Part 1 – First Time Going Into Metals? – It’s Not Too Late Or Early To Start Investing In Precious Metals
This article was allowed to be reprinted with permission from http://theheartofgold.net.
The vast majority of concerns I receive are from individuals who are about to retire or can choose to do so. The main concerns I receive fall into the following:
- They are correctly worried about the fall of the US Dollar due to excessive fed printing.
- Inflation will destroy any dividends, rental income, royalties, and interest from their assets.
- Some want protection against the US Dollar.
Since many of you were born way before me, I’d imagine growing up as a kid or teenager, your parents or guardians would have told you endless horror stories about World War 2, what lead up to it, and the Great Depression. Funny thing is, those events that lead up to the great war and the depression of the 1930’s is occurring again here, in the United States.
While we are not in hyperinflation yet, we’re starting to fall into the same trap as the German Weimar Republic of the 1920’s. Except this time, instead of paying war reparations to nations angry at us, we’re borrowing more and more money to finance our federal government, which leads to higher interest payments that will make us borrow more. This vicious cycle will leave the Federal Reserve and/or U.S. treasury no choice but to print money to pay off our debts, just like the Weimar Republic, which will devalue our currency, create hyperinflation, and well, you know how history occurred. I know for sure that I may need to flee if I feel I will be targeted like the Jews were back then.
If you take a quick look at the USdebtclock.org website, you’ll notice that there are now 48 million people on food stamps, while our national debt is about to approach $17 trillion smackers. Heck, by the time you read this, the debt will be at or surpass that figure. Ouch.
So why gold and silver? Precious metals are a terrible investment according to [insert mainstream(lamestream) denialist name/website here]
Don’t you find it odd how many mainstream investors or websites claim to know so much about finance and investing, yet since 2000, gold and silver has gone up a whopping 500%. In fact, I wasn’t even informed about precious metals in college, and was never uttered by any professor. When you do hear about it, there’s always some idiot reason why precious metals are “losers”.
I’ll tell you who lost, it was those who got slaughtered in 2008. Yet despite that, there’s always “stock markets come back” talk. Typically it does. Problem is, those whose assets that went to zero aren’t getting their money back. Where’s the justice for those people?
If you analyze history, gold and silver has never gone to zero dollars. I can’t imagine a time ever anywhere in my research that it has. That should tell you something.
Gold and silver is great for making money, but its primary investment function is to protect your wealth, especially during bad economic times. You need to go beyond the thinking of making just money and think about protecting what you have.
Ironically, in doing so, you will be on solid financial ground when everyone else is panicking. Prices crashes on real assets, then you sell your precious metals and scoop up the assets for dirt cheap. This is typically how rich people invest. I’d recommend you do the same. Want to own facebook shares for $1? How about Google and Microsoft stock at 10% of their peak prices? What about an apartment building for 1/4th its former asking price? Yes, please!
If you’re thinking about going into metals, especially if it is your first time, you need to keep the above in mind. You won’t get rich overnight. You’re not suppose to. It’s there to protect you against what’s coming down the pipeline. When that crap does come in, you’ll be able to ride the economic shockwave and fare better than most who didn’t prepare.
In the short-term, precious metals are horrible at income generation. It’s volatile, a lot of people have more negative things to say about it (and anyone who invests in it), and it doesn’t produce any dividends or interest. This is why it’s so confusing. But then again, precious metals do not go to zero, like stocks and bonds can. There’s no point in earning 10% interest on an asset if all the money you invested gets wiped out in 5-10 years, or less.
Also, precious metals is a long-term investment only. Warren Buffett broke his own investment rules, sold silver at around $7.50 an ounce, and missed out on a huge return on his investment. This occurred despite the major correction of April 2013.
Whatever you may think about the price of precious metals now, it will look like a bargain after it all comes down. There’s over $40 trillion + of non-precious metals investment money right now. Those people who have some money left will be attracted to the relative stability of gold and silver and want to jump in. Since there isn’t that much gold and silver in the world, that’s going to shoot up the price once sentiment changes.
If you’re still on the fence about precious metals investing, then at least consider the possibility of investing a little money into it. Typical safe wisdom states no more than 10% of your investment portfolio/funds should be in metals, and I happen to agree. If you and I are wrong, we lose only 10%, if we are right, however, there’s no telling how much that 10% of our money will buy, especially since the other 90% of our money will be essentially worthless.
Some of the world’s richest are buying into precious metals as well. This includes George Soros, and the world’s richest man, Carlos Slims. Note that they did not put all their money into them either, they invested a small percentage of their money into it. Starting to see a pattern? To see which rich people have been buying gold and silver, check the right hand side of this website here.
In part 2, I will talk about how to actually buy it with the least tax penalties, take possession of your metals from an IRA/401k plan, and how to plan your gold retirement IRA/401k in the post-crash economic world. See you there!