How Much Silver or Gold should you own???
I've been publishing this blog for a couple of years now. I've had mostly good reviews and comments from my readers. For that, I thank you all. But on a regular basis, I seem to get questions from people asking; "How Much Silver or Gold Should I Own"? That is a difficult question to answer. Mainly, because it depends on why you're buying silver and/or gold, and what you plan on doing with it. This post may be a little longer than normal, but I think it will be easy to read.
As I stated in my first post, and the title of this blog, there are many reasons to buy silver or gold. You can buy it because you believe that there's going to be an "Economic Armageddon". (Which is probably the reason most people asking me how much they should have, follow). You can also buy silver and gold to reduce debt. Example: Buy silver when it's low and when it goes to a set high mark you've set, sell it and take the profits and put it towards paying off that car loan, mortgage, credit card bill, etc. (Remember; I've always said that being debt free is the BEST INVESTMENT you can have. So always try to do that before investing in silver, gold, stocks, or anything else). Some buy silver and gold (And sell) similarly to paying down debt, but to purchase something at a discount. Example: I wanted to buy my wife a new car. But it's not something I HAD to buy right a way. So, when silver was in the $10-$12 price range, I bought about 100 ounces. I waited until it hit the $20-$25 range and I sold it. I basically bought her a new Toyota Rav4 ($24,000) for about $10,000 - $12,000 I bought the silver for. Of course, it's like any other investment. You don't know when the price will go up or down. So it's something you have to be willing to hold onto for a while
But for most people who ask "How Much Silver or Gold Should I Own", I'm pretty sure it's because they anticipate a financial crash that makes their currency worth much less. Probably also stock market crash that makes their other investments worth much less; including their retirement funds. There is some validity to this possibility, and I am not naive enough to believe that it couldn't ever happen. So basically, we're talking about: "How much INSURANCE should you have (Using Silver and Gold as the insurance)? That is the right question to ask. For a financial crash, that is the purpose of silver and gold. To be an "Insurance Policy" to help you through the difficult times.
This is one of the MAIN REASONS I am so hard core about being DEBT FREE. The thing about a Financial crash; either in Paper Currency or the Stock Market, it that it will affect many aspects of your life. It could cause hyperinflation, which could make the cost of food, clothing, utilities, rent, etc. 2, 3, 4X normal cost. It can also increase unemployment. Many employers won't be able to afford to keep their business running. And for those fortunate to still have a job, it could be quite a while before your pay check goes up to match the sudden change in the "Cost of Living". If all of a sudden, your food bill and utilities went up approximately $500-$1000 per month, could you handle this change? Some people can handle it. Many won't be able to. But if between now and then, you somehow ELIMINATED your mortgage, that alone would be able to cushion you for a major economic catastrophe. If you rent your home, then you could be looking at those prices rising too. Are you ready for that. This is why my #1 suggestion is ALWAYS to become "Debt Free". When you charge items on your credit card, do it ONLY FOR CONVENIENCE. If you don't pay off the balance 100% EACH MONTH, then you need to fix that first. If you have to charge because you can't afford it and are living paycheck to paycheck, then you need to get yourself a 2nd part time job at night or weekends. And you shouldn't be spending your money on silver and gold. The ONLY debt (Or money that you invest), should be on a Mortgage, possible car loan (Not a new $60,000 Lexus if you only make $50,000 per year), and some sort of contribution towards a retirement fund for you and your spouse for 20-40 years down the road. Any other debt, you need to end as soon as possible, and then eventually get rid of the mortgage and car loans. But if the mortgage and normal car type loan is all you have, then having some of your assets in Silver or Gold is a great idea.
