Guest Email: To leverage or not to leverage?

SGS,

I started following your blog about a year ago, since then your site along with others such as Sprott, KWN, Keiser and Zero hedge have replaced Facebook. I’ve been slowly building my physical inventory however, I’ve recently felt a bit more pressured and was hoping you could lend some advice. I currently attend the XXXXXXXXXXXXXXXXXXXX. Last year the government allowed me to see a whopping $200 dollars a month from my approximate $900 paycheck. Starting last month I now see $300 a month. I know that seems like nothing but through saved money and other investments I’ve actually been able to pool a bunch of physical. This September I have the ability to take XXXXX “Career Starter loan.” A $36,000 loan at 0.75% that won’t start accruing interest for 2 years. In two years when I am done with XXXXXXXX, and commissioned I will owe approximately 5 years of service at which time I start repaying the loan.

Now…unlike my classmates who will throw their loans into mutual funds because the bank representative told them it was a good idea, I was planning on buying more physical. I was wondering if you would be able to offer some advice as to whether I should throw the majority of it into physical or if I should do less physical and try to grow some more cash through mines, options, etc. before purchasing more silver. My main concern is that I do not see the loan until mid-September and as we saw silver finished the week pretty strong. I’d like to avoid paying $50 an ounce in 4 weeks. I should be able to barrow around 5,000 next week from a friend before I get the loan. Would you recommend trying to grab some more physical this weekend or next week in order to get some more silver before mid-September? Any thoughts on how I should divvy up the 36,000? I understand you are not blogging to manage other people’s money I was just looking for some thoughts.

On a separate note I owe you a huge thank you. Your site has literally taught me more than any of my economic classes thus far. I thoroughly annoyed a teacher of mine last semester when we covered currency and economic policy. He did not appreciate me challenging the US dollar as printer paper nor did he like when I referred to Ben as “the bernank”. Keep in mind this instructor told the class oil was $60 a barrel on a day when it reached $114. On the other hand I have been able to pull a few others over to silver. We did a large joint physical buy and it was like Christmas morning when we divvied up our coins and bars. Thank you for the continued education.

Respectfully,

XXXXXXXXXXXXXXXXX

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Well, I thank you for the kind words. Although I am not going to answer your question directly, as I am not aware of your circumstances, I will tell you this: Borrowing money to invest into anything OTHER than physical usually turns out in disaster. Physical will always be a wealth preserver so its different. That being said, I'm not sure whether you are trying to make money or preserve wealth, or create it. Thus my vague answers.

I always encourage the growth of the physical stack, ultimately its up to you that will determine with what means you will purchase it with. Maples are already in the high 40's, I think you will find out shortly whether to buy higher or lower as next week should be the week that its clear enough to see.

I leave the floor up to some comments under here to help you further make an educated decision in your quest for the million dollar question. Let me know how it went and looking forward to the follow up email a week before Xmas(not sure if I'm allowing to type 'Christmas' anymore so I have to abbreviate it as I may be on the AIPAC/ADL hit list).