[shades]

My kids have received US series E savings bonds from their grandparents for every birthday and Christmas until my parents passed on in 1995. My two youngest have a few thousand (face value - I haven't calculated their actual current value yet). I'm a bit concerned about what a downgraded US rating would do to the value of the bonds. None of the bonds have reached the 30 year date where they would stop accruing interest, so they are still gaining value through the variable interest rate. So My question is....should I allow them to cash in now before a possible downgraded US rating happens or sit tight?

btw...my youngest is 17 and he wants to cash in and buy silver with the proceeds. Would that be a good idea? (ok....so that's two questions....!)

 

[Sundsvall]

My kids have received US series E savings bonds from their grandparents for every birthday and Christmas until my parents passed on in 1995. My two youngest have a few thousand (face value - I haven't calculated their actual current value yet). I'm a bit concerned about what a downgraded US rating would do to the value of the bonds. None of the bonds have reached the 30 year date where they would stop accruing interest, so they are still gaining value through the variable interest rate. So My question is....should I allow them to cash in now before a possible downgraded US rating happens or sit tight?

btw...my youngest is 17 and he wants to cash in and buy silver with the proceeds. Would that be a good idea? (ok....so that's two questions....!)

Even if the economy weathers through the current economic crisis, the unfunded liabilities of Medicare and Social Security will certainly destroy the value of the dollar.

Add to that issue, the growing joblessness, increasing inflation and escalation of foreign wars and you have a pretty good idea of the value of the dollar in 5 years time. It is doubtful the dollar will still be around in that timeframe, let alone 30 years from now.

The only safe haven is in precious metals. Gold may be confiscated in the future. Silver has a better chance of remaining legal.

Also, Silver is consumed more and more as an industrial metal. Gold is not, it is stockpiled by governments and wealthy individuals.

There is more Gold available for sale now than Silver. Thus Silver should appreciate faster and farther than gold.

This also means that Silver can lose far more than gold on any given day.

That said. I would cash in and buy silver. Or diversify into Gold and Silver; with a 1 to 10 ratio of Gold vs. Silver.

 

[sierra skier]

My kids have received US series E savings bonds from their grandparents for every birthday and Christmas until my parents passed on in 1995. My two youngest have a few thousand (face value - I haven't calculated their actual current value yet). I'm a bit concerned about what a downgraded US rating would do to the value of the bonds. None of the bonds have reached the 30 year date where they would stop accruing interest, so they are still gaining value through the variable interest rate. So My question is....should I allow them to cash in now before a possible downgraded US rating happens or sit tight?

btw...my youngest is 17 and he wants to cash in and buy silver with the proceeds. Would that be a good idea? (ok....so that's two questions....!)

YES, let them buy silver and protect the value.

 

[ShaynaGirl]

Also check out the tax hit on cashing the bonds as a youth vs waiting until age 18.

Also, I thought there used to be a way that savings bonds could be used for secondary education expenses without tax consequence, iirc?

 

[LadyFenix]

Add another vote for cashing the bonds and buying silver with the money from that.

I would buy pre-1965 U.S. silver coins.......Peace silver dollars, Franklin halves, Washington quarters, Roosevelt dimes. Nothing dated later than 1964. A local coin shop dealer will give you the best prices. There are also other sources available. Don't buy any "sliders"......(catch-all term for silver coins showing visible wear). Condition matters.

The future just doesn't look bright for U.S. savings bonds. Up until about 5 years ago, they were a fairly decent investment. Paying (I think) about 5% at that time. But, the current variable interest rate is a rip-off. Plus, there is always the chance of possible government confiscation.

Of course, we have no way to know what the gang of crooks in D.C. are contemplating. But, the best defense is always a good offense.

 

[sierra skier]

Also check out the tax hit on cashing the bonds as a youth vs waiting until age 18.

Also, I thought there used to be a way that savings bonds could be used for secondary education expenses without tax consequence, iirc?

With the gifting being done over years and the amounts in a 'couple of thousand,' I do not believe there are any tax consequences to worry about.

 

[dealfinder500]

I would cash them out if it was me.

My gut tells me to invest it in silver, which means that I should really wait, because whenever I get an inkling to invest in something, it almost always goes down.

