Gold and Silver are smart investments
With the uncertainty of today’s economy there are places to invest that are very secure. Gold and Silver’s values have held true for centuries.
Are Precious Metals Good Investments?
Why do people invest in Precious metals? What’s the point?
“Is buying risky? Depending on your appetite for risk, sometimes it can make sense. Precious metals like tend to move in directions opposite of the market. If there’s a market drop (like in 2008), prices tend to rise. You can’t count on that happening, but diversifying your investments into classes like stocks, bonds, and commodities can help you avoid losing everything.
Precious metal prices can continue to increase. They may get more valuable because they get more scarce—mining and refining might produce far less in one year—but by the same token, they might lose value because the get more common, too. Can you predict that?
Precious metal prices might increase because demand increases. More people want to buy them. Then again, demand might decrease. Can you predict that?
Maybe they’ll do neither. Maybe they’ll hold their value. Maybe $1000 in bullion today will be worth about $1000 in bullion in five years, and you’ll only have lost inflation. That’s better than losing everything, right?”
Investors buy silver coins, silver bullion coins, and coin silver for one of three purposes: as an investment, as an inflation hedge, or for survival purposes. Investors who buy for investment purposes look for price increases because of silver’s supply/demand fundamentals. For example, in 1998 Warren Buffett purchased 129.7 million ounces of silver for Berkshire Hathaway, a holding company that Buffet heads.
Buffett’s silver purchase, which became legendary among silver investors, was probably for investment purposes. However, it may have been an inflation hedge; Buffett did not say. In fact, Buffett said very little about his silver investment, even after he disposed of it. One thing is certain, however, Buffett did not buy 129.7 million ounces of silver for survival purposes.
Buying silver bullion as an inflation hedge
Investors who want protection against inflation buy silver and gold as inflation hedges. During the 1970s, silver and gold prices skyrocketed in response to price inflation that reached 13%. During the ’70s, popular silver and gold investments included any form of silver bullion, from 1-oz silver rounds and pre-1965 U.S. 90% silver coins to 100-oz silver bars and 1-oz Krugerrand gold coins. When the Federal Reserve brought inflation under control in the 1980s, much of the silver bullion and the gold coins purchased in the 1970s were sold and the proceeds put back in paper investments.
Silver coins for the worst-case scenario
Investors who buy Precious metals for survival purposes fear the worst. Those fears include the Federal Reserve printing so many dollars that the dollar will become worthless, which is the history of all paper currencies not redeemable in gold or silver. Fear of a financial meltdown, which would close banks as in Argentina and Paraguay in 2002, is another.
Argentinians and Paraguayans who had to foresight to bail out of the banking systems and convert their assets. Not only did banks close, but also when they reopened depositors were limited in the amount of money they could withdraw. Meanwhile, the Argentinean peso and the Paraguayan guarani sank in value. Shortly after those crises, Brazil defaulted on its international debt and its paper currency, the real, sank.
Those are the kinds of situations that investors who buy coin silver and small coins for survival purposes want to protect against. In doing so, these investors buy silver and gold in forms that can be used for money or to barter for goods and services.