For my retirement savings, my strategy is to buy a decent amount of silver (8% of my salary, roughly 1 month) every year to put away in coin form. I am currently investing in nothing else for the long term. In the short term, I have money in the bank – I plan to buy a flat in a year so I don't want to lock it up too seriously.

I am determined not to touch this silver investment until I retire except in very extreme situations. I am afraid the European state pension fund – so Hungarian as well – is in huge trouble (finance & demographic), and if it is not solved, I will get just a miserable amount of money from it when I turn 65. So, practically, the silver shall be my primary source of pension unless I get a brilliant alternative idea or being convinced it is a bad concept.

Also a Hungary specific detail is the Government confiscated the private pension funds recently. I could make a statement I want to keep it (only 3% of the population did that), but the government holding back all the payments to this private pension funds now and redirects it to the state pension. The confiscated private pension's 95% assets are gone now.

I have no faith in the long run in stocks. First of all, it is a risky asset. Second of all, if you do trade, it takes a lot of time, and if somebody else does it for you, you need to pay them. Imagine in Eastern Europe if you open a bank account and put 70000 HUF (300 USD) on it, after 10 or 15 years literally the bank asks for money because your savings was taken by costs, low interest, and inflation. Sadly, I can't trust the brokers here too.

Here's what I see in favor of my silver plan:

  • Silver is pretty cheap now, hopefully it will be for a while.
  • Silver is undervalued compared to gold. World reserve ratio is around 1 to 11, while price is around 1 to 60.
  • Silver (and gold) with the current industry use would be extinct in 30 years. Which of course won't happen due expected price rising and recycling.
  • Silver (and gold) always represented value over the human history.
  • According to usdebtclock.org silver stock of the world is limited ~2oz/capita and as I mentioned, it is decreasing while population is increasing.
  • Silver (and gold) is easy to carry if you need to move away for any reason unlike property.

I can say a single con:

  • Nobody guarantees that silver will be considered as valuable asset in 30 years. But this is true for many-many assets.

Are there real, visible problems with my retirement plan? What are better alternatives?

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    Not an expert, but here's my take. I've been hearing many people tout silver as an opportunity since gold is so high (relative to silver). However, I believe that silver "appears undervalued" today, because it is just not anywhere near in demand today as it was before the advent of Digital Photography. In previous years, silver was consumed (as well as recycled from) photo-processing, something that has rapidly declined in recent years. While I applaud your taking action and planning for your future, you may think about diversifying, or choosing an alternative store of wealth. Commented Feb 14, 2014 at 15:04
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    @mkoistinen I can say the consciousness in Hungary is extremely low - I don't know how about other countries -, only 13 percent of people have actual savings and even for those people who earns well only 20 percent saves for harder times. Practically most of the people have blind faith in government it will save them in hard times. We can see numerous examples when these thoughts failed miserably. Commented Feb 16, 2014 at 7:27

7 Answers 7


To be honest, I think a lot of people on this site are doing you a disservice by taking your idea as seriously as they are.

Not only is this a horrible idea, but I think you have some alarming misunderstandings about what it means to save for retirement.

First off, precious metals are not an "investment"; they are store of value. The old saying that a gold coin would buy a suit 300 years ago and will still buy a suit today is pretty accurate. Buying precious metals and expecting them to "appreciate" in the future because they are "undervalued" is just flat-out speculation and really doesn't belong in a well-planned retirement account, unless it's a very small part for the purposes of diversification.

So the upshot to all of this is the most likely outcome is you get zero return after inflation (maybe you'll get lucky or maybe you'll be very unlucky).

Next you would say that sure, you're giving up some expected return for a reduction in risk. But, you've done away with diversification which is the most effective way to minimize risk... And I'm not sure what scenario you're imagining that the stock market or any other reasonable investment doesn't make any returns. If you invest in a market wide index fund, then the expected return is going to be roughly in proportion with productivity gains. To say that there will be no appreciation of the stock market over the next 40 years is to say that technological progress will stop and/or we will have large-scale economic disruptions that will wipe out 40 years of progress.

If that happens, I would say it's highly questionable whether silver will actually be worth anything at all. I'd rather have food, property, and firearms.

So, to answer your question, practically any other retirement savings plan would be better than the one that you currently outlined, but the best plan is just to put your money in a very low-cost index fund at Vanguard and let it sit until you retire. The expense ratios are so stupidly small, that it's not going to meaningfully affect your return.

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    @Malvolio I've got to disagree strongly with you. Not only is it not a false distinction, but it's basically capitalism 101: you are presumably buying stocks (giving money) to a company which is going to make a product, or more of a product, or a better product...all of that creates value. Your money is actually "working for you". In contrast, silver is expected to create no value. The Wall Street Journal says it better than I do: blogs.wsj.com/marketbeat/2010/12/15/…
    – Jeremy T
    Commented Feb 15, 2014 at 2:17
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    @JeremyT You made a lot of points make sense, and I seriously will think about what to do to make it more diverse. 97% of private pensions in Hungary were confiscated 3 years ago, I saved mine, but government still steals money - holding back the payments from it, and redirecting it to state pensions - I expect state pension, but I see the demographic and finance trends in Hungary, they both horrible. I don't want to end up with 100 trillion HUF on my bank account while 1 trillion buys a loaf of bread. See year 1946 on Hungarian Pengő Commented Feb 15, 2014 at 8:36
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    @CsBalazsHungary If your main concern is the government confiscating your retirement savings, then I guess it's really a different story. I honestly don't know what I would recommend in that situation. Can't you just keep money in foreign bank accounts? However, it sounds like you were saying that the government confiscated pensions... You could keep all of your index funds in regular taxable accounts instead of your pension
    – Jeremy T
    Commented Feb 16, 2014 at 2:44
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    @JeremyT I could keep foreign accounts, it has one disadvantage. I lived 10 years behind the iron curtain, I afraid in some serious rewokement of rights I wouldn't access to my money. And not to mention Cyprus bank accounts. They restricted the access to everybody's money. I wanted to find something what would save value over ages and have no problem in accessibility and mobility. Commented Feb 17, 2014 at 5:41
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    @quantycuenta I sincerelly hope they won't experience it. But sadly the reactions to a bad financial situation is usually similar. Even Iceland - which country in my opinion handled the situation so far the best - had serious troubles with crashing banks, devaluated money. Commented Feb 17, 2014 at 8:26

This sound like a very bad idea. If you invest exclusively in silver, your investment is not diversified in any way. This is what I would call risky.

Have a look at index funds and ETFs and build a diversified portfolio. It does not take much time, and you don't need to let it do by someone else. They are risky too, but I see "silver only" as much riskier. You reduce the risk by holding on to the funds for a long time.

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    +1 for ETFs and index funds, but you could make that more relevant to the question by expanding your answer to enumerate how they address poster's reservations about the stock market. Commented Feb 14, 2014 at 23:01

I think precious metals as an investment might set one up for disappointment.

From goldsiverworlds.com

Why does it seem to continually decline despite the variance? As many have noted, there isn't much productive use for precious metals, and no major wars are taking place, so they aren't being used as currency substitutes, not to mention that more is being pulled out of the ground every day.

The real reason why this graph shows silver to decline in real value over time is because its using a suboptimal price index. An optimal one would most likely show a stable price over the long run.

Silver is a great speculation if one can determine with high confidence the direction.

  • Altough the graph is good and more relevant than nominal value, I think it misses the ability of prediction to future - of course who has it? -, I am sure the oil price shows a good model of a "depleting raw material" price index. Since silver is finitely available for the mankind, and used in the industry, I expect - or hope - for higher value in the future. Commented Feb 14, 2014 at 14:19
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    @CsBalazsHungary You must realize, though, that "finitely available" does not mean that demand will exceed supply in our lifetimes. Silver can be extensively recycled/reclaimed, as it has been in photography/printing for quite some time. There are extremely few production processes which destroy silver or make it unsuitable for reclamation: this means that it is possible now, or may be possible very soon, for society to have ever decreasing (or fully eliminated) need for "new" silver. This is very much unlike oil, which is very hard to reclaim once used (burnt, refined, etc).
    – BrianH
    Commented Feb 14, 2014 at 17:33
  • @CsBalazsHungary Finally, the idea that silver is finite assumes something that is a huge assumption: that no non-Earth sources become viable. We know precious metals are available on other planets and asteroids, and if just a proof of concept is developed in the next 30 years that says "hey look, we could have all the precious metals we could possible use - if it were actually worth bothering" could cause speculators to run away as the idea of gold and silver as scarce resources is put in jeopardy. In other words: don't bet your whole life savings on one unknowable assumption of the future.
    – BrianH
    Commented Feb 14, 2014 at 17:37
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    @BrianDHall Good point on oil, but I mentioned recycling, it surely slows the depletion. Mining silver from outside of the earth in the next 30 years seems purely fictional and even if it becoes reality, won't be a cheap process in 30 years. Commented Feb 15, 2014 at 8:28
  • @CsBalazsHungary No, products of constant quality have constant real prices.
    – user11865
    Commented Feb 17, 2014 at 7:53
  • First is storage which is a big and a detrimental headache.

  • Security is another big headache.

Investing in precious metal has always been an investment opportunity in the countries in the east i.e. India and China because of cultural reason and due to absence of investment opportunities for the less fortunate ones. It isn't the case so in the West.

Secondly what is the right an opportune moment is open to question. When the worlwide economy is up and running, that is probably the time to buy i.e. people would like to put money in use rather than store. The saying goes the other way when the economy is stagnating.

Then there is also the case of waiting out the bad periods to sell your gold and silver.

If you do want to buy precious metals then use a service like BullionVault, rather than doing those yourself. It takes care of the 2 big headaches, I mentioned earlier.

  • Security is an issue, it is true, but I am convinced it is not impossible to hide it at home without risking it for a robbery, sadly I won't have tons... Maybe because of my eastern european personality, but I would prefer to keep the metals with myself, not somewhere abroad. There is a chance - big or small, can't tell - there can be times when you can't access to your rented vault in a distance country. And also if there is a confiscation rule (like Confiscation act 1933) then your vault is way more accessible than your private hiding place. But anyways what you say makes sense. Commented Feb 14, 2014 at 11:59
  • $5000 a year in silver for 30 years at $25 a troy ounce will give you a little over 410 pounds or 186 Kg. Commented Feb 14, 2014 at 12:37
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    @mhoran_psprep Eastern european salary level solves this "where to put that much silver" problem :D Commented Feb 14, 2014 at 12:54
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    @CsBalazsHungary I think you've killed your whole security plan by saying on a public website that you're planning on storing all the stuff at home. How hard you think it would be for me to find out who you are and where you live?
    – Jeremy T
    Commented Feb 14, 2014 at 17:07
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    @Malvolio Silver is pretty durable, would't be greatly effected by a burning house. Hungary is very stable and flat, so the natural disaster risk is very low. But yes, the silver price crash would be a risk what can be accounted. Commented Feb 15, 2014 at 8:24

Because most of the posters have disparaged the pursuit of silver without a reflection upon what you wrote in the question - your concern about Hungary and its government, I'll weigh in it. In a stable and solid political and economic environment, this advice against silver would be generally correct. As you commented, though, this has not been the case and thus it is difficult for some to understand this.

Given your concerns, here's a question to reflect upon - what can the government of Hungary not confiscate? Or what have they not confiscated in the past? If silver is on that list, then very few people here will understand because statements like, To be honest, I think a lot of people on this site are doing you a disservice by taking your idea as seriously as they are, are completely predicated on an environment that has been relatively stable over the years. I know my fellow Americans (and some Europeans) don't get this, but some countries have seen disasters - for instance, Brazil has been hyperinflation even when interest rates with insane interest rates (over 1000%).

So this answer won't be popular, but depending on your environment, silver may be an excellent choice. If the government of Hungary has confiscated silver in the past (or you suspect they might), though, I'd stay far away from it. In reading and listening to people in these environments, citizens typically want something the government does want to take inventory of that tend to hold their value or rise during times of crisis. Most Americans (if they were honest) really can't relate to this and the few that can would agree. Another popular item to have, which doesn't physically exist, is a rare, but valuable skill that will be needed in a crisis. For instance, being highly skilled at negotiation and knowing the right people both come in handy at difficult times. Can you pay for learning or increasing those skill sets now? Never forget that self-investment can go far.

And as a financial note and word of advice from someone who's been a financial adviser for over half a decade, a good financial adviser always seeks to get the person's information before providing advice and almost never says that a particular choice is always bad or always good; I would seldom say that a person should do one thing and it will always be good advice because that may not work in their country/state/environment/situation/etc. As they say in the SQL Server community - "it depends" and that holds true for finance. In the long run, those items which we may not think of as good investments or stores of value may end up having their day. To paraphrase Solomon, "There's a time and place for everything under the sun." Even in my short life, I've witnessed a period of gold and silver routing the stock market and the stock market routing gold and silver. I suspect I'll see both again if I live a few more decades.


  1. If the government of Hungary hasn't confiscated silver in the past and you suspect they won't, it may be a good store of value.
  2. What has the government not confiscated or what do you suspect they won't confiscate? Could these be ETFs, foreign currency, stock funds, etc or something hard like actual ownership of chickens (no joke, I raised them and they tend to be inflation/government-gone-wild proof, provided they live and reproduce).
  3. Is there a set of skills or a particular skill that comes in handy during arduous times? Can you learn this skill or enhance this skill now?
  • Why are people willing to consider all sort of rare catastrophic events (hyper-inflation, foreign assets disappearing entirely, economy in the tank, etc.) but still make all sorts of assumptions about silver? Whether the government of Hungary has confiscated silver in the past or not, it might certainly do so in the future.
    – Relaxed
    Commented Mar 19, 2014 at 7:13
  • Let's go one step further: If the government is out to get you and silver ought to look like a safe asset to people in the region, then many are going to do what the OP is doing and further down the line the government will notice and specifically target silver.
    – Relaxed
    Commented Mar 19, 2014 at 7:15
  • The basic fact is that to enjoy retirement (especially as an employee who isn't very wealthy and/or willing to emigrate), you rely on a more-or-less functioning economy and governments being in place when you retire. What good will your silver do you if things become so bad as others have described? There is just no way around that.
    – Relaxed
    Commented Mar 19, 2014 at 7:18

The points given by DumbCoder are very valid.

