Investing In Gold And Silver For Capital Preservation And Appreciation

Gold Silver Investing

In the previous page we detailed the various methods in which you can invest in Gold, Silver and other precious metals. Now we will discuss the various reasons

we think that you should consider consider Gold Silver Investing in particular in your portfolio.


Gold Silver Investing




Why Invest in Gold and Silver?

In the previous page we detailed the various methods in which you can invest in Gold, Silver and other precious metals. Now we will discuss the various reasons
we think that you should consider consider Gold Silver Investing in particular in your portfolio. In the previous decade stocks have been a roller coaster ride and the Dow Jones Industrial average is almost the same value it was in 2000. The Nasdaq on the other hand is down 50% of its value it had ten years ago. This means that if you had invested in stocks in 2000, the best return you could hope for was approximately 0%. However, when adjusted for inflation your real return on stocks was negative. In other words this marked the first time, that a ten year period whenstocks did not both show growth nor did they compensate for the effects of inflation. The previous two years have bee extremely gut wrenching and there is no guarantee it won’t occur again.

Gold on the other hand has nearly quadrupled in the last ten years far outpacing the inflation rate and beating most other investment hands down. Considering the current economic
and geopolitical environment as they currently are. I ask you, were would you want to invest you’re hard earned wealth, Stocks or Gold?. I think the answer is obvious and below we
discuss some the reasons why Gold Silver Investing should be part of your portfolio. Its not intended to be all inclusive list, but we think that it will peak your interest.


Currently there are so many reasons to invest in the precious metals that they are too numerous to mention them all. Gold and Silver have always been a good and sound investment, although their popularity has increased lately due economic events. Some of the prime reasons you should contemplate investing in Gold, Silver and perhaps Platinum are the following:

1. Global Money Printing.
World government have for sometime now embarked on a money printing binge to stave of the financial crisis that erupted in late 2008. This unprecedented growth in money supply can only lead to currency debasements and henceforth devaluation of them. The U.S dollar is the world currency, however, it is not immune from excessive money printing and will suffer the consequences at some point down the road. Fiat currencies hallmark is that they are backed by nothing but the good faith of the government that issues it. Basically it’s worth the paper it’s printed on. It has no intrinsic value and it supply is only limited by how much a government is willing to print.

2. Hedge against Inflation.
The consequence of unrelenting money printing is usually inflation, or in the worst-case scenario, hyperinflation. Economists are divided on what will be the consequences the unprecedented increase in the money supply. Nonetheless, classic economic theory suggest we are in for a period high inflation were the your currency will buy and be worth less. Precious metals are the primary way to maintain you purchasing power.

3.The unprecedented United States Debt.
The united stated debt is growing exponentially and now is an amazing $ 14 trillion, however, once you add the total obligations of the United States Government some estimates are as high as $100 trillion. With such astronomical amounts of debt, the prospects for the U.S. currency cannot be positive.

4.Increase in Demand For Gold and Silver.
The news lately has been filled with stories of very large purchased of gold by both China and India. Added to this is the increasing popularity of gold as an investment and IRA with individual investors who now understand the consequences of not protecting your assets. Countries such as China and Russia have publicly come out to encourage their citizens to buy gold. Demand for both Gold and Silver can only continue to grow. More and More are realizing that gold and silver are an effective way to diversify your portfolio since it’s the most negatively correlated to stocks.

5. Supply is anticipated to decrease.
Mine supply is anticipated to decline for the next three to four years. Gold and Silver are a limited resources were the amount that ca be extracted is constrained. Mine supply will contract in the next few years, fewer new mines discovered and existing mines will continue to decline in production as they age. This will mean that there will be less Gold and Silver to meet the worlds demand. Current mine supply of gold is estimated at 2,500 tonnes per annum which has not been enough to meet Golds tradition supply for years. It is expected that demand by China alone will be 500 tonnes in the next few years.


6.Large short positions.
To fill the gap that exists between demand and supply. The world’s central banks have engaged in leasing their gold, which results in shorting of Gold futures contracts by the counterparties. The estimate is that 30-50% or 16 thousand tonnes of the world’s banks gold are in the market and therefore an equivalent amount of short contracts exist on Gold.

7. Interest rates.
To combat the worst recession in years the Federal Reserve Bank has lowered interest rates to zero, which in effect caused real interest rates to be negative. The Federal Reserve is of the position that interest rates will remain low for a substantial period of time. Historically, there is a strong relationship between negative real interest rates and appreciating gold prices.

8. Gold the Solution.
More and More individuals, economist anf government are looking towards goals a possible solution to the economic dilemma we face. A new gold standard of variation of it is increasingly being contemplated.

9. Hedge for Political Uncertainty.
As we recently with Greece, were demonstrators took to the street. Gold prices reacted by going up. Increasing tensions within and among countries will cause a flight to Gold. Currently conflicts in the Middle east and economic tensions between China and the United States could act as catalyst for increasing Golds price.

10. Long Term Uptrend.
On Technical basis, Gold recently broke out of an inverse head and shoulders pattern and continues to appreciate. The long term trend in Gold has been up and continues to be so.


We have tried to summarize some of the principle reason you should consider Gold and Silver in your portfolio. By no means are these reasons all-inclusive. However, it is evident that investing in precious metals is great idea and its and investment that will let you sleep at night. Some may argue that Gold and Silver have appreciated considerably and it’s too expensive to buy now. Well I guess there where saying the same thing when Gold was $400, $600, $900, $1000 and then now at over $1,400. Simply, the fundamentals continue to favor Gold and on inflation adjusted basis Gold remains undervalued. That combined with the fact that the economic world changed after September 2008 continues to strongly suggest one should have Gold in their portfolio.

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