OK, enough of that. Lets move on to how much silver or gold you should own. Assuming a mortgage and car loan is about all you're looking at having for large bills, you're looking for enough "Insurance" (Silver/Gold) to offset the inflation prices. In my opinion, that would be about $100,000 to $150,000 U.S. Dollars. (I'll explain how much silver this needs to be in a moment). First, how did I come up with this number? Basically, I figured the inflationary price, because the paper currency would be almost worthless, would add approximately $500-$1000 PER MONTH to your existing "Cost of Living". And because MOST economic cycles go through an approximately 7 year cycle, $100,000 - $150,000 would eliminate all of your debt and augment your current income for 7-10 years. (If you look at historic data on deflation, inflation, recessions, etc... it goes up and down through 7-8 year cycles). So, $100,000 - $150,000 should get you through the tough times until things stabilize. I could add a bunch of fancy charts, but I'd rather save you time reading. Obviously, if you are preparing for the possibility that you'll still have a mortgage and possibly lose your job, then you will need more. Also; this would be for the average family who make a combined income of $50,000 - $100,000 per year. If you make much less than this, chances are you have very little to invest in silver or gold. If you make considerably more than $100,000; then you might want to think of having more in value than the $100,000 - $150,000 Insurance. My children are grown up and have moved on. My wife and I make above the $100,000 per year income. But we have no mortgage or loans. We are 100% debt free. So for me, I use the $100K - $150K Insurance.
The reason for this amount of "Insurance", is because with all economic ups and down, most times it will correct itself. This next time however, is different than many times in the past. In past recessions and economic trials, countries weren't sitting on almost $20 TRILLION dollars in debt; like the United States is. But what's important, is that we want our assets, such as our house, retirement funds, etc. to NOT BE LIQUIDATED. They may not be worth as much; possibly a fraction. But it still has worth, and in time, will come back around. We don't want to have to sell our home; refinance it; take equity loans; empty our 401K or retirement account. Then, when the economic difficulties start to clear, we'll be in a point in our life with little to nothing to help us through our retirement years. So, having a hedge of $100,000 - $150,000 that can eliminate any debt we have and to augment our income to get through the tough times, will help us greatly. Some may think that if food, clothes, utilities, etc all go up in price, then so would the value of our homes. That it becomes a great investment. And if it's paid off, then we'll be set financially. If your $150K home is now worth $300K, that sounds great. Except the only way to get that money is to sell the house. You'll wind up spending almost all of what you sold it for, to buy another house. You have to live some place. And if you down size, you'll spend the rest of the equity on living expenses. Again, that's what INSURANCE IS FOR. That's why if you're buying silver for these types of economic times, you should look at it as INSURANCE.
Ok.... So now that I've explained how much "CASH/MONEY/CURRENCY", etc. you probably will need to get through those times, how much silver or gold will that be? I will be the first to say that my answer here is pure speculation. But that speculation is based on what silver/gold use to be able to purchase when it WAS MONEY. Also, how silver and gold have been suppressed and manipulated and where the price SHOULD BE today. You've heard some say that the silver to gold ratio use to be about 16:1. (16 ounces of silver would buy 1 ounce of gold). It use to be, but a lot has changed over the last couple of thousand years. The biggest change was that the Dollar was taken off of the "Gold Standard". Plus, with Oil, energy, modern technology, and the use of silver for industrial purposes, the actual 16:1 ratio doesn't seem to be hard and fast. In my research and prophecy, I would say that the ratio should probably be closer to 30:1. With that in mind, and with gold almost hitting $2000 a couple years ago and Silver around $50, that was a 40:1 ratio. Keeping in mind that the economy wasn't all that bad, (Just a stock market crash and unemployment rates up), I could easily see the price of gold during a REAL Economic Armageddon, going to between $10,000 and $15,000 an ounce. That's only about 5X more than it was a couple years ago. Silver would be in the $300 and $500 an ounce range. That would get it to the 40:1 - 30:1 ratio. I think this is a very reasonable and accurate prediction. Maybe even a little conservative. We're talking about an economic break down where the "Fiat Currency" isn't worth anything. Example: WWII When Nazi Germany citizens needed a wheelbarrow full of German Marks to buy some groceries.
