It’s easy to see why silver and gold are the world’s oldest and most popular hedge investments.
Our financial system is quite healthy at the moment. Even amidst shifting policies and political unrest, it’s not facing any existential threats. But ultimately, money, equity and debt are social constructs. Their value comes from human behavior, not from their intrinsic properties.
But you know what does have intrinsic value? Shiny stuff.
To be clear, we’re not advocating the transfer of a large portion of your portfolio into precious metals. But during times of uncertainty and upheaval, it’s nice to have some precious metals in the mix.
There are a variety of investment vehicles for buying silver and gold. Aside from physical metal bullion, there are also funds, miner stocks, certificates and derivatives that can give you easier exposure. Let’s look at the pros and cons of each option.
Precious metals investors tend to fall into one of two categories.
The “hedgers” don’t treat gold and silver differently than any other financial asset. They’re investing in precious metals as a hedge against inflation or financial volatility. Hedgers don’t need physical access to their metals. Ultimately, they plan to sell them for money or other assets in a time of financial stability.
Then there are the “preppers” – doomsday preppers, that is. These people invest in precious metals as a hedge against war, major political instability, natural disasters, or other “total breakdown of society” scenarios that would render money and other assets worthless. Preppers intend to use their silver and gold holdings as currency after the apocalypse. So they need it to be in their physical possession.
For the most part, it only makes sense to invest in silver and gold bullion – that is, actual metal pieces – if you’re a prepper. For one thing, physical items can be lost or stolen. A burglar can’t break into your house and take your stocks. There are also maintenance concerns with silver and gold – both can tarnish unless you keep them clean and protected from the elements.
Source: Investment U
