Precious Metals Create and Maintain Wealth — As In Days Of Old

Precious Metals Create and Maintain Wealth — As In Days Of Old 5.00/5 (100.00%) 2 votes

There has been a huge increase in regards to investing in the precious metal markets as of late, and this trend does not seem to be dying down anytime soon — in fact, it is increasing at an exponential rate. If an investor were to tell someone 10 years ago, “My friend, in 10 years, gold, silver, platinum, palladium and other precious metals will go through the roof – make your move, and invest now,” they may have looked at you as if you were crazy. But, the hard-hitting truth is that the speculators who predicted such an event were absolutely right; and, as of this writing, the price of precious metals is still rising at a steady pace with no end in sight.

Consider this fact – it was only five years ago that investors were still not too enthusiastic about the precious metals market. Only one or two years later, after the infamous “banker bailouts,” did you see investors scrambling to invest in physical precious metals to use as a hedge against the falling dollar and the deteriorating economy. This was not only happening in the USA, but throughout many countries – particularly Greece, Italy and Portugal.

At that point precious metal prices – not just gold – soared astronomically. Among them were:

  • Gold
  • Silver
  • Platinum
  • Palladium
  • Copper

precious metals
The question that many people are asking, at least those investors who were left out in the cold regarding precious metals is, “Why is there a gold rush all of a sudden? And God forbid, why is there a silver bull market?”

Investors and non-investors alike are acutely aware of this trend, as one can easily observe the fact that major banks, hedge funds, insurance companies, and other financial institutions are now pushing the idea of owning physical gold or silver as a hedge against inflation.

The common layperson can see this on a daily basis with the rise of:

  •   Copper Thefts
  •   Cash For Gold Outlets
  •   Commercials About Precious Metal Investing (mainly gold and silver)

Between 2007-2008, the price of gold was hovering between $700-$800 per ounce, and silver was between $14-$15 per ounce. As of this writing, gold is steadily approaching the $1700 per ounce mark; and, silver is nearing $32 per ounce – that’s an increase of more than 50% for the price of both metals in only a five or six year period!

At first, there was some speculation that the precious metals market was being manipulated. However, as more citizens became aware of the economic crisis hitting the USA, they began buying into precious metals. Quite simply, citizens who were aware of the decrepit economy chose to guard their finances by backing them up with gold or silver – mostly physical investments. This inevitably caused a spike in the law of supply and demand; therefore, the prices naturally skyrocketed beyond a speculators wildest dreams.

It is times like these that make the average person understand the true value of precious metals, rather than their paper currency counterparts. Throughout history, gold and silver were always the base metals used in trade. In fact, it was quite often that precious metals were used in place of trading livestock, spices, fragrances, and other tangible commodities. The sheer liquidity of precious metals, that is, the ability to buy and sell them easily, is attractive enough for any amateur investor or concerned layman to rally behind. In short, it has been made readily apparent that precious metals indeed hold their weight and value vs. bank certificates and other forms of paper investment.

Hence the old cliché – “Is it worth its weight in gold?”
There are three institutions, which directly influence the price of precious metals in the markets. In order to understand the potential trends in the precious metal markets, it is wise to educate yourself on the backgrounds of which institutions has control over which precious metal:

  •   HSBC – Gold
  •   JP Morgan Chase – Silver
  •   Goldman Sachs – Silver
  •   London Metal Exchange – Precious Metal Futures

These four institutions hold a great influence on the precious metals market.

The spot market is a separate but important entity. Investors in the spot market base their trades on when to exit or enter a purchase on a daily and hourly basis. Because this can change on a minute-by-minute basis, this helps to determine the value a precious metal – either positively or negatively.

There are those who consider precious metals – especially gold and silver – to be “real” money, as opposed to reserve bank-backed paper notes and metal-clad coins. Much of this has to do with the fact that the USA was based on a gold and silver standard in the past. Wherever you travel around the world, gold and silver are equally universally and equally accepted. The truth of the matter is, there are four important features which make precious metals more advantageous for “real money” than the paper counterparts:

  •   Easily Transportable – one can carry 50oz of gold anywhere throughout the world with relative ease.
  •   Liquidity – the high demand for gold and silver make it easy to buy and sell anywhere.
  •   Easy to convert to paper – gold or silver transactions to a common currency can be done almost instantly, unlike currency exchanges in large amounts which are subject to approval and security limits.
  •   Easy to use – anywhere a person travels throughout the world, there is not anything that cannot be purchased with gold or silver.

There are countless examples throughout the history of the world where the elite, royal families, and barons used precious metals as way to create and maintain wealth. Because of this, we should all use this illustration as an example that precious metals can only enhance wealth, not stifle it – something even the shrewdest of investors may be reluctant to admit.

The good news is that you don’t need to be a member of the elite, a member of royalty, or the like to invest in precious metals. In fact, it is now easier than ever to start building wealth with precious metals using reliable sites like Monex.com to purchase gold, silver, platinum, palladium, bullion, etc.

The unfortunate reality is that most people will depend on the government to provide the currency that will make them wealthy. Don’t be one of them, as this is undoubtedly the wrong position to take!

The wealthy have always known that precious metals have contributed to their success. Maybe it’s time for us to take the same stance as well by putting more stake in precious metals, such as gold and silver, than in paper notes and clad alloy coins that only hold value to the ones exchanging them.

As P.T. Barnum once put it, “There’s a sucker born every minute,” there will always be those who hold faith in what they are comfortable with (paper money), than what they are unfamiliar with (precious metal investing).

Don’t be a sucker – invest in precious metals today and reap the benefits!

Sources:

  • http://www.blanchardonline.com/beru/gold_silver_long_term.php
  • www.kitco.com