Why Hold Gold and Silver?
By: Tom Chatham
As the world economy gets more chaotic every day, people begin to wonder how to protect themselves from the disruptions and uncertainty. It is always good to have some basic supplies at home to weather any crisis but you can only store so much. Your supplies may last for years but for any excess wealth you need a place to store it safely as well.
Stuffing dollars under your mattress may seem like a good idea but what exactly are you saving? Those pieces of paper are only worth what someone will trade you for them and the more that are printed, the less they will buy. Paper money can be printed to infinity and can eventually return to its intrinsic value which is zero.
Many people buy precious metals to convert their money into something more tangible. They do so for different reasons but the premise is always the same. They want to hold something that cannot be printed to oblivion. Tangible items will always have some value while paper can become virtually worthless.
Many people use precious metals as an investment to get a decent return on their money but gold and silver are not designed as an investment any more than a can of soup is. In certain circumstances, gold and silver can return profits when there is volatility in the markets but this requires you to sell these metals to access this profit. When you sell these metals you end up with more paper assets that can be destroyed by inflation.
Precious metals are real money and as such hold their value over time. Money is the agreed upon unit that represents proof of your production. Metals must be mined and refined which exemplify production value that is recognized by people. When you buy gold and silver you lock in the value of your production for future use. This stored value is what makes gold and silver a good monetary unit.
When you store your wealth in paper assets you allow those that control the printing of the monetary units to devalue the stored production value you had for the future and they are able to spend it now with little notice from you. The reason to store wealth is for the future use of it when you are no longer able to work. If this wealth is stolen from you it is as though you never earned it and your future can be bleak due to lack of these resources.
Gold and silver lock in the value of your savings and allow you to access this savings in the future to provide for your well being making it difficult for money printers to access this stored wealth against your will or without notice by you. Precious metals can be an investment in some circumstances but it is mainly a wealth preservation tool to hold until you decide to exchange it for other hard assets that you need in the future. Only hard assets are real wealth and that is what you need to remember. As the world economy becomes more unstable through the printing of paper assets, the possession of hard assets in the form of gold and silver will enable you to weather the financial storm and position you to prosper in the aftermath. Hard assets can take many forms but any excess wealth you have can be stored in precious metals to insure the survival of value until it is needed.