Let me begin by saying this post isn’t by any means to discourage individuals to partake in other investment and saving strategies such as: cryptocurrency (especially) stocks & bonds, retirement plans, bank accounts, cash hoarding, etc. But to encourage and highlight the advantages of investing in precious metals, specifically gold and silver bullion. Also, after viewing this post it should be obvious why owning precious metals will greatly compliment your cryptocurrency holdings.
Be aware there are numerous ways to invest in precious metals such as stocks, ETFs and mutual funds. All of these can have their particular advantages but this post will focus on physical gold and silver bullion.
My intent is to make clear the obvious, undeniable reasons a percentage of your savings should be in precious metals (financial advisers would say 10-20%). Some of this reasoning is based in common sense, while the rest will convey specific wealth principles. In my opinion these points are each enough reason to get involved with precious metal investing. I have provided a list of eight.
Also in closing I will explain why the beginner precious metal investor should consider investing in silver initially, and my preferred methods of obtaining precious metals.
Why Buy?
(1) Precious metals are hard assets, not paper(soft) assets
Hard assets are investments that hold real intrinsic value. In steady economic times cash, plastic and paper assets make our commercial lives convenient but when things become volatile (eg. the 2008 recession)hard assets historically provide the greatest returns immediately following these times and the most security during.
The current global economic, political and business landscape is looking very volatile for the remainder of 2017, based on the presidency and other factors. With that in mind individuals should protect themselves by investing in whatever hard assets they have access to. Hard assets would include: precious metals, farmland, commercial real estate, oil, art that appreciates.
Keep in mind that any wealth you have invested in stocks, the bank or retirement accounts is a soft or paper asset. Paper assets are potential wealth! This asset class is potential wealth in the sense that it only becomes actual wealth when
you trade it for goods, services or hard assets.
(2) Investing in precious metals is both a great savings method and a secure investment
There isn’t another asset that provides a solid saving mechanism, high liquidity, consistent returns and constant accessibility to the owner. When investing in soft assets getting a good return is usually predicated on very long terms or making savvy gambles on a high-risk investments. I don’t like being required to wait so many years before I can have what belongs to me (CDs) and I don’t like risking money as if I were gambling(in the stock market).
Also, precious metals are known as the best hedge against inflation. Please be familiar with this concept. Our dollar loses
value by at least 2% or more every year so stop using it as an instrument to save!
(3) There is really no such thing as buying gold/silver!
The truth of the matter is you don’t actually buy gold and silver (bullion). Here is the reality. When you invest in gold/silver you are simply exchanging legal tender for lawful money, public money for private money, local currency for international currency. In fact, until the House Joint Resolution of 1933 all legal tender notes (cash) were backed by gold and silver one could physically receive for exchanging cash. You can always get cash for gold/silver. Even in the case of purchasing jewelry, it still contains some true value based on its weight and purity. Meaning, if no one wanted to buy your metal as jewelry you could still take it to a coin or scrap dealer and get its melt value.
(4) Precious metals are the only true international currency
Precious metals will forever be international currency. Their value has been expressed throughout the history of mankind in all cultures. For this reason it is accepted all over the globe. Silver and gold bullion can be very easily exchanged for its market (spot) value in any developed country.
(5) Gold and Silver are extremely liquid assets
One thing that has steered me away from most paper assets is their general lack of liquidity. In most cases one has to make an order or request of some sort to receive the paper asset and then go through a commercial process to receive the cash or hard asset equivalent. If, and I do mean if the economy runs into another recession or depression we can only imagine how delayed those processes will be.
Silver and gold bullion on the other hand can be sold to coin dealers, pawn shops, some banks, and other individuals
looking to purchase bullion. In most cases this can easily be found locally. Due to gold's high value, I would be willing to pay a little more for quality bullion. This gets rid of the holders burden to prove the authenticity of the gold.
(6) Land, precious metals and oil are the only assets/investments that have not and never will reach a value of zero!
