Let’s Talk About Gold And Silver

People often want to buy up gold and silver when they think we are facing hyperinflation or other markets are volatile.

Do I invest in gold and silver?

I’ve been investing in precious metals since I was 15 years old, when I’d buy coins from a shop in Blacktown.

I started buying it because I was too young to buy property, so I wanted some kind of asset.

When the GFC happened people like Robert Kiyosaki and Mike Maloney were talking about buying gold and silver and I realised I owned a lot of this stuff already.

Some were expecting it to get to $500 or $1000 an ounce. For context, an ounce of silver in the Australian market is currently probably worth around $US19, it fluctuates a bit, but it’s pretty boring and doesn’t move around a lot.

Why do I have it in my portfolio?

It’s just a hedge against inflation, not as an investment. I buy and store them in different formats, in different locations.

I don’t like precious metals as an investment so much because they don’t bring a cashflow and you can’t leverage them (unlike a property or vehicle that you can get a loan against).

As a hedge, the metals are useful in that they would be pretty easy to dispose of if I needed cash.

 

What about the spruikers?

Most of the ‘experts’ spruiking gold and silver are in the business of selling them.

In 1980, the silver price was US$50, compared to US$19 today. If someone bought silver in 1980, it would still be worth less than half of what it was 40 years ago.

Will it go to $500 an ounce like a lot of people say? It could one day, but what would the currency buy at that point in time?

 

Future shortages?

The spruikers say the world is going to run out of silver and it’s going to become too expensive.

I agree that the cost of producing it and pulling it out of the ground will become too expensive and we will see the prices go up in the future.

However, looking at these people that are out there, I don’t know any of them that are successful, let alone have ‘made it’ using precious metals.

 

Being invested

Precious metals play a part in my portfolio.

Property is my favourite vehicle of investment, but it doesn’t mean I don’t invest into other things, like gold and silver, platinum, cryptocurrencies, other businesses and so on.

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