Silver/Gold – Do You Buy, Sell or Hold?

In this article, we re- visit the perennial question of whether “now” is the right time to buy, sell, or hold onto gold and/or silver. Of course, not knowing when you are reading this article, there is no way to tell you if the time is right. Also that would be wrong, not knowing your individual circumstances. However, there are a number of things that you can look at to decide for yourself about your precious metal investment.

First, it must be said that gold, silver, and other precious metals typically outperform any other form of currency over the long-term. Gold has outperformed every other currency since this decade, this century, or even this millennium started. That’s not surprising, given that every other currency is based on faith and trust and little pieces of paper, not on real physical wealth.

Gold does not rot or crumble, can be relatively easily transported (unlike real estate), is universal, and cannot be generated by any government to cover their economic needs. The same applies to silver, with the important addition that silver is used in many industrial processes, and so has commercial value as well as intrinsic value.

The one factor cited against gold is that it pays no interest. At the moment, banks are paying virtually no interest on currency, and in this sort of climate the price of gold typically soars. In fact, holding currency gives you a negative return because inflation erodes the value of money. For the first part of this century, gold has averaged nearly 20% gain every year, making it a winner hands down.

All the gold ever mined in history, much of which is still available in the world as jewellery and the other forms, would currently fetch less than $10 trillion. If you think this sounds a lot, bear in mind that the world governments have spent more than twice this in “bailouts” of their economies in the last couple of years. Not to forget silver, much of which is mined as a by-product of other mining operations and not sourced directly, and which is in short supply because it is being used up in the industrial processes referred to earlier.

Unless you are a believer in the “end of the world” scenario, the current best advice is to hold about 10% of your wealth in gold, though for the end of the world you would probably find a bag of “junk silver”, actually not junk but silver in small denominations, would serve better as a medium for bartering.

There are several ways that you can profit from investing in gold, and not all of them involve buying and storing the precious metal. However exchange traded funds, and other ways of notionally investing in gold have been criticised because you do not have the actual metal. Precious coins are an alternative, though you will pay a premium price when you buy. If you want to speculate in what can be a precarious market, then you may consider some form of investment in mining shares.

Whichever you choose, with extremely low interest rates, and the current economic climate it seems that gold and silver are set to remain a fundamentally sound investment.

Trading Gold Update: Gold looking at $1700 I wish we were in it now lol. With gold it can sometimes be at a level which is uncomfortable if that is the case the trade should not really be taken or perhaps a reduced stake trade, with a bit of luck if it goes our way we can slice and dice the trade and get our stop up to a level where we are in a winning position.