3 Reasons to Buy Gold and Silver in Today’s Economy
Wednesday, May 18, 2016, 6:00 AM | Leave Comment
Investors and non-investors frequently ask why they should buy gold and silver. It makes sense that they are asking me this question; after all, gold and silver don’t have any dividend yields, so it would seem like it would be a waste of money to hold on to them whenever other investments do have yield.
Still, there are a plethora of reasons to own gold and silver. Here are three of the top reasons why we believe that everyone should own a little bit.
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It is Financial Insurance
Now, we’re not going to go all gloom and doom here, but it is absolutely true that gold and silver serve as financial insurance against paper currencies. In history past, every fiat currency (paper money civilization) has had a 100% fail rate. As a result, it is wise to hold gold and silver because it serves as a store of value.
In other words, if you see the price of gold or silver going up…it’s not because they are suddenly worth more. Rather, the value of paper dollars are going down relative to gold and silver. They are losing value. So, gold and silver, which store value, increase relative to paper money.
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In Volatile Markets, Metals outperform
As Zero Hedge, an Internet follower of metals markets, so adequately points out, metals have been surging this year on account of shaky markets and the shaky US dollar.
While metals aren’t actually investments, since they have no yield, they do tend to perform like an investment class whenever the markets look volatile. For example, if you had bought silver at December’s lows of 13.70 per ounce, you would be sitting on a 127% gain on the year right now since silver is now at $17.54 per ounce.
This gain has been largely attributed to the sell-off in global markets at the beginning of the year and continued downward pressure on the US dollar.
So, metals can serve as a nice investment class when things look scary.
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Metals Will ALWAYS Have a Buyer
At times, companies go bankrupt. During these times, many stock owners for those companies find that there is no buyer for their shares. Their investment has become illiquid overnight.
For many countries, their currency becomes so devalued that nobody even wants it anymore, since it is no longer good for anything. Take the Zimbabwean trillion dollar bill as a perfect modern day example of dollars without “buyers”.
However, gold and silver always have a buyer. Since they serve as the perfect store of value, they are always liquid.
Many buyers, such as Rocky Mountain Coins, local jewelry shops, and other locations are always willing to buy gold and silver on demand.
If you don’t already own any gold or silver, now is the time to get started. As a general rule of thumb, many financial advisors recommend that individuals put between 6-10% of their yearly income into the two metals every year. Sound money…sound advice!
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