DRUM ROLL PLEASE......................... I recommend approximately 500 - 1000 ounces of silver. I would actually lean MORE TOWARDS THE LOWER END. (500 ounces). At $300 an ounce, that would be about $150,000. If the price of silver is closer to the $500 an ounce, you'll be in even better shape. Even if it only made it to $100 an ounce, (Which most people believe it's going to reach that even without economic or currency problems), that would leave you $50,000; which could still help you out for at least 3-4 years. But based on "Manipulation" and a bad ratio, silver should currently be at $45 an ounce. That's with gold holding at $1280 an ounce like today. So $100 is a no brainer for silver. Under economic or financial/currency failure, gold will easily reach past $10,000 and silver will easily reach $300. So this is why I recommend 500 ounces. Any combination. rounds, bars, 90% change, etc. I would stay away from larger than 10 ounce pieces if you can. It will be too difficult to "Make Change" for day to day purchases. You can also mix and match some gold. Me personally, I've had my 500 ounces of silver for a while. Even though most of my silver is for the other reasons I post about, I've kept about 400-500 ounce of silver for if the "Shit Hits the Fan". Of the 400-500, I usually keep about $100 face value of 90% silver. I also keep about 2-3 ounces in gold. Mind you, I didn't buy all this silver at one time. I have some silver I bought at $15 an ounce and some I've bought when it was $36 and ounce. My average for this 500 ounces I have, is probably in the $27-$28 an ounce range. So that's probably around $13,000 - $14,000 to purchase the silver. Today, all at once, the price would only be about $9,000 to buy 500 ounces of silver.
Now, does this sound like a lot? Well; in today's exchange rate, 500 ounces of silver would cost you about $9,000. But unlike other types of insurance, like LIFE or AUTO insurance, you don't lose ANY of your premium. When you buy term life insurance; you lose all the premiums if you don't die. If you don't make a claim on your car from an accident, you lose all those premium payments too. But when you buy silver and gold, you'll NEVER LOSE IT!!! A $20 gold piece 100 years ago, would buy you almost exactly what a $25 (1/2 ounce gold eagle) will buy you today. Today, that's about $650. A really nice suit. Point is; the VALUE of what the gold or silver will buy you, will always be there. You can always sell the silver or gold later if you ever want to get rid of it and don't think there will be an economic or financial Armageddon. You can leave it for your kids if you think they may find themselves in such an economy. You can change the PURPOSE of holding the silver, and sell it and use the profit to pay off debt, but items at a reduced price, supplement your retirement, etc. You can't do any of this with OTHER INSURANCE like Term Life or automobile Insurance. You don't need it...... you lose. So even though I'm not a big promoter of economic Armageddon, there's nothing wrong with preparing for such a possibility. You can always change the reason for the silver later. The so called PREPPERS and SURVIVALISTS will invest everything they have in food, water, guns, ammo, medical supplies, silver, gold, etc... The difference is, they believe that the "Armageddon" WILL happen. Guaranteed. So for them, they'll never sell their silver or gold. EVER!!! They've cycle through their food and water. But they'll keep STACKING. I shouldn't say NEVER. When they get to the age where they no longer have an INCOME so they can BUY MORE silver, gold, food, guns, ammo, etc... which can be very expensive; I anticipate they'll have to start selling some of these things just to supplement their income.
