Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold and Silver: Your Financial Main Battle Tanks

Commodities / Gold and Silver 2021 Oct 08, 2021 - 11:11 PM GMT

By: MoneyMetals

Commodities

Armored vehicle-enabled soldiers and the designers who build them understand that a main battle tank must balance three critical elements in order to "complete the mission."

This has been true conceptually since the time of David and Goliath, the Three Hundred Spartans at Thermopylae, with Alexander the Greats' elite Silver Shields, and tank battles in four Israeli wars.

As an analogy for those who acquire and hold precious metals, it offers a close fit to their own ability to "complete the financial mission" of asset protection and growth.

First, a main battle tank must have superior firepower, being able to reliably counter and defeat its adversaries on the field of battle.



Second, the armored vehicle must offer protection for the crew. Otherwise, the battlefield gets swept clean by "the opposition," and, as casualties mount, survivors' morale plummets, and the battle is lost.

Third, to survive multiple engagements, a tank must be highly mobile so as to stay out of harm's way, reposition to counter the enemy's armor, and dispose of its tactical weaponry.

When David fought Goliath, he lacked protection (a shield) and "firepower" (a sword or spear). But he was able to override these deficiencies through superior mobility, skill with a slingshot... and tactics.

Yes, well-thought out and executed tactics can sometimes defeat an opponent who outclasses you in all three respects, but that's not the way to bet, nor, as an investor, should you have to.

Proper planning, patience, and execution with precious metals adds a decisive safety factor with less correlation to other asset holdings.

Since the invention of the modern tank near the end of WWI, the three imperatives listed above have been manipulated in an attempt to gain a battlefield advantage without throwing the trifecta out of reasonable balance.

In WWII on the Eastern Front against the Russians, consider the German Jagdtiger ("Hunting Tiger").

This massive beast, the heaviest armored vehicle used by any nation in the war, could defeat all comers. But it was so heavy, it could not cross most bridges, had an underpowered drive train, and was plagued with mechanical problems.

On the other hand, the Russians fielded the T-34. This tank was smaller and under armored, but was reliable, highly mobile, and could be produced in massive numbers.

When attacking in formation a member of the Tiger tank family, it could sometimes damage its tracks. The now immobilized giant could be finished off with heavy artillery or explosive charges.

Balancing these elements is always a struggle for the designer. Placing too much emphasis on any one factor inevitably compromises – or defeats – the mission and those tasked with carrying it out.

How does the main battle tank analogy relate to holding precious metals?

Firepower. Look back at silver and gold prices since 2001. Silver began at about $4.50/ounce. Today, even at the recent reaction low, it's $22.00, plus a healthy premium of $3-$6, spot price.

At the same time, physical gold cost $270, with a modest premium. Today an ounce will set you back about $1,780, along with a 5% premium.

After over a year of sideways action from the August 2020 spike high above $2,000, gold's asset protection profile still eclipses by double that of the more widely watched S&P 500 measured over the same two decades.

Protection. Silver and gold protect (hedge) your other assets because they effectively limit erosion of their value by inflation.

These days, this factor is even more important for near-cash savings accounts, with their tiny interest yield of less than one half of one percent per annum! And sticking with bullion coins/bars builds simplicity and minimizes premium cost.

Mobility. Unlike most any other asset class, precious metals can be turned into cash at a moment's notice.

Indeed, the reason metals' prices so often decline (temporarily) during periodic crashes like 2008 and early 2020, is that they are easily sold by heavily margined or over-positioned traders, in order to raise liquidity or limit losses in other sectors.

Hold-in-hand metal – from liability of loss standpoint – has no one standing between you and the buyer from whom you redeem it for cash. Evergrande bond and stockholders, eat your hearts out!

Given these implications, would you rather enter the battlefield with physical gold and silver -encased in a metaphorical Abrams M-1, Israeli Merkava, or German Leopard tank – or "armed" only with a sheet of paper showing you have unallocated (mixed with others' holdings) metal in an untested storage facility? Or even worse, in a non-redeemable ETF?

And don't just say "Well I'll play it safe by holding stocks or bonds, and hope for the best!" Because the way things are shaping up, it's more than likely that soon you may seriously regret doing so.

So either ford the stream of indecision now before the "runoff" gets too strong. Or wait until the inflationary flow is so powerful that you must attempt to act – even if it turns out to be impossible, and the real value of your assets is swept away in the process?

Renowned commodities trader Dr. Alexander Elder's battlefield quote perfectly sums up the investor's dilemma, as well as the path to investment survival and success. He says it consists of "battling crowds of hostile people while paying for the privilege of entering the battle and leaving it whether dead, wounded, or alive."

These days, whether we like it or not, we're ALL on an investment battlefield.

For the foreseeable future, as the financial system wends its way through uncharted waters, place the odds measurably in your favor by holding gold and silver – the historic talismans of asset protection.

David Smith is Senior Analyst for TheMorganReport.com and a regular contributor to MoneyMetals.com. For the past 15 years, he has investigated precious metals’ mines and exploration sites in Argentina, Chile, Mexico, Bolivia, China, Canada, and the U.S. He shares his resource sector findings with readers, the media, and North American investment conference attendees.\

© 2021 David Smith - 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