This point goes back to precious metals being a hard asset. There has never been a time when gold and silver held no value. Over history they have proven to be very valuable during stable economic times and extremely valuable during times of economic hardship.
(7) Gold and silver are making a push globally to become a currency again
Both China and Russia are developing new gold/silver backed currencies and are collaborating on a potential joint currency. Countries are slowly denying the US dollar and selling off US debt. And if you don’t think global economics affects us here’s a fact check for you: Arizona and Utah are actively pushing legislation to allow gold and silver to be used as currency. That is happening as we speak. Staying up-to-date is the best way to protect yourself.
(8) The precious metal market is being heavily manipulated!
There has been [speculation](http://nypost.com/2016/04/16/investors-make-golf-off-banks-manipulation-of-metals-market/ for years from investors and economist that the precious metal market is being suppressed. That speculation became fact when Deutsche Bank agreed to pay close to $100 million in settlements and fines in a lawsuit where they admitted the part they played in the whole fiasco.
The cat isn’t completely out of the bag on this one so stay tuned, and while you’re at it invest in some precious metals before the value skyrockets.
How, Where & What to Buy
How (much) to pay
● The per ounce value of gold, silver and other precious metals can easily be found through a Google search. Most online coin dealers and mints keep a live ticker on their homepage also. The values fluctuate daily just as the stock market does. The per ounce price is considered the “spot price”. You can expect to pay 5-20% over the spot price as a cost of doing business depending on numerous factors such as quantity, grade, mint, and condition. I will say one of the advantages of shopping online is the top web coin dealers can charge closer to spot price because they save money in lacking a brick and mortar location. If you have to pay for shipping though, this isn’t always the case.
● Pay cash unless you want precious metal purchases linked directly to your public
record. I feel personal wealth should be kept private.
Where to Buy
● There are a number of routes one can choose when looking to purchase gold/silver. Though there are plenty of options you must ultimately decide whether you want to purchase locally or online. Even though there are credible sources to purchase online I would rather physically exchange my money for precious metals. It completely eliminates all the waiting and uncertainty involved in online shopping. Finding precious metal dealers locally isn’t as hard you would think either. The most credible way is to search through the [BBB](https://www.bbb.org/ (Better Business Bureau) and the US Mint. Also, buying bullion locally is the most private way to do it.
● If getting to a local coin dealer is too inconvenient for you or you just want to compare options there are some trustworthy coin dealers online. Some of the more noteworthy are JM Bullion and GoldSilver.com but there are other reliable companies to my knowledge. As with any investment do your research on whom you are considering to do business with (reviews, comparisons). Again, paying cash and buying locally are the best options but if circumstance prevents that find a reputable source online.
● You can also buy from individual dealers and e-commerce sites such as Amazon and EBay but I would not suggest it unless you have extensive intel about whom you are conducting business with. Even then it’s probably not worth the risk.
What to Buy
● When buying precious metals for investment purposes it is best to invest in bullion grade coin. Bullion has .995 or greater purity and can be easily exchanged for its metal content value. I prefer American Eagles but some other reputable coins are American Buffalo, Canadian Maple Leaf, PAMP Suisse, South African Krugerrand and Austrian Philharmonic.
Individuals that are looking to buy precious metals for collection and hobby purposes tend to invest in numismatic coins.
● People often ask whether they should invest in gold or silver. I see two main viewpoints to approach this
question.
A. How much of your savings do you want to reserve in small and/or in large
denominations?
For example, a 1 ounce silver bullion coin today is valued at $17.97, while a gold bullion coin that same weight is $1,234. Basically you can hold a $1,234 coin that isn’t as bulky but harder to use in small transactions, or the $18 coins that take up more space but are more liquid.
You can also buy gold by the gram but there aren’t many options to do so. In all situations I would say it’s best to diversify.