I hope this has answered the question that so many have had for me. Post a comment on the blog if you'd like. I'd say that 500 ounces of silver is a good amount. If you happen to be quite wealthy, compared to others, you may feel more comfortable having 1000 ounces on hand. Remember, this is NOT the silver I buy to REDUCE DEBT, to PURCHASE ITEMS CHEAPLY, or as an INVESTMENT. That is totally separate. I'm speaking strictly of silver or gold as an INSURANCE POLICY against Currency/Economic collapse or economic Armageddon. And remember; even during an economic catastrophe, the BEST Insurance is to be DEBT FREE. If you have no mortgage payment; no car payment; lose your job; and most of your savings...... You can always find enough side jobs and yard sales to buy food and keep the utilities on. But you can't just supplement a $1000 - $1500 monthly mortgage payment. Even an $800 a month mortgage could be difficult. If you believe you may very well still have a mortgage to contend with, then lean towards the 1000 ounce mark. If you won't have a mortgage, then lean more towards the 500 ounce mark. Of course, the final decision is all yours. Take care. CYA: SE
As I stated in my first post, and the title of this blog, there are many reasons to buy silver or gold. You can buy it because you believe that there's going to be an "Economic Armageddon". (Which is probably the reason most people asking me how much they should have, follow). You can also buy silver and gold to reduce debt. Example: Buy silver when it's low and when it goes to a set high mark you've set, sell it and take the profits and put it towards paying off that car loan, mortgage, credit card bill, etc. (Remember; I've always said that being debt free is the BEST INVESTMENT you can have. So always try to do that before investing in silver, gold, stocks, or anything else). Some buy silver and gold (And sell) similarly to paying down debt, but to purchase something at a discount. Example: I wanted to buy my wife a new car. But it's not something I HAD to buy right a way. So, when silver was in the $10-$12 price range, I bought about 100 ounces. I waited until it hit the $20-$25 range and I sold it. I basically bought her a new Toyota Rav4 ($24,000) for about $10,000 - $12,000 I bought the silver for. Of course, it's like any other investment. You don't know when the price will go up or down. So it's something you have to be willing to hold onto for a while
But for most people who ask "How Much Silver or Gold Should I Own", I'm pretty sure it's because they anticipate a financial crash that makes their currency worth much less. Probably also stock market crash that makes their other investments worth much less; including their retirement funds. There is some validity to this possibility, and I am not naive enough to believe that it couldn't ever happen. So basically, we're talking about: "How much INSURANCE should you have (Using Silver and Gold as the insurance)? That is the right question to ask. For a financial crash, that is the purpose of silver and gold. To be an "Insurance Policy" to help you through the difficult times.
This is one of the MAIN REASONS I am so hard core about being DEBT FREE. The thing about a Financial crash; either in Paper Currency or the Stock Market, it that it will affect many aspects of your life. It could cause hyperinflation, which could make the cost of food, clothing, utilities, rent, etc. 2, 3, 4X normal cost. It can also increase unemployment. Many employers won't be able to afford to keep their business running. And for those fortunate to still have a job, it could be quite a while before your pay check goes up to match the sudden change in the "Cost of Living". If all of a sudden, your food bill and utilities went up approximately $500-$1000 per month, could you handle this change? Some people can handle it. Many won't be able to. But if between now and then, you somehow ELIMINATED your mortgage, that alone would be able to cushion you for a major economic catastrophe. If you rent your home, then you could be looking at those prices rising too. Are you ready for that. This is why my #1 suggestion is ALWAYS to become "Debt Free". When you charge items on your credit card, do it ONLY FOR CONVENIENCE. If you don't pay off the balance 100% EACH MONTH, then you need to fix that first. If you have to charge because you can't afford it and are living paycheck to paycheck, then you need to get yourself a 2nd part time job at night or weekends. And you shouldn't be spending your money on silver and gold. The ONLY debt (Or money that you invest), should be on a Mortgage, possible car loan (Not a new $60,000 Lexus if you only make $50,000 per year), and some sort of contribution towards a retirement fund for you and your spouse for 20-40 years down the road. Any other debt, you need to end as soon as possible, and then eventually get rid of the mortgage and car loans. But if the mortgage and normal car type loan is all you have, then having some of your assets in Silver or Gold is a great idea.
