As the value of the US Dollar continues to weaken, market prices for precious metals like Gold, Silver, and Platinum will go through the ceiling, this is pretty much Economics 101. Gold and Silver have always been seen as a hedge against inflation, and w/ gasoline heading to $5 this summer I’m pretty sure we are looking at hyperinflation. Unless something weird happens to stabilize our economy and oil prices, we could be looking at a perfect storm for those holding precious metals…
By a perfect storm, here’s what I’m saying. Today, 1 troy ounce of Silver (Bullion: Bars or Rounds) that goes for around $32, could be potentially hit $50 by mid-summer and $100 by the fall of the year. What kind of stock shares offered today can even attempt to bring that sort of return? Does this seem a little far-fetched? Check this out, in 1993 1 troy ounce of Silver was worth around $5 and not that many people really saw the potential upside to grabbing it at that price. In 2011, only 8 years later, silver was trading for nearly $50 an ounce. That’s a 10x return over 8 years. Think about it, are we in better shape today than we were in 2011?
I know that a lot of investors have a certain percentage of their investment portfolio in precious metals, usually it’s like 20% max. Here’s my thing, where’s the rest of their assets tied up? The stock market? Unless you have a ton of time on your hand to go short and pickup options, I’m betting your really not doing that well in the markets right now. Why do I say that? It’s simple, we are in a down economy, people don’t have the income stream that they used to have at their disposal. The average 25-30 year old just starting their careers already saddled with student loans, mortgages, automobile payments, etc. may never even bother to open a savings account during their lifetime. Their only hope is that their employer offers an investment plan, or 401k, for them to sew into otherwise their future may look a lot different than their parents did. Another consideration, I will be turning 40 years old this year, is it likely that I will ever be able to draw a penny that I have paid into Social Security over the years? It’s probably not likely…
Taking all of this into consideration, here’s some advice. Allocate around $35 (depending on market prices) on a weekly or monthly basis, whatever works in your budget, and start stacking silver. The best places to purchase from are always reputable dealers and assayers, here are a few that I like:
- APMEX, Inc. – Great Service. Located in Oklahoma City. Shipping is Outrageous Though.
- Northwest Territorial Mint – Great Service. Stick to 1 and 5 oz. bars for easier trading.
- Braswell & Son – Great Service. Local w/ Several Locations. Typically Sells Silver $3 over Spot Price. You Do Have to Pay Sales Tax.
- Oklahoma Coin Dealers – No Sales Tax on Cash Sales. Typically Sells Silver Between $2 – $3 over Spot Price.
Also, I know that someone is going to ask about Gold so I want to quickly give my reasons for touting Silver over Gold. The main reason is that Gold is already high, it’s consistently in the $1700 – $1800 range per ounce, and the average Generation X, Y, investor (that reads my blog), just doesn’t have that kind of excess to invest. Plus, you have to look at your earning potential, is there going to be a lot more demand for Gold at it’s current high price? Or, will undervalued metals like Silver start seeing more uptick in it’s valuations. Bottom line, it’s likely you will earn more tying up your excess w/ silver than you will w/ gold.