For centuries, people have used gold and silver as currency. They would buy everything with these precious metals and sell everything for these metals. Since these are precious metals and there is a limited amount of it in the world, it is a hedge against inflation (since more can’t be printed at will like with paper currency). Now as the dollar has less and less purchasing power than what it used to, many people are putting their cash into gold and silver. First of all, let’s start off with why you would want to invest in gold in silver? There are generally 2 reasons why people rush into investing into precious metals, especially gold and silver. The first one is to gain money when it increases in value, and the second is to hedge yourself against economic collapse.
Capital Gains
One of the main reasons that people rush into gold and silver is because these precious metals have always retained a certain value, even against fiat currency. As more and more money is printed and inflation increases, you will still have something which will always retain its value. As inflation increases, you will be able to sell your gold and silver for more money and get capital gains. This is the main reason that most people invest in gold and silver; for the simple reason that you will be able to sell it for more currency than what you paid for it, assuming you know when to buy and when to sell. However, once you do sell, you will have to pay capital gains tax of 28%, so be sure to factor that into when you are selling to make sure you can make a profit.
Right now, the window for buying gold and silver is closing due to the amount of money being printed, the price escalating and the fact that we are actually running out of silver. This can be the greatest wealth transfer in the history of the world, because this time it is global and anyone is able to invest in it. You can become very wealthy if you’re on the right side of this coming wealth transfer and if you know what you’re doing.
Hedge Against Economic Collapse
In the past, societies used many objects to trade for other objects. As time passed, people started using gold and silver as their main source of money. This was a great system as worked very well with minimal inflation since the precious metals were so rare. But every time they begin to take the currency off silver and gold and use something that is not rare at all (such as paper) the society and the economy begins to collapse. This isn’t anything new; this has happened before and it will happen again every time the currency is no longer backed up by a precious metal.
Generally, we start off with silver and gold as money, then the coins become shaven slightly, then they make coins out of only part precious metal and part copper (or other non precious metal), then they just use a completely new currency and it is just backed up by gold and silver (for example if there are 100,000 notes in circulation, then there is a percentage of that in gold pieces being stored to back it up) and eventually the currency is taken off the gold standard entirely, resulting in inflation, hyperinflation, deflation, as well as major changes in society and the economy such as the Great Depression.
So how does this affect us today? Well in 1971, President Nixon took the dollar completely off the gold standard and therefore changing the monetary system once again. Since then, inflation has skyrocketed just like the price for gold and silver. In 1971, gold was priced at $35 per ounce, as of writing this now (July 1 2011), gold is close to $1500 per ounce. But prices for gold and silver will continue to rise because the currency is not backed up by anything, which allows the government to print as much money as they want and we, as a society, will be paying for it later due to inflation. Because many people are aware that inflation will continue to skyrocket and that they are losing the purchasing power of the dollar, they invest in gold and silver in order to protect themselves from the ultimate economic collapse.
Should the New Depression and the future economic collapse come around, many people will be reverting back to the times in the past where they will be trading objects that they know have some value to them, since the currency will be worth next to nothing. Gold and silver will be used to trade because of their value and those who have had these precious metals before will already be ahead of the game. Every time in history, as the currency fails, people rush back into gold and silver in order to protect themselves and their purchasing power.
Gold
Gold is a rare and precious metal that is generally used in jewellery. There isn’t much use for gold outside of the jewellery department but it is still very valuable, as well as very expensive. Gold coins are bought by collectors as well as investors because of the general rate of return on the investment. At the time of writing this article, gold sits at roughly $1500 USD per ounce. To buy gold now, click here
Silver
Silver is bought more often than gold by investors who wish to put their money into precious metals because it has a higher return on investment than gold does. Although silver costs less per ounce than gold, it is rarer and much more useful. Silver is used in many objects nowadays, in almost every kind of electronic (including cell phones, laptops, etc) and cannot be reused afterwards. After these objects are discarded, the silver remains inside, and cannot be taken out and used into something else because of the configuration of the electronics. As a result, we are actually running out of silver which will ultimately make the price skyrocket later on. Silver is highly undervalued right now which makes it very popular for investors and much more affordable than gold. It also has the potential to outperform gold by a minimum of 400%. At the time of writing this article, silver sits at roughly $35 USD per ounce. To buy silver now, click here
How to Invest in Gold and Silver
So now that we have some of the “whys” out of the way, what is the best way to invest in silver and gold? There are many ways you can invest in precious metals, but by buying physical gold and silver you can ensure that you own them, since you can actually hold them in your hand. Gold and silver certificates are good in theory, but you never know if you will actually get your precious metals when you ask for them since they’re technically not backed at the bank. Buying the physical metal itself will ensure you have it in your possession when you want to trade it or sell it, without any complications.
What’s Going to Happen in the Future?
No one knows for sure what is going to happen in the future, if gold and silver will go up in price or if it will lower in price, but the economic cycle repeats itself and with all the mounting debt, the consequences have to come out somewhere. There are many times in history that this has happened before and gold and silver shot up as a result of it and now, with more currency being printed than ever in history, people all over the world are rushing into precious metals because they know these will always be valuable, and paper currency can lose all of its value.
If you do choose to invest in gold and silver, you should look into it first, read up on it, and do research to make sure it’s the best investment for you. That being said, however, the price will not be this low for long so if you are planning to get into it, sooner is definitely better than later. Many countries are already buying tons of gold and silver to protect themselves, the state of Utah has already passed a bill that silver can now be used as currency so you can see how globally significant this will be on all of us and it’s better to be prepared for it now than watch dumbfounded if/when it hits later.
Where to Buy Gold and Silver
So where can you buy gold and silver? As previously discussed, if you want to buy silver certificates you can just go to almost any banking institution, however, buying physical silver is a different matter. There are many places online where you can purchase bullion and they can deliver it straight to your house, or you can pay a small storage fee if you are uncomfortable holding a large amount of precious metals in your home. I would highly recommend going to GoldSilver for more information if you want to look into this in more depth; Mike Maloney is a highly intelligent man and provides a wealth of free information on his website.
The image used in this post is taken from Image: Maggie Smith / FreeDigitalPhotos.net
