Investing With Jay Today

March 16, 2009

A Strategy for Accumulating Gold and Silver


Q: Can you offer a strategy for those who want to follow your allocations in gold and silver, but are just getting started?

A: I begin with the assumption that they have read and understand the contents of Letters 1, 2 and 3. 

Next, they need to understand my current allocations to gold and silver, which happen to be 14.1% and 23%, respectively, as this is written. But I did not invest nearly this amount of my original investment capital. They grew to these percentages because of increase in market value. That's the reason I talk about "target allocations" of 10% for gold and 20% for silver. Those are the maximum amounts of your total investment capital I recommend you commit to gold and silver, i.e. your cost.

Q: Why have you not sold some of your gold and silver since your current allocation totals 37.1%, 7.1% above the target allocations?

Related Articles
Bullion Dealers and Bullion Info
Practical Ideas on Buying Gold and Silver
The Most Important Chart in the World for Long-term Stock Investors
Will the US Dollar Be Replaced?
Central Fund of Canada (CEF) and Arbitrage
Holding Gold As Cash
Gold, Silver, Stocks and Cash (Letter 27)
Gold, Silver and 200-Day Moving Averages (Letter 24)
Silver (Letter 8)

A: Good question. Answer: Because I believe they are the single best investment I know of when both potential reward and downside risk are considered. They may not turn out to be the single best hedge against inflation, but when adjusted for risk, I consider them to be. I reach this conviction from the study of my experts and prayer.

Q: So, assuming I reach the same conclusion, and presently have little or no gold and silver, what are your recommendations for accumulating them?

A: You have several decisions to make. I recommend they be based on your convictions after prayer and study of my recommendations or those of others in whom you have confidence.

  1. First, select your target allocations for each metal. There's no reason they have to equal mine, either in total or in proportions of the two metals. You might decide on 20% total divided equally between gold and silver, or any other configuration. It's your decision, and your responsibility.
  2. Next, you must decide over what period of time, and in what sized steps you will accumulate your target allocation. I assure you no one does this perfectly for two simple reasons, we don't know the future, and we cannot divorce our emotions from our actions. This is known as the "dollar cost averaging" plan. In any given situation it might not be the best plan, but I believe it is currently. 
  3. Pick a percentage for purchase (5%, 10%, 15%...your choice). Buy that part of your allocation of both metals now. 
  4. Pick an interval of time (3 months, 6 months...), and make your next purchase, and each subsequent purchase, after that time interval passes, WITH THE FOLLOWING EXCEPTIONS:
    - If gold trades at 875, 830, 800, 760, 720, 700, 650, then accelerate subsequent purchases
      (of both metals)
    - If gold trades above 1000, finish your accumulation.

This plan is based on my observation that gold has been trading between 700 and 1000 for the past two years, and will reach an intrinsic value of $3,000 over the next 5-10 years during the coming inflation. This assumption could be right or wrong.

References for further study:


Investing With Jay Today  |  Jay's Portfolio  |  Letters from Jay  |  Apply for regular e-mail updates
Money, Finance and Investing  |  Some other helpful information  |  Feedback
Biblical Economics - what most people don't know the Bible teaches about economics
All I Have Commanded - an exhaustive list of what Jesus expects of His followers

"Well done, good and faithful servant; you were faithful over a few things,
I will make you ruler over many things.  Enter into the joy of your lord"
(Mt. 25:21 NKJV)

If you have not been faithful in the unrighteous mammon, who will commit to your trust to true riches?" (Lk. 16:11 NKJV)

The Apostle Paul wrote, "Now godliness with contentment is great gain. We brought nothing into the world and it is certain that neither can we take anything out. So having food and clothing we will be content with that. But those who want to get rich fall into temptation and a snare and into many foolish and harmful desires, that plunge people into ruin and loss; because the love of money is a root of all kinds of evil; in their greediness some have been led away from the faith and have impaled themselves on many distresses." (1 Tim. 6:6-10 NKJV)

This information is public domain.  Jesus said, "Freely you have received, so freely give." (Matthew 10:8b)

The information in this article is the responsibility of Jay O'Keefe and Ted Spaeth, but all your decisions are your own responsibility.

This web page was last updated on 02 May 2011 .