If you’re like many people these days, you’ve probably gone down the rabbit hole of reading up on the perils of our economy and government.
In light of this, we have a question: are your savings on lockdown or check-writing mode? Are you investing in stocks, bonds (including government), commodities, real estate, or precious metals? Nowadays, there are as many opinions about how to save for retirement as bells and whistles on your latte. But here at GrabAGunner.com, we’ll give you some straight talk about what’s important—and what’s not so important—in considering how to invest your hard-earned money.
How Much Of Your Savings Should Be In Precious Metals?
The truth is, precious metals are an excellent defensive asset to have. Many people don’t realize this because they haven’t done the research and don’t fully understand what it is.
In the beginning, metal wasn’t in the form of silver or gold coins. It was just metal—any metal that could preserve its properties for a long time and be traded for something else. Precious metals’ value against other elements goes back to when humans first discovered them (see The History Of Money). For example, when King Croesus minted his first pieces of pure gold around 560 BC, he found that they were more valuable than anything else, including food and animals.
And now, we are nearly 2500 years later in a world where the value of precious metals is still being tested. Gold and silver have seen their values increase an average of 7% per year for almost a century now (see The Value Of Precious Metals).
But some people are wondering why I should invest in gold and silver. Why not real estate? Or the stock market? And the answer to that is simple: if you’re looking to hedge against the devaluation of the currency, no other investment can hold a flame to precious metals except maybe more precious metals. Let’s go into more detail about why that is.
Why You Should Invest in Precious Metals: Because Currency is “debased.”
A big part of the problem with the US dollar right now is that it has been around for over one hundred years. But other countries have thousands and thousands of years of history behind them. Most currencies are still based on their sound money value. While some, such as the Australian pound and Kuwaiti dinar, have moved to a new currency system (see Currency In The 21st Century), others are still redeemable in their original form (see The Year In Review: Blogging Currency).
But now, we live in a world where politicians can print money as they want, and no one can stop them. In the United States, all the money in circulation and every new dollar published and released to the public will eventually be worth less than a dollar. That’s because federal politicians keep devaluing the currency by printing more and more.
The simple fact is: that all currencies are constantly being devalued. The US dollar has been hitting for years (see The Value Of The US Dollar). Nothing is safe, not even gold or diamonds. They, too, lose their value when people start trusting in something other than their paper bills (see Speculation On Precious Metals And Other Assets).
So if you want to invest in gold and silver, stop putting your eggs in one basket. Instead, diversify by investing in precious metals.
Maybe it’s your first time hearing about precious metals, and maybe you don’t think now is the time to start investing in them. But here’s the thing: even if you don’t have a lot of money saved up, if you are currently invested in stocks or bonds (or other investments) that are dropping, then at this point, there is still a no better investment than buying gold and silver. After all, you don’t want the value of your assets to drop while you’re investing them.
Another reason is that precious metals are an excellent hedge against inflation, which has created a problem for the US dollar in recent years. Most people don’t understand that whenever the government prints billions of dollars, they often do it to pay back debts. What they don’t understand are the consequences of this action. When the Federal Reserve increases the money supply by printing more bills without backing it up with anything, what happens is that prices (inflation) get pushed higher and higher. In other words, if you have a stock or bond portfolio and your investments have decreased in value over time, you will eventually notice a drop in your investments’ values when you’re investing that money into precious metals.
Some people are nervous about investing in the stock market because it’s just a game of chance. But precious metals, especially gold and silver, are different. These days when you invest in a business or commodity, what you want to look for is tangible goods and hard assets. As opposed to private companies that go under or stocks that go down and can’t be traded anymore, hard assets can be sold at any moment and they’re also valued by a market that’s constantly changing.