OK, enough of that. Lets move on to how much silver or gold you should own. Assuming a mortgage and car loan is about all you're looking at having for large bills, you're looking for enough "Insurance" (Silver/Gold) to offset the inflation prices. In my opinion, that would be about $100,000 to $150,000 U.S. Dollars. (I'll explain how much silver this needs to be in a moment). First, how did I come up with this number? Basically, I figured the inflationary price, because the paper currency would be almost worthless, would add approximately $500-$1000 PER MONTH to your existing "Cost of Living". And because MOST economic cycles go through an approximately 7 year cycle, $100,000 - $150,000 would eliminate all of your debt and augment your current income for 7-10 years. (If you look at historic data on deflation, inflation, recessions, etc... it goes up and down through 7-8 year cycles). So, $100,000 - $150,000 should get you through the tough times until things stabilize. I could add a bunch of fancy charts, but I'd rather save you time reading. Obviously, if you are preparing for the possibility that you'll still have a mortgage and possibly lose your job, then you will need more. Also; this would be for the average family who make a combined income of $50,000 - $100,000 per year. If you make much less than this, chances are you have very little to invest in silver or gold. If you make considerably more than $100,000; then you might want to think of having more in value than the $100,000 - $150,000 Insurance. My children are grown up and have moved on. My wife and I make above the $100,000 per year income. But we have no mortgage or loans. We are 100% debt free. So for me, I use the $100K - $150K Insurance.
The reason for this amount of "Insurance", is because with all economic ups and down, most times it will correct itself. This next time however, is different than many times in the past. In past recessions and economic trials, countries weren't sitting on almost $20 TRILLION dollars in debt; like the United States is. But what's important, is that we want our assets, such as our house, retirement funds, etc. to NOT BE LIQUIDATED. They may not be worth as much; possibly a fraction. But it still has worth, and in time, will come back around. We don't want to have to sell our home; refinance it; take equity loans; empty our 401K or retirement account. Then, when the economic difficulties start to clear, we'll be in a point in our life with little to nothing to help us through our retirement years. So, having a hedge of $100,000 - $150,000 that can eliminate any debt we have and to augment our income to get through the tough times, will help us greatly. Some may think that if food, clothes, utilities, etc all go up in price, then so would the value of our homes. That it becomes a great investment. And if it's paid off, then we'll be set financially. If your $150K home is now worth $300K, that sounds great. Except the only way to get that money is to sell the house. You'll wind up spending almost all of what you sold it for, to buy another house. You have to live some place. And if you down size, you'll spend the rest of the equity on living expenses. Again, that's what INSURANCE IS FOR. That's why if you're buying silver for these types of economic times, you should look at it as INSURANCE.
Ok.... So now that I've explained how much "CASH/MONEY/CURRENCY", etc. you probably will need to get through those times, how much silver or gold will that be? I will be the first to say that my answer here is pure speculation. But that speculation is based on what silver/gold use to be able to purchase when it WAS MONEY. Also, how silver and gold have been suppressed and manipulated and where the price SHOULD BE today. You've heard some say that the silver to gold ratio use to be about 16:1. (16 ounces of silver would buy 1 ounce of gold). It use to be, but a lot has changed over the last couple of thousand years. The biggest change was that the Dollar was taken off of the "Gold Standard". Plus, with Oil, energy, modern technology, and the use of silver for industrial purposes, the actual 16:1 ratio doesn't seem to be hard and fast. In my research and prophecy, I would say that the ratio should probably be closer to 30:1. With that in mind, and with gold almost hitting $2000 a couple years ago and Silver around $50, that was a 40:1 ratio. Keeping in mind that the economy wasn't all that bad, (Just a stock market crash and unemployment rates up), I could easily see the price of gold during a REAL Economic Armageddon, going to between $10,000 and $15,000 an ounce. That's only about 5X more than it was a couple years ago. Silver would be in the $300 and $500 an ounce range. That would get it to the 40:1 - 30:1 ratio. I think this is a very reasonable and accurate prediction. Maybe even a little conservative. We're talking about an economic break down where the "Fiat Currency" isn't worth anything. Example: WWII When Nazi Germany citizens needed a wheelbarrow full of German Marks to buy some groceries.
