Guide To Investing in Gold & Silver: Protect Your Financial Future

by Michael Maloney

One is the stock cycle, where stocks and real estate outperform gold, silver, and commodities, and then the cycle reverses and becomes a commodities cycle where gold, silver, and commodities outperform stocks and real estate. The other cycle is less known, less regular, and less frequent: the currency cycle, where societies start with quality money and then move to quantity currency and then back again.

There are three layers of cost built into the price of a numismatic coin: metal content, numismatic premium, and dealer profit. Bullion and bullion coins, by contrast, have only two layers: metal content and dealer profit.

Physical precious metals are, by far, the safest and least amount of work of any investment in the precious metals sector, and they still offer the potential for enormous gains. Just buy them now, sit on them until they have become overvalued and go into a bubble, then sell.

1. For 5,000 years, gold and silver have been the only assets that have never failed. Because they are tangible assets of inherent value their purchasing power will never fall to zero. 2. They are financial assets that can be completely private and not part of the financial system. Even real estate requires the financial system to transfer title. Gold and silver do not. 3. They are one of the few financial assets that are not simultaneously someone else’s liability. Stocks, bonds, and derivatives like futures and ETFs require the performance of the issuer or counterparty. Even cash requires the performance of the government that issues it to have value. If a government fails, so does its currency. Gold and silver never fail. 4. They can be wholly owned. You can never really own real estate for instance; if you think you can, just try not paying your property taxes for a few years. 5. They are safe-haven investments that rise during economic upheaval, war, terrorism, and natural disaster. 6. They have a proven track record of performing well in inflation or deflation. 7. They have a high value density. That means that, unlike copper or oil, a very small amount of gold or silver provides significant purchasing power. 8. They have a low bid/ask spread, unlike diamonds or collector coins, which can carry a 15 percent to 100 percent spread. 9. Every ounce has the same value. Every diamond or collector coi...

Every precious metals investor should have a core position of physical gold and silver that they do not trade.

get the most gold and silver for my currency. For silver in 1-ounce increments I now buy my own product, the Pegasus Round.

For portable wealth and the best protection against government confiscation I can find, I buy another of my own products, Gold Without Borders. In a nutshell, this is investment grade, 22-karat, gold bullion jewelry.

Most jewelry is a bad investment because it usually costs many times the value of the metal content. What you are usually paying for is the artistic value and large wholesale and retail markups.

For gold coins I now buy semi-numismatic pre-1933 $20 Double Eagle coins in low grades such as AU (almost uncirculated) or jewelry grade. These semi-numismatic coins are a very thinly traded market (a market with a very small volume), and just a single investor trying to buy a few hundred of them can actually move the price of the whole market up. As of this writing their premiums are very small, but when investors rush in near the top of the market I expect the premiums to explode once again, returning gains not only on their gold content, but their collectible value as well.

2015 Update: I believe we are now about to go into the short-term deflation that I predicted in this book. Yes, this economic storm is an opportunity, but I am getting an increasingly uneasy feeling about the scale of the second half of this hurricane that is just about to hit us. As I said earlier, all the underlying fundamentals that caused the meltdown of `08 have only been magnified by the actions of the world’s central banks. The bailouts, currency creation, market manipulation, derivatives expansion, and growth of the “too big to fail” banks only guarantee that the next crisis will be much, much larger. This stored up energy will one day be released and I now think it could be really bad, with civil unrest and food shortages as a tail risk possibility. I now keep 6-months of living expenses in cash, outside the banks, where I can get my hands on it, (there are private vaulting services that offer safe-deposit.) I have 6-months of food, water, and other essentials, and a small allocation of Bitcoin.

2015 Update: When it comes to the upcoming economic crisis I believe it is better to be years early then one second too late. So over the past couple of years I have reallocated my portfolio to reflect what I believe are the coming economic conditions. I no longer have a position in stocks and have increased my allocation of physical precious metals. I have a small allocation of Bitcoin, and I now keep a much larger allocation of cash on hand because I believe we are going into a deflationary dip and I want to buy even more gold and silver should the price temporarily fall. The price fell in 2008 and I was lucky enough to almost double my position in the metals near the bottom of that dip. I continue accumulating gold and silver every month and believe that if the price falls from here it will be the last opportunity to accumulate precious metals at bargain basement prices before the major crisis that awaits us.