Precious Metals Investing

As times progress, the world economies are becoming more and more unstable. During these times of economic turbulence the smart money moves towards "real money". What is real money you ask?

Real money isn't printed and cannot be reproduced. The value you of real money does not inflate or deflate. If you haven't figured it out yet I am referring to precious metals. To be more specific: silver and gold. It isn't nearly as difficult as one may think to start investing in precious metals, and it doesn't require much paper (funny) money to get started.

fiat currency

I recommend starting any precious metals investment with silver. Get a solid foundation of silver first before buying gold. It's common to pay a premium (an amount over the actual metal value), but you want to shop around in order to pay as little premium as possible. As you shop around, you notice that many dealers encourage bulk purchases by way of discount. Take advantage of these deals if you are able.

Always, always, ALWAYS take possession of your gold and silver. A common saying in the precious metals community goes along the lines of, "If you can't hold it in your hand then you don't own it". The saying "Possession is 9/10's of the law," shouldn't be taken lightly. That being said I discourage precious metals pools, gold and silver ETF's e-gold and other knock offs and heck, I wouldn't even trust your local bank. The banks have stolen from the people before and with the political elite having more power today than ever I would not put it past them to do it again. (And, no, I'm not a doomsayer or a conspiracy theorist. Just an observer of the past who firmly believes that history repeats.)

Here are what I consider to be the golden rules to investing in gold and silver:

Gold and Silver American Eagles

--> Always take physical possession of your precious metals.

--> Pay the lowest premiums you can afford to pay. Don't pay ANY if possible.

--> Avoid numismatics and focus on bullion. Numismatic coins are for collectors. Not for those who want to preserve wealth.

--> First buy silver before buying gold. It's simpler to convert silver into currency than it is gold because it isn't as dense in value.

--> Start off with small amounts gold first, before buying larger amounts.

--> Only buy what you know and are familiar with.

--> Get a good foundation of metals before speculating in mining stocks, if you must. Keep in mind that investing and speculating are two completely different things.

--> Find a reputable dealer and build a good relationship with them.

--> Don't commit more than 20% of your portfolio to a stake in precious metals. Think DIVERSIFY.

--> Buy at regular, consistent intervals. This is another way of saying dollar -cost averaging. Over time it will lower your investment costs and will instill discipline.

Here is a simple plan that can be incorporated immediately. Take ten percent of your income each time you get paid and start buying some silver. Take out more if you can afford it, but no less than ten percent. I suggest buying one ounce silver rounds, because of their popularity and their easy recognition. Eventually you want to accumulate a position that is equivalent to at least ten percent of your net worth. This, my friend, is your foundation. Where you go from here is entirely dependent upon your risk tolerance. You can begin speculating in mining companies if you don't mind the risk, but I urge prudence with any speculative endeavor. Even if they often times outperform the metals that they mine!

There is a lot of uncertainty about the future of our economic infrastructure, but what is certain is; precious metals were around before the first man made currency was produced and they will be here after the next. Till next time…

Old Roman Silver Coin