Is It Time To Invest in Gold And Silver?

invest in gold and silverInvest in gold and silver? Both precious metals had dramatic price pull-backs in mid-2013. As I write this, gold has edged back up into the $1350’s and silver to around $22.53 per troy ounce. I won’t go into all the reasons I believe these two precious metals have gone down in price from the 2011 highs, but rather, I’d like to consider the reasons to buy gold and silver now.

After literally spending years reading about buying gold and silver, I’ve come to a few simple conclusions. Central banks and central bankers control the money system. A handful of people around the world dictate how much paper (or digital) currency gets printed. As central banks around the world continue to print “money”, it becomes increasingly important for people to invest in real things such as income-producing real estate, which may be apartments, single-family rental homes, or farmland. I even consider real things to be intellectual property rights or domain names that produce income. Art and collectibles fit the bill, and I don’t think any list of real things would be complete without mentioning precious metals.

One reason to invest in gold and silver is for the metals to be used as “insurance policy” should there be a global financial meltdown or currency crisis in which there is either no access to paper currency or people/merchants no longer accept paper currency for their goods and services. If those outcomes are avoided and central banks around the world continue to print money, thereby decreasing the purchasing power of the dollar at some future point, reason number two to invest in gold and silver now is that the metals may at least stay steady (or rise) as the purchasing power of the dollar decreases. The third reason to purchase these two precious metals may be simply as a trade. Buy them when prices are low and sell when prices peak. There are some people that undoubtedly buy gold and silver because they consider the metals as real money which can’t simply be produced by the stroke of the keyboard.

There are a few things that could get me to rethink investing in gold and silver. One would be if our country begins to get its fiscal affairs in order by truly reducing the outstanding debt. And by reducing debt, I don’t mean playing tricks with the numbers by simply no longer including intra-governmental obligations as debt or eliminating the debt ceiling. If either of these are done, I’d take it as indication of desperation. Also, my understanding (check with your own tax advisor) is that the capital gains on precious metals are taxed at the same rate as for collectibles, which is at a higher level than many other investments. This capital gain tax rate already is unfair as few gold purchases have anything to do with it being “collectible.” Were capital gains tax rates hiked even higher, I’d have to reconsider investing in these two metals.

When gold and silver prices peaked, I had a number of people ask me what was the best way to invest in gold and silver. Now that prices have come off the 2011 highs, I haven’t had anyone approach me and ask how to purchase gold and silver. Folks, that doesn’t make any sense. You make money buying at lows and selling at highs. If I were an active buyer of gold and silver, I look at price dips as a gift and an opportunity to buy the metals. My view is that precious metals should be treated like stocks and bought little by little over time and dollar cost averaging. If it makes sense for investing in stocks, why wouldn’t the same strategy make sense for precious metals?

One of the books that was helpful in giving me a greater understanding of investing in gold and silver was Michael Maloney’s Guide to Investing in Gold & Silver. If you’re considering diversifying and want to own something real that won’t disappear overnight, here’s my affiliate link to Mr. Maloney’s website where you can purchase gold and silver. If gold is simply a barbarous relic with no intrinsic value, then why do the central banks, the very same banks that control the world money system, have stockpiles of gold? Why do so many countries have gold reserves or back their currencies with gold, at least in part?

As always, I’m by no means giving investment advice, but rather trying to showcase that other investment opportunities exist aside from just stocks and bonds. Personally, I believe having at least a small percentage of my assets stored safely (deposits boxes) in gold and silver seems to be a wise hedge against inflation and a prudent insurance policy. If you’re considering investing in gold and silver, I recommend reading more on the subject and seeking advise from a qualified investment advisor.

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