Are Silver and Gold Still a Good Investment?
If you have been around cryptocurrencies for more than a year, chances are you came over from the silver and gold community.
Precious metals are the original hedge against rampant government spending, and an honest money in a muddled monetary system.
But, silver and gold have not moved much in the last decade. Sure, silver had a run-up to $50 in 2011, and gold to $1800, but they have essentially returned to the same price they had before the housing crisis.
While many silver and gold bugs have faithfully hodled their store of metals, they have watched their digital counterpart go to astronomical prices.
Many of the YouTube channels I follow for news about the metals are now becoming hubs of discussion about Bitcoin. Do we sell our silver stash and buy Litecoin? Is Bitcoin better than gold?
While I am adamant about the possibilities crypto offers, and see it as the transition from a broken fiat system, I still see silver and gold as wise investments.
When Puerto Rico was leveled by Hurricanes this past year, bitcoin and blockchain assets were not an option for basic necessities - silver coins became invaluable for survival.
Granted, not everyone is in the path of a hurricane or even sees catastrophic weather very often, but having a backup is never a bad idea.
Aside from these anomalies, I believe silver is a good investment for its industrial capabilities.
We are not leaving the digital age anytime soon, and all these cell phones and laptops need silver to conduct electricity.
While demand for silver is going up, the supply we find from the earth is becoming thinner.
Mining companies struggle to make a profit when their margins are single digits, and the current lag in prices does not help.
The problem is, the price of silver is not a free market. Paper contracts in amounts that supersede anything that is mined on a yearly basis are traded on a daily basis - the market is rigged.
While I believe that silver will be valued at $600 or more at some time, and gold at $8,000 or more, until the ability of banks to manipulate prices is eliminated, precious metals will crawl behind their digital equivalents.
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Anyone who buys silver (physical bullion, not "paper contracts") right now will most likely be pleased with their decision in the future.
When?
Who knows.
With inflation and the madness of crowds as factors that can make markets go crazy, if a really good story gets out to the public about what a great investment silver is, watch those triple-digit an ounce silver prices become a reality :)
Got silver?
True, and the range of all unforeseen things that make the internet temporarily inaccessible will be built into the value no matter where you're located or what your circumstance is.
And in a distant future where crypto replaces fiat, all the more important to have this decentralized backup (now that there aren't fiat notes to use).
So at any stage of crypto adoption it does seem a role for metals remains, at least for a long, long time until we've smoothed out life's uncertainties to the point where we're always sure there will be internet.
For this reason, I would never want to own paper gold. I imagine it's like pushing on a string and they can't manipulate the price forever, right? But they probably have a loooot of rope, since so much of the money today is happy to trust institutions to hold it and very few are ever calling for delivery.
The same concept can eventually happen with bitcoin (and maybe already is, with futures contracts underway). But, much much less of the market is conditioned to using paper ownership.
I don't expect they'd be able to tame bitcoin's growth pattern anyways, but maybe could influence market psychology and when exactly the booms and busts happen.
Good analogy!
thanks!
Honestly I don't know why people always compare Gold/Metals, Stocks, and Cryptocurrencies; they're completely different in their markets and usabilities, and I'm glad to see that you pointed it out.
I'm guessing that most all assets will probably be going for now, especially if we hit another recession.
Diversification is key. At the end of the day, savings/investing anything is a good practice, but as you grow and experience more ups and downs of the market, you will learn what your risk tolerance is and what assets you prefer.
How I see Investments (not all, but the biggest):
Yourself! - Invest in your education, health, and well-being... yes, this includes traveling and experiencing things that make you happy!
Real Estate - Your own home, rentals, commercial, etc. One thing to remember is, real estate requires work and continued investment to maintain. Don't be fooled when people tell you it's completely passive!
Gold/Silver - time tested store of value. Industrial applications as well.
Businesses - I'm talking about businesses you run, own, or at least own enough of to influence operations. Great way to generate value directly.
Stocks - the first thing people think of when investing these days. Investing in companies, big or small, means you trust their leadership to make good decisions and grow the value of your stock, or continue to pay dividends.
Bonds - Your parents/grandparents investments. Safe, stable, unsexy.
Forex - for the Macro-Economists and students of arbitrage.
Cryptocurrency - the newest investment class that is arising to change the standard of value across all economies.
Many options, many strategies, just remember to do your homework and understand the risk associated with various investments.
Nice thoughts.
It's a good asset to hold, because obviously humanity is not able to prevent big disasters leveling our houses, villages and cities.
However thought from a higher perspective we will all die, no matter the amount of gold, silver or crypto currencies we have. Death is not easy to overcome, but we could still try our guts and focus on consistently piling few non-materiable treasures that will help us avoid it.
Just my 5 cents on the topic.
Excellent observations. We should all think seriously about being prepared for death. I write about that quite a bit in my blog...
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I like this post, lydon - it's sane and balanced, like your portfolio :)
I think you've provided some excellent observations and insights here, my friend. I'd like to point out one other good reason for HODLing precious metals.
As a store of value, they are quite excellent. When "lean times" come, as they have for me over the last six months or so, I have been able to easily and privately convert some metal to fiat to help tide us through the tough going.
My point here, however, is twofold:
First, you can use your stored metal "for a rainy day," not just for hurricane weather.
Second, at this point in history, I see greater potential value in crypto. Consequently, for my "rainy day" needs I've tended toward liquidating the metal before the crypto...
In addition to learning network coding, as I've spoken of elsewhere, I also need to learn how to buy and sell crypto on the new distributed exchanges (such as bitshares) in order to leverage the value that I have already.
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I've read several articles about gold and silver manipulation by the banking industry. I don't buy gold but I do buy and hold silver just incase our power grids fail ;-)
Not sure if you saw this piece from Goldman. Basically says Bitcoin is the new gold, and should have a near zero return (stable) eventually. Im not agreeing or not, just bringing to your attention as it fits your post.https://www.ccn.com/bitcoin-new-gold-better-safe-haven-asset-goldman-sachs/
As the increase of digital tech every now and then and the amount of people entering the crypto market and the investment as well is also quite noticeable here ,less hassle but the demand of SILVER & GOLD will be there in time as it still is.In time we will know the definite answer !