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Makayla Pone - January, 5th 2024
Should I invest in Gold or Silver?
Have you ever thought about investing in gold or silver? These precious metals have been popular for a very long time. People like them for several reasons. Gold and silver can protect your money from inflation, which means even when prices go up, the value of these metals often stays strong. They are also considered safe choices when the economy or world events are unstable.
In this blog, we're going to explore why people choose to invest in gold and silver. We'll look at how these metals have performed in the past, showing how their value has remained quite steady even when other investments have not. Plus, we'll talk about the different ways you can invest in gold and silver. This includes owning the actual metal, or investing in funds that represent them. Whether you're new to investing or already know a bit, this blog will help you understand if gold and silver are good choices for you.
Reasons people decide to invest in Precious Metals
- Hedge against Inflation: You’ll hear this term a lot if you do any more research past our article. This is generally for large financial institutions that maybe have a lot of liquid funds, they’ll move it to a large position in gold and silver. If you are someone who likes to save cash or have a large, all cash savings laying around this is something you might consider. More on why this is good during high inflation in a moment.
- Safe Haven Investment: During times of economic uncertainty or political turmoil, gold and silver are often viewed as safe haven assets. Investors flock to them as a way to preserve their wealth when other forms of investment, like stocks or bonds, are seen as risky.
- Doomsday and Tangibility: Many folks see commodity investing such as this, similar to property investing. It’s tangible, it’s real and you actually own it. This bodes to the prepper community and the prepared mindset because if the dollar fails and large scale conflict break out, historically, gold and silver revert back to the one and true currency.
- Diversification: If you crack open any book on investing or finances, chapter 1 will tell you to pay off all of your debt and chapter 2 will talk about investing and diversifying those investment. This is one of the biggest reasons people by precious metals so there exposure and risk is limited to not one but many forms of investment. This is seen and in a lot of cases proven, to significantly reduce risk.
- Undervalue & Historical Performance: Many people look at gold and silver and view them as extremely undervalued and some data analysis would agree with the reasoning. This and the historical performance of gold and silver (which has been traded for thousands of years) has a proven and lengthy track record compared to other investments.
Gold is often viewed as a "safe haven" investment during economic downturns or global uncertainty.
Inflation and Past Performance
Uniquely, it’s not that gold or silver goes up during an inflationary period, what is actually happening is that it takes more dollars to buy the precious metal. This is because gold and silver are relatively stable and very rarely have do they see volatility in the markets. And when sudden sharp increases or decreases do happen, it’s usually from some level of corporate fraud or price manipulation and is very temporary. Those who quickly sell during those sharp peaks or HODL during sharp down turns are usually safe.
In terms of past performance, gold and silver have often shined brightest during times when other markets faltered. For instance, during the 2008 financial crisis, while the stock market experienced significant downturns, gold prices soared. Investors, wary of the unstable stock and real estate markets, turned to gold as a safer bet, driving its value up. This trend was a classic display of gold's reputation as a 'safe haven' during economic distress.
Similarly, silver has had its moments of outperforming other investments, especially when industrial demand rises or when investors seek it as a more affordable alternative to gold. For example, in the early 2010s, silver prices skyrocketed, partly due to the increasing demand in various industrial applications, including electronics and solar panels. It's also worth noting that silver tends to be more volatile than gold, leading to sharper rises and falls in its price.
These instances highlight how gold and silver can behave differently from traditional stocks or bonds. Their value doesn't just depend on market trends but also on factors like global economic stability, industrial demand, and investor sentiment during uncertain times.
Gold sometimes moves opposite to the U.S. dollar because the metal is dollar-denominated, making it a hedge against inflation. Image Credit: Gold Avenue
Economic Disaster, Doomsday and Conflict
In recent times (2000’s on) there has been multiple scenarios where gold and silver was used to barter and even used as ‘fill-in’ currencies when times got rough, this with ever increasing tensions globally is a huge reason people are flocking to the commodity. Here are just a few recent examples of this.
- Zimbabwe Hyperinflation: During the hyperinflation in Zimbabwe, which peaked in 2008-2009, the value of the Zimbabwean dollar plummeted drastically. In response, people started using gold and silver, along with other foreign currencies, as a means of trade and to preserve their wealth.
- Venezuela Economic Crisis: In recent years, amid the economic crisis in Venezuela, where the local currency experienced severe devaluation due to hyperinflation, people resorted to using gold and silver for transactions, especially in remote and mining areas.
