By: John Fisher
“Do NOT consider gold an investment.” At first glance, this statement seems irrational. For most of us, gold (and silver) have been one of our best “investments”! The nuance here is not lumping gold and silver in with our other investments. In fact, its principal purpose, its principal intent, is not that of an investment at all.
Many of us have converted a portion of our paper dollars into metals due to concern for one of the following:
- Diminishing integrity of the U.S. Dollar
- Growth of the fiat money supply – domestically and internationally
- Increased money supply leading to a rise in inflation
- Inflation resulting in an erosion of purchasing power
- Increased government intervention
- Current account, balance of trade, consumer and other mushrooming debt
- And the list can go on and on
Not in this list for most of us is profit – and a nice profit at that. Why? Because most of us don’t intend to sell – and you can only realize a profit when you sell. See, if we sell, then the whole reason we bought will be invalidated. If we sell, we will be holding the very paper currency we sought to exit. And we would be foolish to sell, as our metals will do nothing but grow in value as the intrinsic value of the fiat currency against which metals are valued continues to decline.
So, if gold is not an investment, then what is it? Exactly what we have always been told – insurance. Look at the list above. Is it now true that we are “insuring” against all those items, all of which threaten our well-being. Are we not insuring our freedom, or standard of living – and an extreme case, even our survival?
If we sell our gold (and silver), we surrender our insurance. With no insurance, we have opened ourselves up to a myriad of threats and potential disasters. That would not be prudent, and we initially bought “insurance” because we were prudent.
So, we hang on to your insurance, not our investment. Maybe one day we will take a portion of that insurance and exchange it for another form of insurance such as agricultural land, the right kind of real estate or ownership of a company. But that’s a ways off.
For now, just sleep tight knowing that “You’re in Good Hands” with a little golden insurance tucked under your pillow.
All Things Considered – John’s Commentary
Action to take: If you haven’t already done so, consider swapping some of your silver for gold. As we swap on the current Gold:Silver ratio, we do so with the intention of gaining additional metal for our clients with no additional cash outlay.
This is a very sound strategy, however, few dealers will take the time and effort to educate and subsequently execute these swaps for their clients. When and if they do, they typically charge commission on both “ends” of the transaction. We charge commission on only one side of the swap – we will never “double dip” on our clients.
What to buy: Gold Medallions, Austrian Corona’s and 90% silver coin – all are available at a very low premium with free shipping.
Quote of the day: “From a strictly economic point of view, buying gold in a major inflation and holding it probably presents the least risk of capital loss of any investment or speculation.” – Henry Hazlitt
