Precious metals investing should be a core component of every investor’s portfolio. I’m confident it will return the greatest returns of any investment before the bull run is over. And it could well be the only financial resources that survive in the event of a currency collapse. Indeed, we see more and more people beginning to buy silver and gold, or put money into a bullion fund of sorts.
Precious Metals Investing In Light Of The Fact That Previous Highs Haven’t Even Been Reached
The forecast for precious metals investing, even after a decade-long bull run, is strong. One need only look at the highs that were reached in the bull market that lasted throughout the 1970s and culminated in 1980. If you adjust those numbers for inflation, gold and silver still have way to go. Indeed, once you compare apples to apples, gold and silver are cheap compared to 1980.
Some critics claim that silver only rose to those levels back then because the Hunt brothers were supposedly trying to corner the silver market. However, the reality is that silver prices actually went down for a couple of years after the rumors were mainstream. As if that’s not enough, the fact of the matter is that silver and gold moved together in unison. The correlation wasn’t perfect, of course, but the two metals had similar price patterns. So, if this unnatural market anomaly of Hunt brother buying explains silver’s rise, what explains the comparable rise in gold? Moreover, just as silver outperformed gold in that bull market, it’s interesting to see silver doing the same now.
Precious Metals Investing And Why The New Highs Should Be Higher
There’s an important feather in the cap for precious metals investing at this unique point in history. The fact that metal prices haven’t even reached inflation-adjusted highs is huge. However, the flip side of the coin is that the fundamental factors fueling the secular bull market are more profound now than they ever were back in the 1970s. There is massive geo-political and financial instability that makes real, hard assets all the more attractive as countries engage in a race to the bottom devaluing their currencies for economic boost.
Precious Metals Investing And Just How & How Much Is Enough?
A common question for those new to precious metals investing is how and how much. Let’s first deal with the how much. Really it’s quite difficult to tell someone how much precious metal they must own. Some advisors will only advocate that you keep 5% of your portfolio in precious metals. Frankly, I think that’s stupid. That might be conventional wisdom for conventional times. These are not conventional times.
The simplest way to look at it is to realize that the U.S. Dollar, as well as other fiat currencies, are falling out of favor worldwide. So, holding any assets denominated in paper money is where the real risk is. One can only see precious metals as a risk if they do not understand that they are fundamentally the original currency.
People can instruct you on all sorts of ratios. And things get more complicated when you consider physical bullion versus “paper” metal like ETFs. Then there are the mining stocks. So now how do you apportion all of these weights and percentages? You simply have to begin by educating yourself and then figuring out what you want and how much.
I’ve always been way, way overweight precious metals. In fact, that’s about all I invest in other than other resources. I stay away from paper products, as they suffer the same flaws as paper money. Bullion is good, but it’s upside is limited, so it’s primarily a defensive play for protection. I’m a true speculator, and I prefer the leverage of mining stocks. With a few producing companies to balance things out a bit, my favorites are the junior resource companies. This is where you can find market inefficiencies and score companies that are selling for less than they are worth.
Precious Metals Investing And Exploring The Risk
Anyone new to precious metals investing would be remiss not to ask about the risks of buy gold and silver. Indeed, at any given time it’s important to ask whether a given investment is more likely to go up or down. As a form of real money sought for safety in times of uncertainty, it seems to me precious metals are likely to go up from here. If you are ready to invest in precious metals there are some really serious investing companies out there, such as Regal Assets, that will help you make the best decision possible.
We have inflation upon us, with potential hyperinflation at our front door. There is a grave weakening in the U.S. Dollar, which is being printed as fast as they can cut down trees for paper. There is geo-political unrest of epic proportions as nations rise up against their leaders. There are sovereign debt problems that are near incomprehensible. “Real” interest rates are actually negative. Unemployment is abysmal. The housing market is terrible and foreclosures continue.
Moreover, precious metals investing is not fully in vogue. When your co-workers and neighbors are pitching mining stocks and owning bullion in significant numbers, things may shift. Once precious metal ETFs are loved by managed money and the mainstream media tells me to buy gold and silver, I’ll look for a slow-down. Until then, even the risk of a sluggish economy reducing industrial demand for silver is not a grave concern. There are new applications for silver in consumer goods all the time, not to mention that we cannot even meet full precious metals investing demand now.