B. Where does each precious metal currently stand in the “buy low, sell high" investing principle?
This all depends on what range you base your averages. I like to look at each precious metal’s average value over the last 10 years. Gold’s average value is about $1,255 compared to today’s value of $1,246, while silver’s average is around $28 compared to today’s value of $17. Gold is right around the average point but silver is roughly 36% under its average. Based solely on this viewpoint, silver would be the obvious way to go if you are looking for greater returns in the near future.
Be sure to do your due diligence researching before making any investments and be as private about it as possible. I hope this document gave you some new insight on investing and can be used as a reference for you in the future. Here are a few terms to be familiar with before you start investing in precious metals:
* Bullion - precious metals in the form of bars or coins that are at least 99.5% pure
* Numismatic coins - coins that depend more on their rarity, condition, date, and mint mark rather than metal content
* Coin - a stamped, round piece of metal of a known weight and fineness issued for commerce (different from a “round”)
* COMEX - 1 of the world’s major commodities futures exchanges where gold/silver are traded (NY)
* Coin Face Value - value stamped on coin (not the “intrinsic value”)
* Fiat money - paper money made legal tender by law, though not backed by anything tangible
* Fineness - the purity of a metal in 1,000 parts of an alloy eg., .9167 fine = 91.67% pure
* Gold standard - a monetary system based on convertibility into gold; paper money backed and interchangeable with gold
* Hedge - a transaction initiated with the intent of protecting an existing or anticipated market exposure from adverse price fluctuations
* Intrinsic value - the value of a coin’s metal content
* Karat - measure of gold purity; pure gold is 24 karat
* Liquidity - the ease in which an asset can be quickly bought or sold in the market without affecting the it's price
* London Fix - 2 daily bidding sessions in London of 5 major gold firms, at which the price of gold is “fixed” or set
* Premium - dollar amount or percentage coins/bars sell over their intrinsic value eg., the American Eagle usually sells at a
premium of 5-8%
* Spot price - daily fluctuating market value of precious metals. When investing, your total cost will be “spot price + premium”
* Troy ounce - basic unit of weight for precious metals. One troy = 31.1035 grams or 480 grains
It's funny I just saw this new video as I was preparing this blog post so I decided to add the link to it last minute. In the past purchased a book from the speaker, Mike Maloney, and saw he was discussing Bitcoin in the current video. Mike is a highly reputable precious metals dealer/investor and in the video he briefly discusses the advantages of moving money across different asset classes.
Check him out below! He also has a great YouTube series called The Hidden Secrets of Money that explains the history of the monetary system in detail. I would definitely recommend it for anyone who is interested in finance.
Very nice write up. Upvoted.
What are your thoughts on buying the commodity itself compared to an ETF or other fund that covers either mining or the commodity itself?
Personally, I'd rather invest in items that make money and not just sit there, but I can understand taking a defensive position in a certain percentage of savings funds.
I've always preferred to hold the physical gold personally. Seems like the powers that be have put forth a lot of effort to keep precious metals (investment grade) away from the common man. And on another note, possession is 90% of the law so I rather have possession than a piece of paper saying I do.
thanks good info.
I also write about gold and silver. trying to get a precious metals community going here on steemit: https://steemit.com/silver/@hgmsilvergold/silver-and-gold-community
It's appreciated! Looked at the post and it sounds like a great plan!!
thanks. stay in touch for more info. imagine doing a post with a guaranteed 50 or 100 votes from the start?
Great comprehensive article. Upvoted and following you now.
I write about PMs on a daily basis. Feel free to check them out and follow.
Thanx 4 the support! About to check out your page and do the same!!
We need more like us sharing this information in the community
Awesome article, thanks for putting it together!
The praise is very much appreciated my friend
Invest in precious metals ? Okay I will invest in technical brutal death metal xDDDD...
Seriously, thanks for this good post ;p
As a fellow silver stacker / gold bug, I say AMEN. Love to follow fellow precious metal enthusiasts here on Steemit.
Thanks a million!