Silver and Gold are not investments

Hey friends, it's been a long time. Sorry about that. I've had a couple of deaths in the family and I've been quite busy with higher priorities. But I'm back. I recently retired from working, so I'll be spending a lot more time on my blog and spreading the word about the state of silver and gold.

So.... let me clarify the title of this blog post. There are many reasons for people to exchange their currency for silver or gold. And yes, as an investment can be one of those reasons, but I would advise against that. Why? Because that's not what silver and gold are for. In the last 10 years, it's only averaged a gain of about 3% annually. The stock market averaged around 12%. There are much better places to "Invest" money. However, if you've done a lot of historical research on silver and gold, and you anticipate that the "Exchange Rate" to cash will go up dramatically, then you could look at it as a potential investment in the short period.

Notice I said "Exchange Rate". I didn't say if you "BUY" silver or gold. Silver and Gold ARE REAL MONEY. They are the ONLY TRUE forms of money out there. The dollar, pound, euro, etc. is simply a piece of paper backed by your faith in the government. Paper currency, or as some may refer to it as "Fiat Currency" is subject to inflation and affects your buying power.

So, while there are many reasons people possess silver and gold, the main reason for acquiring silver or gold is: PRESERVATION OF WEALTH.

Preservation of wealth: This means that you are holding onto something that has a certain purchasing power at the time of acquiring, and will pretty much have the same purchasing power in the future. Unlike paper currency, the purchasing power of $100 today will most times not allow you to buy the same amount of goods in the future for that same $100. But that 1 ounce of gold or silver will most times still have the same purchasing power years from now that it does today. Example. In 1964 (When US dollar, half, quarter, dime coins were made of silver) if you had $2700 in say silver dollars or quarters, you could buy a brand new Ford Mustang car. Price was about $2700. So you saved you quarters, half dollars, and dollar coins from all your paper routes and odd jobs to save to buy the new car. You friend, did the same thing, except he didn't want all that change, so he saved his $2700 in paper dollars. No problem right? You both can go buy this new car. On your way to the dealership, you get into an accident and you both are in a coma. The coma lasts around 50 years. You both miraculously wake up from the coma. After getting your thoughts together, you realize you were on your way to the car dealership to go buy a car. Do you think your friend can buy a NEW CAR for $2700 in cash? No..... I doubt that very much. You on the other hand, have $2700 in quarters, dimes, half dollars, and dollars, Because of normal wear and tear on coins, some get worn down. But a $1 worth of 1964 and prior coins have roughly 0,7 ounces of silver in it. The rest being copper. So, your $2700 in change, has about 1890 ounces of silver in it. At $20 an ounce (To be conservative), that means you have $37,800 in dollars. Can you buy a new car for $37,800??? Yes, most definitely. Put it this way. In 1910, you could buy a really nice lunch for a dollar. A silver dollar. Morgan dollar. Today, that morgan silver dollar would be worth about $20-$25. You can STILL buy a decent lunch for that amount. Get where I'm going. Silver and Gold are PRESERVATION OF WEALTH. In the short term, it can go up or down vs the current purchasing power of paper currency, but in the long run, you will maintain your purchasing power. Meaning, while technically it's not making interest, the fact is, it is. It's keeping up with normal inflation. Whereas, if you kept paper currency under your mattress, or just as bad in a savings account making 0.01% interest, your money would LOSE purchasing power. So silver and gold are a preservation of wealth.

This preservation of wealth makes for a GREAT RETIREMENT PLAN for the future. If you've read any of my past blog posts, you know I am not opposed to 401k, IRA's, and other investments and retirement plans. I simply believe you need to be well rounded. An economy is broken into many facets that affects it. Inflation, unemployment, consumer confidence, national debt, national deficit spending, etc. There are many avenues for assets. Stocks, bonds, cash (bank, CD, money market, etc.), real estate, crypto, etc. There are many places to put assets. The CASH category is an area where I group silver and gold into. Remember, you're simply EXCHANGING one CURRENCY for another CURRENCY. No different than exchanging dollars for euros or yen. It's just that silver and gold are currencies that preserve their purchasing power. They move WITH the economy. If there's inflation and prices go up, history shows that silver and gold will meet that inflation to preserve the purchasing power. If deflation kicks in and prices for goods and services go down, the purchasing power of silver and gold will match it. Obviously it's not instantaneously, but it will in time. This has been proven throughout history. ALL HISTORY. ALL CIVILIZATIONS. 

