Gold & Silver Investment
Gold and Silver as Money
There is no subsitute for holding physical gold and silver in your portfolio. Precious metals are real money, a store of value, and liquid. Gold and silver held in bar or coin form is free from risks associated with counter-parties. Gold can not go bankrupt, cannot default, and cannot be created out of thin air.
Gold and silver exhibit all of the qualities of sound money, which is why they have been considered real money for thousands of years. In contrast, fiat money (paper/digital money by government decree) have limited lifespans. There have been over 3,400 fiat currencies and they all have failed. Fiat money has no backing and it is only the confidence of its users that give it value. Since it is only confidence that gives the currency value, a lack of confidence can quickly destroy the value.
To understand gold and silver as money consider Aristotle’s definition of good money. He characterized good money as having four characteristics; Durability, portability, divisibility and intrinsic value.
“Gold is Money. Everything else is credit.”
– J.P. Morgan, 1912
Aristotle’s Definition of Good Money
It Must Be Durable
Money must stand the test of time and the elements. It must not fade, corrode, or change through time.
It Must Be Portable
Money must hold a high amount of ‘worth’ relative to its weight and size.
It Must Be Divisible
Money should be easy to separate and re-combine without affecting its fundamental characteristics.
It Must Have Intrinsic Value
The value of money should be independent of any other object, and contained in the money itself.
Investing In Hard Assets
Precious metals have stood the test of time. In fact they continue to protect wealth long term against inflation, deflation, and geo-political risks. Protecting wealth using historically safe assets like precious metals may not seem exciting, but Gold and silver are considered an alternative assets.
It is ironic that owning hard assets are to There are many ways to gain exposure to the precious metals market. Mining stocks, ETFs, physically backed funds, futures contracts and others. Yet none of them are substitutes for owning the real thing. It is important to maintain complete ownership over your hard assets.
Precious metals are hard assets that store and protect wealth over time. While there are many ways to gain exposure to precious metals there is no substitute for owning physical metals. Color diamond investing continues to grow as an alternative to traditional stock and real estate portfolios. Popularity of color diamonds in general is on the rise. More stars are seen on red carpets wearing color diamonds and more high-end jewelry stores are promoting them. It is not just the world of fashion and media that have taken notice of color diamonds it is also the investment world.
“Investment in gold now is insurance. It’s not for short-term gain, but for long-term protection.”
– Alan Greenspan – World Gold Council Newsletter February 2017