EBay. With the profits and only the profits I would buy silver bars and keep them as part of an investment. This way I would be risking nothing but my time and energy for a sure thing investment and learn about marketing, EBay sales, and running an investment business. “Precious metals are a poor investment,” said the jeweler that I was buying from.

Now as I mentioned I didn’t really have the time to become an internet entrepreneur in silver and I didn’t have the boat loads of cash to be spending on the silver to negate shipping costs in terms of my margin. However, having someone in the business of precious metals telling me it was a bad investment didn’t necessarily help all that much.

This is where I should have seen what those comments were, which was someone who goes with the norm and what they’ve been told and doesn’t want to take the risk which at the time and from my limited research seemed like a solid investment. Funny that I read that today as I just finished a book titled The Essential Buffet about Warren Buffet and his using Value investing when everyone else preaches diversification and uses a more high portfolio turnover approach. Buffet has gone against the norms for over 40 years of investing and done quite fine for himself.

Lesson learned. Stick to your calculations, stick to your own ideals, and try to not be so influenced by the norm. If I had continued with the so called risky investment plan I would be up 100% in one year. It may now be too late to get into the mix but I will have to evaluate the market once again and see where things could go from here.