Investing in Silver Blog

Cash or Gold Bullion?

Why You Should Be Investing in Silver

Throughout history, precious metals have been recognized as money. Fiat currency has an average shelf-life of four decades. The United states got away from the gold standard in 1971 under President Richard Nixon. What's the difference concerning currency and money? Currency is cash. It is a tool of trade. Throughout the historical past, there were many forms of currency, for example seashells, rice and sticks. Currency is convenient and divisible. It is fungible, meaning my dollar is valued equally to your dollar. It can be used to obtain something of worth. Money is all that currency is, but additionally, is a store of value. Think about a merchant ship that sunk many years ago. If it contained a treasure chest packed with coins, it would maintain its value, as gold does not corrode and silver can be cleaned. The same cannot be said of paper money, it would have simply dissipated.

Worldwide Money Printing

Through all of time, when a nation begins printing money, it becomes very hard to quit. A greater amount of currency in circulation creates inflation, meaning you will need more currency to purchase the same items that it did before the influx of cash into the market. The Federal Reserve is greatly increasing the monetary base as of late.

Money Flowing Out of Wall Street

The small time investor has pulled more than $214 billion from US mutual funds since the outset of 2010, and since the US debt downgrade, they have removed an additional $44 billion. A portion of that money has moved into bonds, which is astonishing. Individuals are searching for shelter from a failing currency, and then loan their paper money to the very same government who's destroying said currency, it’s mind-blowing. If they haven’t moved their cash into bonds, it’s more than likely placed in a savings account, amassing no more than one percent interest. With real inflation exceeding 5%, it means they’re securing a loss of 4%. In other words, they are voluntarily becoming 4% poorer annually. If you had put your money into the DOW in 2000 and just maintained it, you'd have picked up roughly twenty-four percent. Conversely, if you had acquired silver in 2000 you could have gained 550%; and had you sold near its all-time high of $50, investing in silver could have netted an easy 1000%.

Silver is Greatly Undervalued to Gold

The historical price ratio between gold and silver is 16:1. That means silver really should be trading near the hundred dollar range, and it ended 2011 at $27.50. With gold in the $1550 area, that sets the present ratio at 56:1. So basically, this should be a major buy indication with limited downside risk.