Why Buy Gold and Silver?

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Gold    Silver    Economy    Central Banking

(September 2012)

The simple answer is: Preserve Your Purchasing Power! Gold and silver are great investments in the current monetary environment, lovely to hold in your hand, historically interesting, and they provide financial and emotional security.

Consider these ten questions

  • If you were putting something into a “time capsule” for your grandchildren to open in 40 years, would it be gold coins or $100 bills?
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  • Gold was under $300 per ounce in 2001. As of today, it is nearly $1,700 per ounce. How has the purchasing power of a $100 bill held up since 2001 compared to gold?
  • Would you trust the veracity of a gold coin more than that of a politician?
  • Central bankers can and do create trillions of Dollars, Euros, Yen, and Yuan. How many ounces of gold can central bankers create?
  • How many hundreds of paper currencies throughout history have been inflated into worthlessness? Has a gold coin ever become worthless because of inflation?
  • Have you ever held a gold coin in your hand? Would you like to?
  • Gold was valuable 5,000 years before the “Dollar” was invented. Will it still be valuable 5,000 years from now?
  • Gold pays no interest, so should I invest my savings in it? How much is your money market paying you these days? Less than 1%? Gold has averaged over 15% increase in price per year for the last decade. Which sounds better?
  • Do you remember $.15 per gallon gasoline? Gold was worth about $40 per ounce at that time. Our economic system depends on a rapidly expanding money supply, which guarantees inflation over time. In simple terms, as prices increase, so will the price of gold. During some decades, the price of gold can increase very rapidly. I suspect 2010 – 2020 will be one of those decades.
  • If I substitute silver for gold, are all of the above still true?

Think about the above questions and then think about your retirement, your savings, and your ability to preserve your purchasing power with gold and silver, in comparison to most other investments. I think an objective analysis will point toward gold and silver over most other investments.

GE Christenson
aka Deviant Investor

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2 thoughts on “Why Buy Gold and Silver?

  1. To Mr Christenson,
    I have been reading for sometime that Banks will be able to use Gold as a first tier asset as first on Jan/20/12.
    Do you if this correct?
    If so, do you have any comments about this?
    Could such an action have any bearing on the spot pice of Gold/Silver?
    Or would it be business as normal?

    • Nick Barisheff and others have stated that the Basel III framework becomes effective January 1, 2013. These new banking rules require that bank reserves increase from 4% to 6%, and allow gold to be counted as a Tier 1 asset at full value, instead of at the current 50%. It seems to me that this can only increase the value placed on gold by banks and the investing public. I fully expect the demand for gold to increase and for a substantial rise in the gold price during 2013. Silver will follow.

      GE Christenson
      aka Deviant Investor

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