Gold and Silver- What Happened?
Speculation is running rampant in trying to figure out what is happening in the metals market. Jim Rickards told Max Kieser on the Kieser report that it is possible that China is manipulating the price in order to be able to purchase more metal at a lower price. The recent comments by Ben Bernanke caused a momentary liquidity crisis as global markets digested the thought of the money spigot being turned down. Interest rate shot up like a rocket causing people to sell everything. Andy Hoffman recently told Financial Survival Network that production costs of silver are now higher than the metal. He expects this to cause many miners to go out of business which could trigger sever inventory shortages in the future. Shortages equal higher prices. The bottom line is that no one knows what the fiat price of metals will be tomorrow or even next year. What we do know is they have a historical track record of holding their value where fiat currencies have historical track records of loosing value steadily over time until they collapse. Gold and silver have been considered stores of value since Genesis 13:1 “Abram had become very wealthy in livestock and in silver and gold.” The US dollar has only existed in its current completely fiat form since 1971 and has lost 75% of its value since then. You decide which one you trust.
Gold and silver have suffered steep declines in recent months. Is it time to get out? Historically speaking, when everyone was most panicked, it was the time to buy. There is a very high probability that people will look back on these prices and kick themselves for not buying more metal than they did. While PrepperRecon.com does not offer investment advice, I do speak about my personal strategies. My target is always to keep 10% of my total assets in physical gold and silver. A great strategy is to make a regular schedule of purchasing small amounts. That is called dollar cost averaging. If a person has been purchasing silver and gold every month or every other month, the price fluctuations have been averaged out by the systematic plan.
Every good financial plan starts with a budget. You have to keep track of what is coming in and what is going out. Once you have that on paper and are able to actually live by it, you can begin to set aside some amount each month for savings. The first thing you want to do with those savings is to set aside six months expenses worth of cash. This money is not to invest, prepare for teotwawki, buy a new car or allocate to silver or gold. This money just sits there and depreciates. This is your catastrophic insurance fund. If you loose your job, if there is a hurricane and you have to bug out, if you are forced to shoot an intruder and need bail and a lawyer, this money is there to get you through the toughest times of life. You can put it in an interest baring savings account if you can find one and if you trust banks. I recommend keeping some portion of that money outside of the banking system all together. I would keep at least 1 months worth in a well secured place like a home safe or hidden well on your property.
Once the six month cushion is taken care of, you may then proceed to allocate your savings to investing, wealth preservation and prepping. My recommendation is to create an envelope system where a certain percentage goes into a dedicated envelope each week. Perhaps you want to dedicate 10% to investing, 5% to prepping and 5% to wealth preservation through gold and silver. Like most people, I do not consider gold and silver to be investments. For those who look at them as long term wealth preservation instruments, they have not been shaken by the recent price drops. Those people, like the Chinese and Indians, have been taking advantage of these great deals.
When I think of an investment, I think of something that produces income like rental real estate or solid dividend stocks. For myself, I seek to maintain diversification so that no one market crash can wipe me out. There is wealth of knowledge out there to offer investment tips. Just make sure you know what you are doing if you take on the challenge yourself and do not put all of your eggs in one basket. One great resource I use is Follow The Money Daily. They speak about specific recommendations and overall investment strategies. Jerry at FTMDaily also produces a weekly podcast that I listen to every week.
If you do decide to take advantage of the current gold and silver prices, shop around to find the best deal. You will probably find out, like I did, that JM Bullion has the lowest over spot price. You can also use coupon code PR5 to get $5 off any order over $300. They have no minimum to purchase and their $10 shipping charge makes it cost effective to purchase a little at a time so you can practice dollar cost averaging to smooth out market volatility. At the time of this writing, they were offering a special on Silver Maple Leaves at $2.45 over spot.
Happy Prepping!
The markets are being manipulated. Nevertheless, it’s a good time to buy precious metals. Personally, I favor silver over gold as it has been undervalued compared to gold in the last decade or so. It will also easier to use as currency than gold.
All that said, barter will be much more valuable/practical than gold/silver for weeks/months and maybe years depending upon what causes a collapse. Therefore, I strongly recommend you spend first on things that will keep you alive initially, and then will sustain you (e.g. non-GMO seeds). Things like food, water, ammo, alcohol, tobacco, coffee, toilet paper etc. will be much more valuable in the short to medium term, so make sure you have lots of those before buy gold/silver (unless money is no object for you). Supplies are always a good ‘investment’ because even if there is no collapse, prices for those always go up more than our income, so if you buy food today and don’t eat if for 2-5 years, you’ve still made a good choice.
Good advice KJQ. Thanks for commenting!