Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19
Central Banks’ Gold Buying and Repatriation Spree - 28th Nov 19
Another Precious Metals’ Reversal Coming Right Up! - 28th Nov 19
Stock Market 100% Measured Moves May Signal A Top - 28th Nov 19
Don’t Look for Investing Advice in the Media - 28th Nov 19
Why You Should Buy Trailer Park Stocks - 28th Nov 19
Will YouGov General Election Forecast 2019 be as Wrong as their REAL Forecast was for 2017? - 28th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

5 Big Lies About Precious Metals Investing Exposed

Commodities / Gold & Silver 2019 Jun 08, 2019 - 03:48 PM GMT

By: MoneyMetals

Commodities

Physical precious metals serve a unique role in an investment portfolio. Unlike stocks and bonds, gold and silver coins can be held entirely outside of the financial system. They carry zero counterparty risk. They are the ultimate “buy and hold” safe-haven assets.

Unfortunately, investors must often navigate through a barrage of fake news, myths, misinformation, and fraudulent pitches surrounding precious metals before arriving at the simple truth.


Investing in metals isn’t complicated; nor are the reasons for doing so. Gold and silver are hard money with centuries’ long track records.

You don’t buy bullion to get rich quick. You buy it to preserve wealth over time against the threats of currency depreciation and financial crisis. Opting for common, low-premium bullion products that sell close to spot prices is the most efficient way to invest.

That’s precious metals investing in a nutshell. But if you listen to financial and monetary establishment mouthpieces, you’ll likely be misled.

Lie #1: Gold Isn’t Money

Neither brokers, bankers, nor central bankers particularly want the investing public to view precious metals as a core holding. They prefer we think of gold as a “barbarous relic” of the past that no longer serves as money.

In an infamous exchange in 2011 between then Federal Reserve Chairman Ben Bernanke and pro-gold Congressman Ron Paul, Bernanke stated flatly that gold is “not money.”  This is the big lie of fiat money pushers and their ideological allies.

It flies not only in the face of history, but also of the fact that central bankers themselves continue to hold and accumulate gold as monetary reserves.  In 2018, central banks around the world, led by Russia and China, added hundreds of tons of gold to their reserves.  In the first quarter of 2019, Russia boosted its pace of gold buying by a whopping 68%.

Gold isn’t a “barbarous relic” to major world powers seeking to divest themselves from U.S. dollars and insulate themselves from perceived threats out of Washington, D.C.

Lie #2: Silver Isn’t Money

Some misinformers will concede that gold is money… but claim silver isn’t. 

The Founding Fathers of the United States would disagree strongly.  They originally defined a “dollar” in terms of grains of silver (Coinage Act of 1792) which simply codified what was nearly universally in practice. 

Specifically, a dollar was to be 371.25 grains (equivalent to about three-fourths of an ounce) of silver, in harmony with the Spanish milled dollar.  Thus, the true foundation for U.S. circulating currency was silver.

On Wednesday, the central bank’s “Open Market Committee” released the minutes from its March meeting.  Participants decided the Fed will soon stop selling Treasuries and other paper assets on its $4 trillion balance sheet and stand pat on rates.

It’s true that silver has since been removed from circulating coins and replaced with cheaper metals.  It’s also true that silver generally isn’t held in monetary reserves by central banks.

Silver, however, remains the go-to tangible money of the masses.  In the event of a currency collapse that causes the public to ditch fiat dollars, silver is more likely than gold to be used as barter money in everyday transactions.

Lie #3: Precious Metals Are Too Risky for the Typical Investor

This lie is propagated by Wall Street and by Main Street financial advisors who have bought into anti-gold propaganda.  Their conflict of interest is obvious.  The financial industry loses out on commissions and fees when investors park wealth in hard assets.  So they portray gold and silver as “exotic” and “risky” investments.

Or, as in a recent documentary financed and distributed by The Financial Times, they deride gold as “shiny poo.”

It would indeed be risky to bet everything on gold and silver. But no responsible voices in the precious metals community advocate that for the typical investor.  Instead, they advocate a prudent allocation to the precious metals sector – from around 10%, perhaps up to 25% of a portfolio.

A study by Ibbotson Associates found that investors who put 7.1% to 15.7% of their portfolios in precious metals enjoy superior risk-adjusted returns. Gold shows virtually no correlation to stocks and bonds, meaning it can rise when paper assets fall.

Yet the average investor has nowhere near even the bare minimum suggested by Ibbotson Associates to hedge against risks in financial assets.

When the stock market crashed in 2002, precious metals shined.  When the financial sector melted down in 2008, gold finished the year with a modest gain.  When the U.S. suffers a debt-driven currency crisis, as many economic forecasters think is inevitable, the biggest risk of all will be not having adequate exposure to precious metals.

Lie #4: Cryptocurrency Is More Valuable Than Hard Currency

The crypto coin craze has spawned a number of misconceptions, such as the notion that Bitcoin is “digital gold.”  Whatever their merits (and there are certainly some), cryptocurrencies backed only by digits cannot be equated to gold and will never replace it.

Unfortunately, some cryptocurrency promoters are trying to sell their digital storylines by bashing gold.

Grayscale Investments, which runs an exchange-traded Bitcoin product, recently launched a “drop gold” campaign.  It even produced an anti-gold TV commercial, portraying gold buyers as “living in the past” and out of step with the “digital world.”  The commercial’s narrator states, “Digital currencies like Bitcoin are the future… and unlike gold, they actually have utility.”

The lie that gold lacks utility is an old one propagated by the financial establishment.  It’s now being regurgitated by overzealous Bitcoin bugs. 

The truth is that gold came to be recognized as money precisely because it has utility outside of monetary use.  Gold is useful not just to jewelers and artisans, but also to rocket scientists in space technology applications.

What exactly would a Bitcoin be useful for outside of its own digital ecosystem?  Nothing.

Cryptocurrency enthusiast James Altucher went so far as to claim in a recent interview, “Gold is just a rock. Bitcoin has real value.”

Cryptos certainly have a role to play, and, in fact, Money Metals Exchange is leader in offering customers the ability to using digital currencies when buying or selling the monetary metals.

But here’s a reality check: Bitcoin has market value, which can be fleeting. Bitcoin might be worthless 100 years from now if new technologies supplant it.  Gold’s value, on the other hand, is real, immutable, and eternal. Its unique physical properties combined with its rarity ensure it will always be worth something substantial.

Lie #5: “Collectible” Coins Are Better Investments than Bullion Coins

Sadly, some of the misinformation being spread about gold and silver investing comes from bad actors within the precious metals industry.

The biggest culprits are numismatic coin promoters who try to trick people into paying huge markups for supposedly “rare” or “collectible” coins.  High-pressure salesmen will sometimes pitch nonsense about numismatics being “confiscation proof” or fantasies about how they’ll appreciate more than ordinary coins.

They almost certainly won’t after factoring in bid/ask spreads.  The truth is that these high-premium and relatively illiquid products are suitable only for those with a particular interest in, and knowledge of, numismatics.

For the vast majority of precious metals investors who are simply looking to acquire ounces of gold and silver, common, low-premium bullion products are better investments.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2019 Stefan Gleason - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules