Silver vs Gold? Which should I buy?
Howdy folks. I received another email from a reader wondering if he should be buying silver or gold. He read my previous posts, but admits to being still a little confused on the subject. So, I'm going to go against my norm of writing lengthy blog posts, and try and make this "Short and Sweet".
I always recommend diversifying, which also means buying both silver and gold when it comes to the metals. HOWEVER..... it shouldn't be an equal split of ounces or of dollars. The Silver to Gold ratio is STILL OVER 70 to 1. That means, you need 70+ ounces of silver, for every ounce of gold. Why is this important? Simple. Throughout history, the ratio has been around 15 or 20 to one. If we only look at the last hundred years, even with the USA being taken off of the gold standard and no longer including silver in their money after 1964, the ratio still averaged around 40 to 1. That means today, at the least, with say a $1200 an ounce gold price, silver should be around $30 an ounce. At historical ratios, it should be closer to $60-$70 an ounce.
Silver is very under-valued. That is why you should be buying silver vs gold. Some might argue that, maybe silver is where it should be, and gold is over-valued and should be closer to the $650-$700. Let's say they're right. That's another reason NOT TO BUY GOLD. You could buy at $1200 and it could drop down to almost half. So, no matter which way you look at it, Silver should be your choice.
That's not to say you shouldn't own any gold. Just don't make gold part of your "HEDGE" fund for why we buy silver. Remember, you can buy silver and gold for many reasons. Many buy as a hedge against inflation and to preserve their wealth. Some buy in case of a crash with the fiat paper currencies and/or a crash in the stock market. Some go as far as buying in anticipation of economic Armageddon. Either way, it's ok to buy gold; just not in proportion. Make silver your #1 purchase. If you want to buy gold, buy it for a different reason. Example: If you're buying silver for your hedge and to preserve wealth, then maybe every once in a while you can buy 1/10th ounce or 1/4 ounce of gold as part of your Armageddon or Fiat currency crash fund.
But if you have your 500 ounces of silver that I recommend; (1000 ounces for those more well off or needing to protect more assets); then you probably don't need any more than say 3-4 ounces of gold. (7-8 ounces if you have 1000 ounces of silver). Obviously, this is a 125 to 1 ratio, but that's ok. If you traded silver today for gold, it would cost approximately 72 silver coins to get 1 gold coin. If the ratio dropped back to 36 to 1, you would be able to get twice the amount of gold, or use half the amount of silver to get gold. In other words, storing your silver is flexible. You can trade it later for currency; trade it for labor or materials; food; clothing; ammunition; etc. You can also trade some for gold. And guess what????? If the time comes, there will be some who want to trade. Why? Because it's hard to walk into a supermarket and get a loaf of bread, milk, eggs, and toilet paper worth $30 (Assume hyper inflation economic crash), using a 1 ounce gold coin worth $10,000 and expect to get change back. Some people will want some silver because the denomination is easier to work with. (Another reason I tell people to buy silver over gold). But the gold holders, will easily take 20-25 silver ounces for a 1 ounce gold coin. They need something spendable.
So don't worry too much about gold. Get silver. if you already have a couple ounces of silver, go ahead and throw in an ounce of gold here and there. Especially if you can get fractional pieces for the same percentage price. E.g. 1 ounce gold coin might be $1200 but a quarter ounce gold coin could cost you $350-$400. Be careful. And sorry got not making this as short as I wanted to.
CYA: SE:
I always recommend diversifying, which also means buying both silver and gold when it comes to the metals. HOWEVER..... it shouldn't be an equal split of ounces or of dollars. The Silver to Gold ratio is STILL OVER 70 to 1. That means, you need 70+ ounces of silver, for every ounce of gold. Why is this important? Simple. Throughout history, the ratio has been around 15 or 20 to one. If we only look at the last hundred years, even with the USA being taken off of the gold standard and no longer including silver in their money after 1964, the ratio still averaged around 40 to 1. That means today, at the least, with say a $1200 an ounce gold price, silver should be around $30 an ounce. At historical ratios, it should be closer to $60-$70 an ounce.
Silver is very under-valued. That is why you should be buying silver vs gold. Some might argue that, maybe silver is where it should be, and gold is over-valued and should be closer to the $650-$700. Let's say they're right. That's another reason NOT TO BUY GOLD. You could buy at $1200 and it could drop down to almost half. So, no matter which way you look at it, Silver should be your choice.
That's not to say you shouldn't own any gold. Just don't make gold part of your "HEDGE" fund for why we buy silver. Remember, you can buy silver and gold for many reasons. Many buy as a hedge against inflation and to preserve their wealth. Some buy in case of a crash with the fiat paper currencies and/or a crash in the stock market. Some go as far as buying in anticipation of economic Armageddon. Either way, it's ok to buy gold; just not in proportion. Make silver your #1 purchase. If you want to buy gold, buy it for a different reason. Example: If you're buying silver for your hedge and to preserve wealth, then maybe every once in a while you can buy 1/10th ounce or 1/4 ounce of gold as part of your Armageddon or Fiat currency crash fund.
But if you have your 500 ounces of silver that I recommend; (1000 ounces for those more well off or needing to protect more assets); then you probably don't need any more than say 3-4 ounces of gold. (7-8 ounces if you have 1000 ounces of silver). Obviously, this is a 125 to 1 ratio, but that's ok. If you traded silver today for gold, it would cost approximately 72 silver coins to get 1 gold coin. If the ratio dropped back to 36 to 1, you would be able to get twice the amount of gold, or use half the amount of silver to get gold. In other words, storing your silver is flexible. You can trade it later for currency; trade it for labor or materials; food; clothing; ammunition; etc. You can also trade some for gold. And guess what????? If the time comes, there will be some who want to trade. Why? Because it's hard to walk into a supermarket and get a loaf of bread, milk, eggs, and toilet paper worth $30 (Assume hyper inflation economic crash), using a 1 ounce gold coin worth $10,000 and expect to get change back. Some people will want some silver because the denomination is easier to work with. (Another reason I tell people to buy silver over gold). But the gold holders, will easily take 20-25 silver ounces for a 1 ounce gold coin. They need something spendable.
So don't worry too much about gold. Get silver. if you already have a couple ounces of silver, go ahead and throw in an ounce of gold here and there. Especially if you can get fractional pieces for the same percentage price. E.g. 1 ounce gold coin might be $1200 but a quarter ounce gold coin could cost you $350-$400. Be careful. And sorry got not making this as short as I wanted to.
CYA: SE:
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