The Truth About Gold and Silver

If you are thinking of investing into metals, then you are certainly thinking of precious metals. These are not ordinary metals like steel or aluminum alike. Gold and silver are the so-called precious metals here. For many centuries, gold and silver have been used countless times in the economy for trade and as a currency.

The advantage of using precious metals (gold and silver) is that the government cannot debase them. This would mean they cannot simply multiply the amount of gold and silver because they are limited resources on earth. On the other hand, the government can simply make more copies of paper money if cash is used as currency (which is the case for almost all countries currently). But the problem with debasing is that it will devaluate a certain currency. This will ultimately lead to inflation. It simply requires much more work to produce gold and silver if compared to printing money.

The advantage of having gold and silver is that they can provide a protection against inflation. How is this possible? In recent decades, their prices seemed to rise despite other resources like stocks and bonds decreasing in value. Their (goal and silver) value even continue rise and even beat inflation. Therefore, precious metals provide decent amount of returns. However, in recent times, precious metals are lousy investments. Why is that despite all the nice talk about their increasing value? This is because their rate of return can only keep up with inflation, not overcoming it.

However, if you have a knack for investing in precious metals or insist on it, then you should invest in them as an inflation hedge. You should look for mutual funds and purchase them off right there.

As a word of warning, you should never purchase precious metals futures. These particular items are not considered as investments at all. They are just short-term gambles. The prices of gold and silver might rise quickly and also decrease very quickly. Another source of investment you should avoid is buying coins or bullion. While you might understand the meaning of investing in coins, what about bullion? Bullion means bars of gold and silver. The problem faced when buying bullion is that it is expensive to store them in a safe place (most likely a bank). Even if you can find a proper and legitimate firm, you should still avoid the temptation to go into buying gold and silver during these days.

Source by Alfred Chai Wei Liang

The Truth About Gold and Silver