The Value of Gold and Silver Investing

Throughout history and especially in times of economic turmoil, recessions, and wars, precious metals have served as a store of value for investors. Gold and silver are considered safe-haven investments that produce no cash flow, but maintain their intrinsic value. However, before making a purchase, it is important to know about the various reasons why it is highly regarded.

The Value of Gold and Silver Investing
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Precious metals have served as a store of value throughout human history

The history of gold and silver as a store of value dates back thousands of years. It is closely tied to the evolution of what we call money now, and the evolution of human civilization. Precious metals were used as a bartering tool in the ancient Greek and Roman civilizations and were prized in pre-Columbian America, Africa, and Russia. They were also highly regarded by Genghis Khan and Attila. Gold and silver have always served as a symbol of beauty and power. Even today, they are important in the global economy for their intrinsic value, store or wealth, and protection against government-caused currency crises.

Gold and silver have special qualities that have made them the ideal store of value. Gold is a non-reactive metal, meaning that it won't corrode or ignite when exposed to air. This means it is perfect as a bartering tool because it will never "go bad".

They are an affordable safe-haven investment

In economic downturns, gold and silver are excellent resources to use when you want to store the value of your wealth somewhere safe. The COVID-19 pandemic is a recent example, just like in 2007 when the Great Recession began and gold skyrocketed. When it comes to cost by weight, gold is more expensive than silver but they are both very valuable. Both metals are considered to be safe havens and do better in times of economic instability.

Gold and silver have long been considered an affordable way to diversify your portfolio. While gold gets all the credit in the investment world, silver is often overlooked when the two are compared side by side. But silver is a valuable alternative and can sometimes even outperform gold in certain situations.

While gold doesn't pay dividends or interest, it's a safe and secure investment because it acts as a hedge against inflation and economic downturn. Gold increased in value 25% during the 2008 financial crisis and continued to rise over the next few years.

They are a long-term investment

While investing in gold and silver is a long-term strategy, it is important to remember that the price of these precious metals fluctuates from time to time. As a result, small changes in price have a decent effect on the underlying investment. For example, if silver's price changed by two dollars an ounce, it would have a 10% fluctuation. In comparison, if the price of gold fluctuated by one dollar, it would only move by 0.0013%; but in this case, you have to consider as well - is the value of my dollar also changing? However, this "volatility" in precious metals is not necessarily a bad thing. As long as you invest wisely and know how to invest in gold and silver, you can enjoy a safe long-term investment that has a positive return.

They produce no cash flow

Investing in commodities such as gold and silver is a common way to save money, but this type of investment produces no cash flow. In contrast, stocks and real estate provide passive income through dividends, but you also have the risk of betting on a market that will someday crash. Precious metal investments also have transaction costs, insurance, and storage costs which stocks and bonds do not have.

While precious metals do not produce cash flow, smart investors can take advantage of their price appreciation and safe store of wealth, unlike what you will get with fiat currency. 

They are an opportunistic investment

Gold and silver have historically experienced short-term fluctuations, which usually are the opposite of what the economy is doing, therefore, these metals are often the best investment options during times of recession. In fact, during each of the last three recessions, the G/S ratio increased. While this may be a negative, this volatility has historically served opportunistic investors well. Even though silver prices can drop more quickly than gold, they always bounce back.

Gold and silver can be used as investment vehicles in a retirement account as they are best invested as part of a diversified portfolio. Many financial experts recommend 5% to 20% of a portfolio invested in precious metals. It is important to remember that the prices of gold and silver fluctuate due to market conditions, economic events, and other factors.