- War-Torn Areas: In some war-torn regions as of recent (Ukraine & Gaza), where the banking system and local currency become unreliable, gold and silver has been used as a trusted medium of exchange. Their universal value makes them a viable alternative in these unstable conditions.
- Natural Disasters: In the aftermath of major natural disasters recently, when normal financial systems and infrastructures are disrupted, gold and silver have occasionally been used for barter and trade. This is especially true in remote areas where access to cash or digital transactions might be limited.
In today's rapidly changing world, a multitude of unforeseen scenarios could underscore the enduring value of gold and silver as alternative forms of currency and safe-haven assets. The possibility of events such as an EMP (electromagnetic pulse) attack leading to a widespread grid-down situation, the escalation of large-scale global conflicts, or even widespread civil unrest, presents a landscape where traditional financial systems and currencies could be severely disrupted or devalued. In such scenarios, the intrinsic value of gold and silver, recognized globally for centuries, might once again come to the forefront as reliable means of storing and exchanging value. This potential makes them a unique and compelling component of any well-rounded investment strategy, especially for those looking to hedge against the full spectrum of global risks.
Investor Crate makes it easy to get gold and silver safely delivered to your door every month.
How do people invest in gold and silver?
While the allure of these precious metals is timeless, the methods of investing in them have evolved, offering investors a variety of options to suit their needs and investment styles. Whether you're drawn to the tangibility of physical metal or prefer the convenience of digital platforms, there's an approach for everyone. Here are some of the most popular ways to invest in gold and silver:
- Physical Bullion: This is the most traditional way of investing in gold and silver. It involves buying physical gold and silver bars or coins. This method appeals to those who want to hold a tangible asset. You can get bullion online right here on our website in a unique monthly ‘dollar-cost average,’ subscription box way. You can also buy from other online retailers, as well as local coin stores and pawn shops.
- Jewelry and Collectibles: Investing in gold and silver jewelry or collectible coins is another option. While this includes the intrinsic value of the metal, it also factors in aesthetic and historical value, which can appreciate over time. Keep in mind though, Jewelry isn’t always the best way because the purity is usually lower than bullion and the weight is hard to determine on the fly.
- Gold and Silver ETFs (Exchange-Traded Funds): These are funds that track the price of gold or silver and are traded on stock exchanges. This is a convenient way to invest without the need to store physical metal.
- Mining Stocks: Buying stocks in companies that mine gold and silver allows investors to benefit from the value of these metals indirectly. The performance of these stocks is influenced not just by metal prices but also by the company's operational efficiency and mining reserves.
- Futures and Options: More experienced investors might consider futures and options in the gold and silver markets. These are contracts to buy or sell the metals at a predetermined price in the future, offering ways to speculate and hedge.
- Gold and Silver IRAs (Individual Retirement Accounts): In some countries, like the United States, investors can include gold or silver in their retirement accounts. These IRAs follow specific rules and require that the metals be stored in a licensed facility.
- Digital Gold and Silver Platforms: Emerging technologies have introduced digital platforms where you can buy, sell, or even redeem physical gold and silver. These platforms often provide secure storage options and easy liquidity.
Each of these investment methods comes with its own set of advantages, risks, and considerations. The choice depends on the individual's investment goals, risk tolerance, and interest in physical versus paper assets. Remember, this is not investment advice and should not be used as such. Always consult a licensed financial advisor before making any decisions. As always folks, thank you for reading and feel free to reach out if you have any questions.
This is in no way to be considered investment advice. Past performance is no guarantee of future results. Asset allocation and diversification do not ensure a profit or guarantee against a loss. Keep in mind that any form of investing involves risk and you should always consult with your financial advisor before making any financial decisions. Investor Crate, LLC., it's subsidiaries and staff will never advise you on any asset as our aim is to provide a fun and affordable service should you decide to purchase Precious Metals.
Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.
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Price of gold has sure skyrocketed lately, alot than silver and other metals
Do both if you can manage it!
I actually being that silver seems to hold the value a little better over time
I like them both ! Buy what you can afford !
I think both are great investments. Not everyone can afford gold, myself included. But I think silver is a great investment and I have a fair amount of it. I purchase mostly to pass down to my son, though, as I have pieces from my father and grandfather and I want to keep it all in the family.