Gold and silver often take a bad rap in the investment world, but some of this reputation might come from a poor understanding of just why people often buy these metals.
An article on DallasNews.com notes that, “Historically, gold bugs have been easy targets for ridicule as they are sometimes portrayed as anti-government nut jobs nervously awaiting financial Armageddon.”
It goes on to say, “However, since the financial crisis, an increasing number of average investors allocate a small portion of their portfolios to gold – just in case. And even the most ardent stock-oriented investment managers now advocate holding a little gold.”
While I think that anyone with a mind toward the future and their own self-preservation should put a little time into planning for the unexpected, I’m not necessarily planning for Armageddon with my small amount of precious metals purchases. I do however think that these items are good things to have in an asset portfolio, good economy or bad.
An insurance policy
Buying silver and gold doesn’t have to be an all-or-nothing proposition. I don’t think that the majority of the people who invest in these metals put all their savings into them and instead largely view them as a sort of insurance policy. They are there to provide a hedge against the risk of hyperinflation, an economic or monetary collapse, or similar disaster that while maybe not likely, are still possibilities.
As with auto insurance, while we tend to hope we never have to use it, it is an investment that can certainly prove valuable if we do.
Physical is different than paper
Personally, I would never buy silver and gold in anything other than its physical form. I wouldn’t own precious metals on paper form in which I would have to take the word of someone who tells me that are safely stashed away in a vault somewhere. And I don’t like the idea of having to wait weeks or longer to obtain said metals should I need access to them in an emergency. Plus, as more information regarding the manipulation of metals prices comes to light, it makes me wary of just how such paper markets are being handled. Not only this, but there is often a premium in price associated with physical metals (more so with coins) that can make them more valuable than the quoted “spot” price of the metals the coins are minted from.
A family investment
Silver and gold coins are something that can be tucked safely away and saved for future generations. Their value can grow substantially over time as inflation and other factors push their value higher. For example, I just found an old coin book in my bookshelf with a copyright of 1957. It lists $5 half eagle gold pieces from the mid-1800s in fine condition – with a few exceptions of low mint years – priced for between $7.50 and $11.00 a piece. As I review such prices today – 57 years later – in various coin sale venues, similar coins are ranging in price between $350 and $450 or more.
The idea of stashing a few such coins for the kids and grandkids with hopes of similar or even greater price increases is certainly an appealing one.
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The author is not a licensed financial, commodities or precious metals professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.