DRUM ROLL PLEASE......................... I recommend approximately 500 - 1000 ounces of silver. I would actually lean MORE TOWARDS THE LOWER END. (500 ounces). At $300 an ounce, that would be about $150,000. If the price of silver is closer to the $500 an ounce, you'll be in even better shape. Even if it only made it to $100 an ounce, (Which most people believe it's going to reach that even without economic or currency problems), that would leave you $50,000; which could still help you out for at least 3-4 years. But based on "Manipulation" and a bad ratio, silver should currently be at $45 an ounce. That's with gold holding at $1280 an ounce like today. So $100 is a no brainer for silver. Under economic or financial/currency failure, gold will easily reach past $10,000 and silver will easily reach $300. So this is why I recommend 500 ounces. Any combination. rounds, bars, 90% change, etc. I would stay away from larger than 10 ounce pieces if you can. It will be too difficult to "Make Change" for day to day purchases. You can also mix and match some gold. Me personally, I've had my 500 ounces of silver for a while. Even though most of my silver is for the other reasons I post about, I've kept about 400-500 ounce of silver for if the "Shit Hits the Fan". Of the 400-500, I usually keep about $100 face value of 90% silver. I also keep about 2-3 ounces in gold. Mind you, I didn't buy all this silver at one time. I have some silver I bought at $15 an ounce and some I've bought when it was $36 and ounce. My average for this 500 ounces I have, is probably in the $27-$28 an ounce range. So that's probably around $13,000 - $14,000 to purchase the silver. Today, all at once, the price would only be about $9,000 to buy 500 ounces of silver.
Now, does this sound like a lot? Well; in today's exchange rate, 500 ounces of silver would cost you about $9,000. But unlike other types of insurance, like LIFE or AUTO insurance, you don't lose ANY of your premium. When you buy term life insurance; you lose all the premiums if you don't die. If you don't make a claim on your car from an accident, you lose all those premium payments too. But when you buy silver and gold, you'll NEVER LOSE IT!!! A $20 gold piece 100 years ago, would buy you almost exactly what a $25 (1/2 ounce gold eagle) will buy you today. Today, that's about $650. A really nice suit. Point is; the VALUE of what the gold or silver will buy you, will always be there. You can always sell the silver or gold later if you ever want to get rid of it and don't think there will be an economic or financial Armageddon. You can leave it for your kids if you think they may find themselves in such an economy. You can change the PURPOSE of holding the silver, and sell it and use the profit to pay off debt, but items at a reduced price, supplement your retirement, etc. You can't do any of this with OTHER INSURANCE like Term Life or automobile Insurance. You don't need it...... you lose. So even though I'm not a big promoter of economic Armageddon, there's nothing wrong with preparing for such a possibility. You can always change the reason for the silver later. The so called PREPPERS and SURVIVALISTS will invest everything they have in food, water, guns, ammo, medical supplies, silver, gold, etc... The difference is, they believe that the "Armageddon" WILL happen. Guaranteed. So for them, they'll never sell their silver or gold. EVER!!! They've cycle through their food and water. But they'll keep STACKING. I shouldn't say NEVER. When they get to the age where they no longer have an INCOME so they can BUY MORE silver, gold, food, guns, ammo, etc... which can be very expensive; I anticipate they'll have to start selling some of these things just to supplement their income.
I hope this has answered the question that so many have had for me. Post a comment on the blog if you'd like. I'd say that 500 ounces of silver is a good amount. If you happen to be quite wealthy, compared to others, you may feel more comfortable having 1000 ounces on hand. Remember, this is NOT the silver I buy to REDUCE DEBT, to PURCHASE ITEMS CHEAPLY, or as an INVESTMENT. That is totally separate. I'm speaking strictly of silver or gold as an INSURANCE POLICY against Currency/Economic collapse or economic Armageddon. And remember; even during an economic catastrophe, the BEST Insurance is to be DEBT FREE. If you have no mortgage payment; no car payment; lose your job; and most of your savings...... You can always find enough side jobs and yard sales to buy food and keep the utilities on. But you can't just supplement a $1000 - $1500 monthly mortgage payment. Even an $800 a month mortgage could be difficult. If you believe you may very well still have a mortgage to contend with, then lean towards the 1000 ounce mark. If you won't have a mortgage, then lean more towards the 500 ounce mark. Of course, the final decision is all yours. Take care. CYA: SE
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