Part 5 – Investing Large Sums Of Money Into Gold $50k+ – Good Idea?
This article was allowed to be reprinted with permission from http://theheartofgold.net.
For anyone thinking about investing a large amount of money into gold and silver, you really need to look at this from the long term point of view.
In the short term, you can and probably will take paper loss hits of 5-10% in a month or two. Luckily though, most of the correction has occurred and precious metals bottomed out in April 2013 (for now). Many billionaires like George Soros and Carlos Slim are still committed to their gold holdings. Heck, even former presidential candidate Ron Paul hasn’t budged, and he took a 66% loss in April 2013!
Obviously, you’ve been around long enough to know that this is a serious investment and commitment to your future and your family. Understand that any amount you invest, you won’t see returns until many years later, specifically, when the US debt blows up in the world’s face. The dollar collapses, and our financial system suffers a meltdown that is likely going to be worse than 2008.
If you still don’t feel comfortable, then consider your alternatives. Bonds and real estate are propped up by endless money printing by the central banks of the world. Stocks are inflated as well. You could attempt to play these markets but you have to know when to get out and you definitely have to do it before there is a collapse in the markets when every investor in the world realizes that our finances aren’t actually as good as they seem to be.
When you see that foreign nations are loaning America less and less money (as shown at the website usdebtclock.org) we will go broke because our annual deficit is still approximately $1 trillion per year. We won’t be able to pay for everything and we will go broke. Government continues to grow and spend more.
For now though, people are playing along and the markets are humming along.
The more fear you have of our economic system collapsing, the more you will want to purchase precious metals sooner.
The more you realize that paper money isn’t nearly as valuable as real tangible assets, the sooner you will want to purchase gold and silver.
Either way, once these precious metals goes up, you can sell it at the height and turn it in for assets that will help secure you and your family. Typically this includes farm land or real estate, if you’re willing to work it.
You will also want to grab shares of true, value-creating companies such as Google, Microsoft, and healthcare industries. Food and necessities will also be great, such as stocks in Costco or supermarket chains. Telecommunication and utility companies such as Verizon and Con Edison will also be great assets to pick up too.
After all the chaos is over, these companies will still be here simply because they make life better for everyone and they provide services and products that people NEED.
Gold and silver is a great contrarian investment because it goes up and down with fear and optimism. It reacts the opposite of many things simply because it was designed to do that.
If you’re looking to play the markets a while longer, then investing in precious metals can be put on hold, provided that you don’t mind the potential to miss your window of opportunity to get in while it’s cheap. You still want to make sure that at least a part of your wealth is protected in some form by actual physical metals. A great book I recommend on this topic is the Aftershock Investor by Robert Weidemer. He periodically publishes his updates every 12 to 18 months.
Also, I forgot to mention that if you own annuities or universal whole life insurance (or its variations), you definitely will want to cash out as soon as you can. When the dollar collapses, these policies will fail because they are mostly tied to the stock markets and the ability of the governments of the world to pay the interest (your premium payments you may be receiving). If they go broke, they stop paying their debts, which means you lose your income stream.
All of this has to factor into whether you want to invest a lot of money into precious metals or not. In the end, it’s less about making money and more about acquiring better financial control, tangible assets, power, and freedom than simply sitting on a pile of cash.