Expert: Joe Hylas - 12/7/2010

Question
Hello Joe,

I read one of your answers on buying gold bullion. I have a potential to gain some inheritance. I am 57, only debt is an income adjusted student loan payment, and am drawing social security disability but don't really need to spend this potential inheritance unless some medical or legal emergency arises. I can also go to the V.A. hospital free.
Take a $100,000 inheritance for example-What percentage of that should I use to buy gold & silver? In the present economy, I'd feel like investing 80% of the inheritance in gold/silver, taking 20% and learn to perform some intermediate or trend trading.
What might be any downsides in owning this gold? If the economy were to improve, which is probably a long shot, at what point should I convert the gold to stocks, bonds, etc. and what would be any economic indicators telling me to convert the gold into something else? Also, would there be much difficulty in doing so fairly quickly?

Thank you very much!

Mark E.

Answer
Hi Mark,

First off, let me say that I am not a financial advisor and what I am about to say is my opinion.  This is what I would do.

Assuming that the $100,000 is not needed at this time and cosidering your age and disability, you want something secure.  I would avoid the temptation to get into trading.  Novice traders usually lose their investment, however the choice is yours.  I think owning metals is enough without getting into the trading aspect.

I would keep 20% of the inheritance in cash such as a money market where it is quickly at hand in case of emergency.  Before you make any decisions, speak with a tax accountant to make sure that you don't have to pay inheritances taxes, that could mess you up when you start spending it.

Assuming that do you have $100,000 tax free, put $20,000 aside for emergencies.
Then, I would invest the remainder in the following proportions:
50% in gold, 40% in silver and 10% in palladium.
I would buy 1 oz. Krugerrands for the gold, 100 oz. Bars of Silver and 1 oz. Bars of Palladium.

Presently, there are no downsides to owning precious metals.  The 3 metals mentioned have performed very well over the past 18-24 months, however past performance is no indication that it will continue.  That said, my opinion is that these bull markets have a long way to go because the economic problems are not just here in the US, they are worldwide.

You will know when it's time to sell your metals, the US Dollar will continue to strengthen and gold will begin to decline.  That probably will take years to happen.  However, selling the metals is easy and can usually be done on the spot.

Watch this video, I am not the only bull out there and for good reason.
http://www.charlierose.com/view/interview/11330

If you are looking for an experienced metals broker to work on your behalf, feel free to contact me.

Regards
Joe Hylas
800-474-6960
www.OmegaPM.com