CEO at PMI | Bullion Dealer
In the chaotic world today, people worry about security. Not only physical safety but financial firewalls. Even in America, despite a few signs of improving financial markets, there are austerity clouds on the horizon. Even economists with CNBC say America is headed for recession. Some experts believe the fog of economic uncertainty could hold the seeds for another depression.
What are the best practices to protect wealth as stock markets rise and fall on the whims, Tweets and caught-on-the-mic musings?
Many people watch the federal debt and deficits and are amazed. Only a small portion of investors are ready to try to sustain their purchasing power by switching dollars for precious metals. Many see the problem yet fail to turn to the solution.
Throughout history, gold rose in value when things like wars, the Great Depression, or steep inflation occurred. For instance, between 1970 and 1975, the price of gold rose 375% while the Consumer Price Index increased by double digits.
Still, owning precious metals is unfamiliar to most. People don’t know what to expect. They decide to buy but then ask: “What do I do with it once I bought it?”
Buy and Hang on To Your Investment
However, for how long? Gold and silver is a long-term investment which comes with the unique potential for wealth protection. Buy now and build an investment — and wait. Currency debasement, runaway debt and deficits and improving supply and demand translate to higher values — over time. When compared to holding depreciating dollars in a 0% savings account, the case for precious metals is compelling.
When holders of precious metals are ready to sell, they can do so quickly and easily. Selling isn’t a contradiction of hanging on to it. Today is the time to accumulate, so don’t avoid buying since you may not realize how easy it is to sell.
Unlike Anything, You’ve Seen
Similar to conventional assets, precious metals carry some unique characteristics. Buying gold and silver is like buying stock or real estate, you think is likely to appreciate. A person builds a position when it appears undervalued and sells when opportunities are spotted.
With investments in gold and silver, a person moves beyond a fragile financial system. With gold and silver, there is no chance of a company, in which stock is owned, going bankrupt, experiencing mismanagement or seeing tough economic times destroy the investment value.
Storing wealth in real estate is announced to the world. Precious metals are confidential. A person doesn’t have to register their purchase with a local office or government agency. Real estate sales often stretch out. Gold and silver can be purchased, and marketed, in minutes — not months.
If the American dollar completely deflates, gold and silver will be there. Pretty sweet.
When it comes to gold and silver, it can be difficult keeping up with the news. The press doesn’t always portray the full image. As the world’s financial markets continue to churn in turmoil, gold and silver remain a vital way to protect your wealth against economic chaos and helps preserve wealth against inflation as the world’s central banks continue to print fiat money.
Commodity-Backed v Fiat Money
Precious metals have served their purpose for centuries. Until lately, gold and silver formed the foundation of wealth in almost all cultures. Eventually, money didn’t exclusively take the shape of precious metal. Instead, central banks printed paper money and the quantity linked to precious metals by nothing more than a gossamer link of speculation.
The necessity for durability was satisfied as the amount of gold is comparatively fixed and is only increased by the quantity of new gold quarried.
The amount of gold above ground increases just shy of 2% per year. That closely matches the increase in the world census and the creation of new wealth. Money supply stabilization is secured— as a hypothesis at least.
The story of commodity-supported money hints that linking currency availability to a staple isn’t always functional. Like most nations in the 1920s, America operated on a gold standard. Still, monolithic credit growth permitted speculators to acquire money for stock market speculation and created the bubble which burst in 1929.
‘A contraction’ set in and anyone who could manage to pay off their accounts did so — intensifying a reduction in demand. In the early 1930s, social opposition to belt-tightening measures disconnected Britain from currency backed by precious metals. Economic recovery was reached quicker than in America where the banknotes stayed tied to gold.
Money, not backed by a tangible commodity such as gold, is fiat money. Fiat money has value and is suitable for exchange merely on the authorities’ word. Many experts believe it was fiat money which pushed the stock market to its bursting point in 1929. It was money not backed by gold but created out of thin air by banks. Each time they loaned to investors seeking funds to ride the tidal wave of optimism, new money was created, asset prices were inflated, and the almost unlimited money supply expansion led to the crash.
Which Direction Will Precious Metals Go In 2018?
2018 is displaying a lot of potential for the precious metals marketplace.
Firms surveyed by FocusEconomics in 2017 predicted an average silver price of $18.00 in 2018.
Allocating a small slice of your portfolio into precious metals builds a barricade against economic or currency failure, possible stock downgrades, limited access to your capital, among many other benefits. Merely by diversifying a portion of investments into precious metals protects against the potential of a market downturn.
Do you have any questions or comments?
We would be pleased to put you in touch with a premier Independent Broker Dealer in your area.