 

[shades]

Thanks everyone for your input. You have all confirmed what I thought was the right course to take and in addition gave me some concrete advice! :thumb: I guess I'll have to get those bonds out of the safe and calculate their worth. I'll be headed to the bank with my youngest tomorrow and let my 23 year old come get hers and head to her bank.

I had thought about cashing their bonds back when silver was $15 an ounce.....ahhh 20/20 hindsight. But I imagine one day (soon) we'll think the current $38 is cheap!

 

[shades]

I would cash them out if it was me.

My gut tells me to invest it in silver, which means that I should really wait, because whenever I get an inkling to invest in something, it almost always goes down.

Isn't that a good thing? Buy when it's down??

 

[ratsg]

Also, Silver is consumed more and more as an industrial metal. Gold is not, it is stockpiled by governments and wealthy individuals.

I wish this rumor would stop. Its simply not true. As a person who has spent a lot of time working with electronics in my past, I have seen a lot of gold plating for contacts and other items in electronics. I have never (personally) encountered silver.

http://en.wikipedia.org/wiki/Gold#Electronics

OTOH, I brought this up in another thread, and many posters let me know that silver is being used quite a bit currently in solar cells. So I was educated here.

But it doesn't mean that gold isn't an industrial metal.

 

[Sundsvall]

I wish this rumor would stop. Its simply not true. As a person who has spent a lot of time working with electronics in my past, I have seen a lot of gold plating for contacts and other items in electronics. I have never (personally) encountered silver.

http://en.wikipedia.org/wiki/Gold#Electronics

OTOH, I brought this up in another thread, and many posters let me know that silver is being used quite a bit currently in solar cells. So I was educated here.

But it doesn't mean that gold isn't an industrial metal.

Its not a rumor. Just because you haven't seen it, doesn't mean its not happening.

When the price of gold went to 4 digits, you can bet every electronic manufacturer went to an alternative conductor namely silver. If you look at the old silver thread, I posted no fewer than 6 links from manufactures and news sources that cited this fact. The issue with silver is oxidation, so a lot of electronic boards have the silver pathways mixed with tin.
When you find a manufacturer who is going to use $100 worth of gold on a set of cable contacts, you let me know. I suspect those cables will be retailing for about $400.

In the near future, electronics will only consume more silver, not less.
Solar cells, clothing, medical, food and water will all use silver in increasing amounts.
Silver stands as the best conductor of electricity and the best reflector of light.

Silver is mined at about 12x the rate of Gold. Right now the Silver to Gold ratio is around 43. It should go down to the rate of production of 12 to 1. That would put the price at $133.00 at todays Gold price. In the future, Gold is expected to go to $5000. That would put Silver at $416.00 an ounce.

Some argue that the necessity of silver in society should bring Silver to parity with gold. That would be the first time in history that such a shift occurred.

 

[Sundsvall]

I would cash them out if it was me.

My gut tells me to invest it in silver, which means that I should really wait, because whenever I get an inkling to invest in something, it almost always goes down.

Buy in 25% chunks of your money.

That way if the price drops, your average cost goes down, not up.

You only run into problems when you go all in with one purchase.

 

[Sundsvall]

Thanks everyone for your input. You have all confirmed what I thought was the right course to take and in addition gave me some concrete advice! :thumb: I guess I'll have to get those bonds out of the safe and calculate their worth. I'll be headed to the bank with my youngest tomorrow and let my 23 year old come get hers and head to her bank.

I had thought about cashing their bonds back when silver was $15 an ounce.....ahhh 20/20 hindsight. But I imagine one day (soon) we'll think the current $38 is cheap!

Anything under $50 is still a bargain.

I think I want all my accumulating to be done before it crosses that line.

 

[MIL-DOT]

I concur with the majority, get out of those bonds/dollars, and turn them into something tangible......while you still can.

 

[Medieval Man]

Look at it this way.

A $100 savings bond bought in 1993 (17 years ago) would now have the same purchasing power of only $66.22, not including accrued interest.

Use this inflation calculator to do the math:

http://www.westegg.com/inflation/infl.cgi

You would have already had to earn enough interest for the bond to equal $148.96 in today's dollars.

Go here to calculate the current value of your bonds:

http://www.treasurydirect.gov/BC/SBCPrice

I, like many here, believe inflation will accelerate even faster in the coming years. But do the math so you can make your own decision...