So, people look today at CD's and other SAFE INVESTMENTS and they are starting to get happy because these CD's are starting to get around 3% again. The USUAL rate of inflation. The last couple of years, they were in the 1-2% range. Sometimes lower. Exchanging for silver and gold is like having not a 12 month, or 24 month, or 36 month 3-4% CD, but like having a 3-4% as LONG AS YOU WANT IT. 5 years, 10 years, 20 years, etc. Because it will keep up with inflation. 

So yes, you can exchange for silver or gold as an investment. When silver $10 an ounce back around 2006-2008 I KNEW that the price was WAY TOO LOW. Even for the current economy. It was obvious that it was being manipulated. There's a lot of reasons, but that's for another post to discuss. Yes, if you go back further in history, you'll see that the average price between 1994 and 2004 was about $5-$7. But a lot of things happened around 2004 to correct and change things. Again; that's for another post. Anyway, I KNEW the price could not go back down. There's a certain silver to gold ratio that had been manipulated and silver was being suppressed. And with silver becoming a BIG TIME INDUSTRIAL REQUIRED COMMODITY, it had to go up. So, if a person bought quite a bit when it was around $10 an ounce. they would be able to use that silver a couple years later to purchase say a vehicle. By then the price of silver had almost doubled. Thus, a person could theoretically buy a $20,000 vehicle for say $10,000 if they bought that much silver. The point is, silver and gold can be used as an investment, but you're taking the same risk you do with the stock market. And when the stock market AVERAGES 12% over a 10-20 year period, it is a much better "Investment" than silver and gold. Unfortunately, investments in one year, can lose 5+ years worth of gain. For a 401k or IRA holder who has time on their side before retiring, (Like I did in 2008 when the market got crushed), my investments bounced back within a couple of years. And with my still contributing to my 401k (at much lower prices) I gained back all my losses and pulled ahead within just 4-5 years. But people who were retiring then or had already and was living on their investments, got hurt bad. Value was down 30-40% and they weren't adding to it; just taking out each month. Silver and gold doesn't have that problem.

So, my suggestion is, and has always been DIVERSITY. If you are working and in your 30s-40s then definitely have a 401k or IRA or similar long term retirement fund. Have an emergency cash fund to pay for a broken car, water heater, etc. Your BEST INVESTMENT is to be DEBT FREE. Pay off ALL car loans and don't use credit cards unless you can pay the balance off 100% each month. And gradually build up a stack of silver and gold. I maintain that you should have, depending on your lifestyle and income, between 500-1000 ounces of silver and between 10-20 ounces of gold. This doesn't mean to exchange it all for dollars today. It means to exchange dollars for silver a gold a little each month. And over time accumulate you'll accumulate that amount. 

In today's paper currency, you're looking at around $45,000. It will take a couple / few years to accumulate, but once you do, you'll be able to sit back and relax for your future. Imagine what you can do TODAY with $45,000. That is what you'll be able to do with it in 5, 10, 15, 20, 30 years. Meaning, it WON'T LOSE PURCHASING POWER. And if god forbid there is a MAJOR ECONOMIC ARMAGEDON, then silver and gold will be the only real currency of value there is. That along with bartering materials like guns, ammo, medical supplies, gasoline, food, and MAINLY YOUR SKILLS. But besides that, silver and gold would be the only other real currency. As it has been for thousands of years. But if that happens, we've got much bigger problems. Bottom line..... your silver and gold will ALWAYS BE WORTH SOMETHING. 

Anyway; I'll hopefully be writing new blogs at least once a week like I use to do. Spread the work. Take care.

SE
CYA