Is Precious Metal Investing Only For Survivalists and Conspiracy Theorists?
What is your opinion? Do you think people who invest in gold or silver and other precious metals are smarter than the rest of us who invest in pieces of paper, or are they “survivalists, conspiracy theorists and flakes” as the LA Times says? They even talked to the head of financial planning firm Glowacki Group in West Los Angeles, who said “That’s for the guys we don’t want as clients”. Wow, that’s…interesting…that they would actually turn down clients interested in precious metals.
As for me, we do have some silver in our “portfolio” - meaning in my house. 
My grandparents always used to give us half and silver dollars throughout the years, and I am glad I hung on to them because they are actually worth more than their face value now. In fact, Mighty Bargain Hunter just wrote about copper pennies becoming scarce, and I left a comment reminding him about pre-1964 pennies and even modern day nickels, which are worth more than face value as well.
So what are your thoughts? Are people who invest heavily in metals “flakes” or are they onto something? What do you think?
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13 Comments so far
I certainly won’t invest in it myself. While I expect it’ll always have some value because people will think it does–Gold is just a shiny rock. We create this aura around it, we have a hard time breaking our cultural conceptions, but it just comes down to our love for shiny things. Particularly shiny things that aren’t too common.
It’s only advantage is that most of the world likes its shinyness and may be willing to accept it. We’d do the same with seashells if they were rare.
So true, but money is only worthless paper and we chase that around…:-)
I came across this decision a couple months ago. Doesn’t it almost sound silly to aim for complete diversification and then disregard diversifying for currency/societal risk?
It is the eventual fate of EVERY paper currency in history to become obsolete, what makes us so damn sure the dollar is different? I’d argue it’s crazier NOT to take some meager % (1-2% for most people would still be a lot of silver) and put it in metals as the ultimate emergency fund. Even if the dollar never dies, you can always shorten/eliminate your position at a time metals are up.
With this viewpoint, I recently bought $86 in face value junk silver (pre 1965 silver coins) off feeBay and tossed it in the safe. Estimated spot price: 900+. Hopefully it never comes to it, but in a pinch I suspect it will go further to secure me food/transportation/fuel/whatever than what would be a worthless piece of paper.
The dollar will be obsolete, as you say Dave, no doubt about it. The important part is “when”…
Thanks for your interest in my post David!
It’s impossible to plan for every contingency but having some gold and silver covers a few bases. Hard-core survivalists would do much more. It’s best to keep one’s ear to the ground once in a while, even if it’s not there all the time.
Oh I agree mbhunter, I agree! At least metal is metal, not just paper milled at a govt. agency!
I think it’s a good hedge against inflation, volatility, and currency weakness. Should be a small part of every portfolio.
I wouldn’t directly. But I’m boring… plain index mutual funds for me!
Invest is a tricky word when it comes to gold/silver. The value of gold and silver really does not fluctuate that much and thus the true value (purchasing power) of your gold/silver will remain the same - even though it takes more of those ever decreasing in value paper dollars to purchase the same amount of gold/silver.
Essentially you won’t become any wealthier investing in gold/silver but at same time you won’t constantly be losing money as the USD continues its inevitable plummet.
I guess the moral of the story is gold/silver is certainly 100 times better than holding cash as Inflation will continually eat away at the paper dollars.
Sort of funny - I read this article before the Ron Paul article and actually thought you might be a Ron Paul supporter
Not to kick a dead horse - but think you should do a little more research before you call someone crazy…pretty sure I could find an article on every candidate that would make them sound insane. He’s the only candidate out there who seems to understand the fiscal problems. Anyway feel free to move this comment to another thread if you feel it’s too spammny
MFJ
http://www.MyFinancialJourney.com
No, not really - I think they are all terrible candidates, to be honest. But so far, RP is the only one coming across as kind of nuts, as we all discussed in the other thread. Anyway, thanks for the comment.
I have a very small portion of my portfolio in a precious metals fund (maybe 2-3% total). I don’t think that will hurt me much, and even though that particular fund increased 30% this year, it won’t help me much either.
I’ve owned silver bars in the past. They made a great tax deduction when I sold them. Commodities as a whole tend to return 0% after inflation. They can be used as a hedge against inflation, but frankly natural resources (energy, timber) probably make better choices than precious metals, in my opinion. That said, a few gold and silver coins at the ready help some sleep better at night.