Historically, precious metals have been the go-to investment for hedging your bets during economically uncertain times. Gold and silver are the main precious metals, the commodities where all investors turn when seeking to build a stable portfolio during unstable times.
Gold doesn’t just make great jewelry. It has been used as a currency for thousands of years and in modern times it is hoarded and valued more than any other metal. Since 1971 and the end of the Bretton Woods Accords (1946-1971), the dollar’s value is no more indexed to a quantity of gold, and no country today has its currency based on gold. When you look at the many different paper currencies that have existed in the past, it is interesting to note that none of those currencies (non-convertible to tangible assets) have survived, whereas gold has always been there.
As the saying goes, “If I had to choose between trusting politicians and trusting gold, it’ll always be gold”. Physical gold may be a great investment, but it’s also a value preserver, a protection against money devaluation. Since 1980, the rate of inflation has been higher than 11% a year. Unfortunately, nothing yields anything close to 11% interest anymore. The aim of the game is not so much earning money, but rather protecting what you already have and guarding against future inflation.
- Since 2002, the price of gold has increased between 15% and 20% every year.
- In 2011, stocks fell between 1% and 24%, while gold gained over 20%.
- If melted down, all the gold in the world would fit into a 20 square meter room.
As for silver, it has a few more merits. Its safe-haven status and the fact that it’s also an industrial commodity, means that even if humans stopped placing an investment value on it, it would still have a huge practical value. About 95% of demand for silver comes from industry, and most of the silver used in industrial applications can never be recovered. Only 5% of the demand for silver comes from investors, but this number is growing. Silver is often called “Poor Man’s Gold”, because it is so much more affordable, but many investors see silver as a much more stable and profitable investment opportunity than gold.
Gold and Silver are both worthwhile investments. It’s up to you to decide which is right for you. Gold is probably a more reliable investment, but silver has unlimited potential. Many precious metal investors like to split their investments between gold and silver, getting the best from both worlds.
Physical Gold, ETFs, Junior Miners, Major Miners and Explorers — What’s the Best Way to Invest in Gold and Silver?
Physical gold and silver (coins and ingots) is the safest way to invest in precious metals. Stock markets are unstable in this day and age. They do not offer real value and fluctuate with political discourse. If another market crash happens (and many think it will), mining stocks will crash as well. ETFs are only paper gold issued by the banks and, in the event of a major crisis, you cannot be assured that the banks will actually deliver your physical gold, or even that they have it in their vault in the first place.
Don’t forget, the most recent global financial crises was caused by the banks, so when it comes to safeguarding your money, why would you trust them and their tarnished reputation?
We don’t recommend that you buy coins or ingots and store them in a bank. Should you decide to invest in gold for less than 20,000 euros, store it at home. For bigger investments, there are many companies based outside of the banking system that will store your gold and silver securely.
Do your research. Buy at a reasonable price. Don’t worry about short-term fluctuations, sit tight and focus on long-term security, and on reaping the benefits of your gold bullion investment.