| 3/20/2010 |
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Guide To Investing in Gold and Silver Everything You Need to Know to Profit from Precious Metals Now by Michael Maloney "Throughout the ages, many things have been used as currency: livestock, grains, spices, shells, beads, and now paper. But only two things have ever been money: gold and silver. When paper money becomes too abundant, and thus loses its value, man always turns back to precious metals. During these times there is always an enormous wealth transfer, and it is within your power to transfer that wealth away from you or toward you." --Michael Maloney, precious metals investment expert and historian; founder and principal, Gold & Silver, Inc.
A lot of people fall into the trap of thinking that they don't have to physically own their precious metals. Either they think they can leverage their position better by buying mining stocks, or they think the futures contracts or ETFs they own are as good as gold. As I've mentioned, that's just plain stinking thinking. First off, if you're reasoning, "Mining stocks give me leverage; I'll just buy the stocks," then think again. First, if everyone just bought mining stocks, and no one bought physical gold and silver, then the price of gold and silver wouldn't rise. In fact, it would fall because of lack of demand, while all the extra funds available to the mining sector because everyone was buying their stock would then spur increased supply. Second, mining stocks are stocks. They are not gold and silver. They are shares in a company that processes gold or silver. As such, they are subject to market conditions such as a currency crisis or stock market crash. Gold and silver, on the other hand, could rocket to the moon while the mining stocks fall. But beyond that, there are a number of reasons physically owning gold and silver is the ultimate way to invest for this part of the cycle that we are in. They are:
It is my recommendation that you establish a core physical position of gold-and silver-before you ever diversify into mining stocks, futures, options, ETFs, or any gold-and silver-related investment. Every precious metals investor should have a core position of physical gold and silver that they do not trade. A core position can be held many ways. The size of your core position will be a major factor in determining the different ways it is held.
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