Diversifying portfolio is always a good idea. Including Metals is also a good idea. Investing in single metal though may not be a good idea.

•Silver is pretty cheap now, hopefully it will be for a while.
•Silver is undervalued compared to gold. World reserve ratio is around 1 to 11, while price is around 1 to 60.

Both the above are iffy statements. Cheap is relative term ... there are quite a few metals more cheaper than Silver [Copper for example]. Undervalued doesn't make sense. Its a quesiton of demand and supply. Today Industrial use of Silver is more widespread, and its predecting future what would happen. If you are saying Silver will appreciate more than other metals, it again depends on country and time period. There are times when even metals like Copper have given more returns than Silver and Gold. There is also Platinum to consider.

In my opinion quite a bit of stuff is put in undervalued ... i.e. comparing reserve ratio to price in absolute isn't right comparing it over relative years is right. What the ratio says is for every 11 gms of silver, there is 1 gm of Gold and the price of this 1 gm is 60 times more than silver. True. And nobody tell is the demand of Silver 60 times more than Gold or 11 times more than Gold. i.e. the consumption. What is also not told is the cost to extract the 11 gms of silver is less than cost of 1 gm of Gold. So the cheapness you are thinking is not 100% true.

  • As I understand you are on the favour of the idea, but you would refine it. Cheapness is declared by me judging the available quantity and price. My only problem with copper is to be too cheap to be practical. I would end up with tons which is way more problematic to store. Platinum is an interesting idea too. Thanks for answer! Commented Feb 14, 2014 at 11:53

Like Jeremy T said above, silver is a value store and is to be used as a hedge against sovereign currency revaluations. Since every single currency in the world right now is a free-floating fiat currency, you need silver (or some other firm, easily store-able, protect-able, transportable asset class; e.g. gold, platinum, ... whatever...) in order to protect yourself against government currency devaluations, since the metal will hold its value regardless of the valuation of the currency which you are denominating it in (Euro, in your case). Since the ECB has been hesitant to "print" large amounts of currency (which causes other problems unrelated to precious metals), the necessity of hedging against a plummeting currency exchange rate is less important and should accordingly take a lower percentage in your diversification strategy. However, if you were in.. say... Argentina, for example, you would want to have a much larger percentage of your assets in precious metals.

The EU has a lot of issues, and depreciation of hard assets courtesy of a lack of fluid currency/capital (and overspending on a lot of EU governments' parts in the past), in my opinion, lessens the preservative value of holding precious metals. You want to diversify more heavily into precious metals just prior to government sovereign currency devaluations, whether by "printing" (by the ECB in your case) or by hot capital flows into/out of your country. Since Eurozone is not an emerging market, and the current trend seems to be capital flowing back into the developed economies, I think that diversifying away from silver (at least in overall % of your portfolio) is the order of the day.

That said, do I have silver/gold in my retirement portfolio? Absolutely. Is it a huge percentage of my portfolio? Not right now. However, if the U.S. government fails to resolve the next budget crisis and forces the Federal Reserve to "print" money to creatively fund their expenses, then I will be trading out of soft assets classes and into precious metals in order to preserve the "real value" of my portfolio in the face of a depreciating USD.

As for what to diversify into? Like the folks above say: ETFs(NOT precious metal ETFs and read all of the fine print, since a number of ETFs cheat), Indexes, Dividend-paying stocks (a favorite of mine, assuming they maintain the dividend), or bonds (after they raise the interest rates). Once you have your diversification percentages decided, then you just adjust that based on macro-economic trends, in order to avoid pitfalls.

If you want to know more, look through:

http://www.mauldineconomics.com/ < Austrian-type economist/investor

http://pragcap.com/ < Neo-Keynsian economist/investor with huge focus on fiat currency effects

  • Hungary is not in the eurozone.
    – Relaxed
    Commented Mar 19, 2014 at 7:20
  • Ah, you are correct. I mis-interpreted the Eurozone wiki site. This would make it more critical then to hedge against currency fluctuations of the Hungarian forint.
    – adv
    Commented Mar 19, 2014 at 14:44

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