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First, let me say

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that I have an ongoing inherent distrust of a lot of forms of paper assets and paper currency. So when I’ve had sufficient money to invest (it’s been awhile but once upon a time I was in that position, and plan to be there again), I was uneasy with the idea of investing in Wall Street. I had no control over what some CEO was doing with any given company, and how those decisions would affect my investments. Yes, I know, there’s a lot more to it than that, and you spread the risk over a wide number of companies to thin out the ripple from any individual company’s performance. I also know that during the history of this nation’s stock market, it has very generally done well and trended up. But if you take another step back and look over the history of civilization on this planet, economies have come and gone. And they have taken their paper assets with them when they fell. But gold/silver has outlasted them all. So I will admit right up front that I have always wanted to make room for gold/silver in my overall investment strategy.
Having said that, I’ve looked into this a fair amount, and when I get enough money coming in/saved up such that I’m ready to invest, gold/silver will be a part of (but only part of, and not all of) that investment plan. Here’s why:
1) both gold and silver are very long-standing investment vehicles, possibly one of the oldest investment vehicles available, and they are both universally recognized as having value. No other form of currency can say that.
2) when economies are clicking along, a variety of investment vehicles are created and used as part of that comprehensive economy. But when economies either struggle or fail, most of those investment vehicles can (and have) lose value almost overnight. That’s exactly when gold and silver are at their highest value.
3) They are extremely portable, and at the moment still non-traceable. Meaning, there’s no regulatory oversight to track how much gold and silver folks have. Most other investment vehicles have federal reporting requirements. That freaks out some people, that Uncle Sam knows what assets you have.
4) Silver is consistently very conveniently roughly 1/10 the value of gold, which provides almost a built-in system of currency. If things every really went south, gold and silver coins would still hold a lot of their value even as other forms of currently wouldn’t. Anyone who doubts this, just go look through how societies have handled currency values during national upheavals, such as during/after major wars like civil wars, world wars, etc. National denominations often fluctuated, and were sometimes eliminated entirely. Gold/silver was the standard during those moments of transition until the new currency was mature enough to stand on its own.
5) Even if things never go south, and let’s hope they don’t, gold and silver still appreciate in value, although at rates which might not match other forms of investing. More importantly to some, they might fluctuate up and down a little, but they don’t fluctuate as wildly as other investments can, and they rarely ever (trying to think if there’s a single instance) where they’ve seriously tanked. I’m not a precious metals historian, but I don’t think there’s an instance where they’ve ever lost a significant portion of their worth.
6) While most folks think of gold and silver bars as THE form of precious metals investment, that’s not the only option. One of the safest and most consistently active forms of gold/silver trade is in certified gold/silver coins, which are a convenient and comfortable way for folks to “dip their toe” in the precious metals investment pool. Go check out eBay sometime to see how lively that trade is. Suffice to say that even when the DJIA is having a bad day, gold/silver is still being traded very actively and rarely at a loss. No brokers, no investment houses, no websites to navigate and figure out. Just buyer + seller and then you have the tangible object in your hand. Some folks find that a comforting alternative to brokerage firms and paper assets.

Author:AMA