Simple Silver Bullion Buying Tip
Hi Everyone, Dean here, thanks for joining me again.
This week we saw The Silver Spot price dip to a buy level.
Cool for those of us who are still building our holdings.
The problem with the drop in the price of silver is that the it usually contrasts the rise in the U.
S.
Dollar.
No big deal if you live in the United States, however, for those who live outside and have to purchase precious metals in U.
S.
dollars this poses an interesting paradox.
So what can be done to offset this? Here's what I did: It is relatively easy to open a foreign currency bank account at your local bank, especially if you live in Canada or the United States.
For my example, I opened a U.
S.
account that was attached to a Canadian bank account.
The basic rule of thumb goes like this.
Whenever the U.
S.
dollar drops to near par with the Canadian Dollar I transfer a lump sum into the U.
S.
account.
For example, last month the two currencies were almost on par, this is a good time to swap Canadian Currency for U.
S.
Dollars.
The interesting contrast between the two currencies is that during the same time, the price of Silver per ounce went up to near $20 U.
S spot per ounce.
Why? There are a lot of factors in the argument but basically Canada (like Australia) is a commodities based economy.
Waiting and watching a week or two later, magically the U.
S.
dollar gets a little stronger on the news of another bail out or main stream media release that is geared to bolster the economy.
For example: Last month $5000 CAD transferred to USD at a 1.
02= about $4902 USD.
At the same time Silver is trading at 19.
47 spot + strike price of $1.
99 to $2.
99 = $21.
46 (depending on what you buy - $1.
99 for silver rounds up to $2.
99 above spot for silver eagles) This means that if I were to spend my $5000 CAD on one ounce silver rounds at $21.
46 USD I could only have purchased 226 Troy Ounces.
Now, if I transfer my CAD into USD while the market is close to par and then wait until the USD strengthens (which usually means that the Precious metals market dips a bit.
) I can multiply the value of my dollar and make a better transaction by simply watching the market.
Back to my Example: My $5000 CAD exchanged to $4902 USD @ 1.
02.
Then the USD strengthened to $1.
067 so now that Original $5000 CAD is could be transferred back from USD into CAD and would buy $5230 CAD.
But why would we do that when we have found a better deal.
The original CAD (now $4902 USD) can be used to purchase Silver at the reduced price of last Friday's average Spot price $17.
49 + strike of $1.
99 = $19.
49 per Troy OZ.
This means we can buy 251 Troy ounces of Silver with our initial $5000 CAD.
This equates to an extra 25 ounces of Silver in your possession for the same initial investment.
Obviously there are some other costs involved like shipping etc.
But you get the gist...
The only reason I mention this is that this cycle has been happening over and over, particularly this year.
This is not a fool proof system but it has been fun.
enjoy your day Dean (disclaimer: always seek professional advice when dealing with your financial circumstances, the information provided in this blog is for educational purposes only)
This week we saw The Silver Spot price dip to a buy level.
Cool for those of us who are still building our holdings.
The problem with the drop in the price of silver is that the it usually contrasts the rise in the U.
S.
Dollar.
No big deal if you live in the United States, however, for those who live outside and have to purchase precious metals in U.
S.
dollars this poses an interesting paradox.
So what can be done to offset this? Here's what I did: It is relatively easy to open a foreign currency bank account at your local bank, especially if you live in Canada or the United States.
For my example, I opened a U.
S.
account that was attached to a Canadian bank account.
The basic rule of thumb goes like this.
Whenever the U.
S.
dollar drops to near par with the Canadian Dollar I transfer a lump sum into the U.
S.
account.
For example, last month the two currencies were almost on par, this is a good time to swap Canadian Currency for U.
S.
Dollars.
The interesting contrast between the two currencies is that during the same time, the price of Silver per ounce went up to near $20 U.
S spot per ounce.
Why? There are a lot of factors in the argument but basically Canada (like Australia) is a commodities based economy.
Waiting and watching a week or two later, magically the U.
S.
dollar gets a little stronger on the news of another bail out or main stream media release that is geared to bolster the economy.
For example: Last month $5000 CAD transferred to USD at a 1.
02= about $4902 USD.
At the same time Silver is trading at 19.
47 spot + strike price of $1.
99 to $2.
99 = $21.
46 (depending on what you buy - $1.
99 for silver rounds up to $2.
99 above spot for silver eagles) This means that if I were to spend my $5000 CAD on one ounce silver rounds at $21.
46 USD I could only have purchased 226 Troy Ounces.
Now, if I transfer my CAD into USD while the market is close to par and then wait until the USD strengthens (which usually means that the Precious metals market dips a bit.
) I can multiply the value of my dollar and make a better transaction by simply watching the market.
Back to my Example: My $5000 CAD exchanged to $4902 USD @ 1.
02.
Then the USD strengthened to $1.
067 so now that Original $5000 CAD is could be transferred back from USD into CAD and would buy $5230 CAD.
But why would we do that when we have found a better deal.
The original CAD (now $4902 USD) can be used to purchase Silver at the reduced price of last Friday's average Spot price $17.
49 + strike of $1.
99 = $19.
49 per Troy OZ.
This means we can buy 251 Troy ounces of Silver with our initial $5000 CAD.
This equates to an extra 25 ounces of Silver in your possession for the same initial investment.
Obviously there are some other costs involved like shipping etc.
But you get the gist...
The only reason I mention this is that this cycle has been happening over and over, particularly this year.
This is not a fool proof system but it has been fun.
enjoy your day Dean (disclaimer: always seek professional advice when dealing with your financial circumstances, the information provided in this blog is for educational purposes only)
Source...