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The are some downsides

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while gold/silver is very stable in overall value, meaning it is not subject to losing value during economic hiccups, the other side of that coin (no pun intended) is that it also doesn’t gain value as quickly when other forms of investment do. I think I recall from DR’s class that a person should be able to reasonably expect mutual fund accounts to appreciate at a rate of 10%-12% per year, year in and year out, when things are clicking along reasonably well. Even when events like 9/11 come along, or the 2008 crash, those figures might stumble a bit but they generally recover. Gold/silver might not have quite that performance during generally stable economic conditions. As such, they are not a first choice investment vehicle when things are clicking along nicely. But they can be a very nice alternative, particularly for folks (like me) who get uncomfortable with some of the layers of complexity involved with other modern investment vehicles. 2) it is easy to accumulate gold/silver incrementally, but it can be hard to spend it all at once if you want to divest yourself of that particular asset. So for instance, if I wanted to buy a $100,000 house with gold/silver coins, yes the value is there and I could easily say I have X quantities of gold/silver, and it’s worth X amount. But to actually physically deliver larger volumes, you start getting into the logistics of moving heavy objects. $100,000 at today’s rates is about 4lbs of gold. It’s over 200lbs of silver. That’s a lot to lug around for day to day transactions. And while banks could potentially handle that, they much prefer paper.
3) It’s hard to count, because you have to weigh it, and most folks don’t have certified scales. That’s why the certified gold/silver coins are so valuable; those weights are fixed and published and generally regarded as rather difficult to modify. But if you don’t have that certification in hand, all bets are off until you actually weigh the item in question.4) when times REALLY get tough, and you’re hand to mouth, having a pantry worth of food and/or the means to produce food becomes the hot commodity. You can feed yourself for a time with whatever is in the pantry, and you can feed yourself forever if you can grow food somehow. But you must have a trading partner in order for gold/silver to have any ultimate value, because gold/silver have no inherent value other than to be traded for something you need. That is ultimately true for all currency, and gold/silver is the most durable currency ever invented. But it does, at the end of the day, only allow two people to trade back and forth. If a person were desperately hungry with only the clothes on his back, and one seller had a meal and the other seller had gold/silver coins of equal value, the hungry person would probably trade the clothes on his back for the meal rather than the coins. To push this analogy to its extreme end, if you were the last person on earth, gold and silver would by definition become worthless. Food, however, always has value.

Author:AMA