Silver and gold have obsessive followers and fans. But are they for the right reasons?
I see these stackers on YouTube and on blogs. Which I guess means silver collecting and I hope they consider it a collection. Like baseball cards, or old movies and video games. A lot of people buy as a hobby not an investment.
Keep in mind silver doesn’t pay dividends. You can’t invest in it and take an income from it. If you want to use or liquidate your ‘investment’ you have to touch principal. You’re unable to take a monthly income. You shouldn’t have to sell an investment to capture its value.
There are two reasons to buy it.
To speculate. people buy it at around $14 and expect it to double. You just have it sitting in your drawer or safe or bank vault and its doing nothing. It’s not even that easy to liquidate. You have to take it to a sleazy coin dealer and have him give you cash. You’re unable to click a button and sell and have the cash immediately in your account. Unless you buy an ETF to get the price exposure but that’s not what I’m talking about. I’m talking about the physical silver that people are buying. Speculation can pay off. During periods of inflation most asset classes will go up. Stocks, Real Estate, Gold/Silver.
To hedge. Buying silver is a bet against America. It’s to hedge the declining dollar. That is the main purpose to invest in precious metals. If you think our currency is weak and America is about to collapse then silver would make sense. America is doing great, (I’m aware of the national debt. usdebtclock.org ) our economy and stock market are phenomenal right now. There is no reason why you will need to sell your USD and buy rolls of silver. When you sell it what are you going to sell it for? American dollars.
Remember during the 08’ recession there was talk of $100 silver and people thinking they could buy a house with 1000toz. What happened to that? Silver dropped over 50% since then.
If you timed the market correctly you could have made a lot of money during the recession. But I know you didn’t, most people were buying silver in the 40s thinking it would go up to 100.
It’s fun to collect buy some as a collection and keep it on your safe deposit box at the bank if you want, old coins are fun to look at and they might even increase in value a bit. But do understand they are only a part of your overall portfolio and you can not realize its value unless you sell.
Our suggestion is if you do decide to buy/invest in Gold/Silver put 1% of your net worth into it as a hedge against the declining dollar.
Remember if you have 1M in real estate you can receive a monthly income from it without having to sell the asset. The same with a stock portfolio. Once you have sizable investments in other cash flowing assets, or businesses, then would be a good time to hedge or speculate with precious metals.