Why Buy Silver and Gold?
1. It’s super cheap. Gold and Silver are cheap. Silver is mostly used as an industrial metal. In 1900, there were approximately 12 billion ounces of silver in the world. Today, that figure has fallen to about 300 million ounces of above-ground, refined silver. This means that there is more demand for Silver than there is Silver available. This fact will create higher prices as we will not be able find and mine Silver fast enough to keep up with industrial usage.
2. Governments will make our money worth less to pay off their record debts. Governments can print money to pay off their debts. But they can’t create gold. The supply of paper money can be infinite. But the supply of gold is extremely limited (they say that the entire gold production in the history of the world could fit on the basketball court at Madison Square Garden). And it’s difficult to extract.
3. Precious metals do well in major international conflicts. The price of Gold was fixed during World War I and World War II. But Silver, for example, rose by over 100% in both world wars. Gold has risen for the duration of the War on Terrorism. It all comes back to #2, above... governments ultimately print money to pay for wars.
4. Gold and Silver should do well in extreme bear markets. Silver more than doubled in value from 1932 to 1936 during the Great Depression (the price of gold was fixed by the government). The next long bear market was 1968-1980. Silver rose from around $2 in 1968 to a peak near $50 in 1980.
5. Gold and Silver will rise during inflation, recession and during deflation. Gold and Silver are good inflation protection... they rise as the value of the dollar falls. But what many people don’t understand is that gold will do even better during deflation, as the government lowers interest rates and wildly prints money (creating inflation) to offset that deflation... leading to substantially higher gold prices.