The Pros and Cons Of Investing in Silver and Gold

Image credit by digitalmoneyworld from Flickr

Gold and silver have been very popular investment vehicles for some time now. They`ve been in the news a lot more recently, especially in Australia and New Zealand, however for as long as we can date back they have been desirable to us. Even thousands of years ago, ancient texts speak of kings and their gold. People have always desired gold, and that`s not something that is going to be changing any time soon. As the demand for gold in Australia and around the world has been increasing over recent years, so has the price. Gold is also a popular investment for people who don`t trust their governments to properly manage the economy. Gold is desirable all around the world, whereas a currency can quickly become deflated and lose its appeal. So, are you ready to start speaking the universal language of gold investments? Here are some pros and cons to investing in gold and silver.

Pros Of Investing In Precious Metals Like Gold And Silver

In recent years, people have been a little bit gold-crazy. The price has pulled back a little bit in recent months, making this a great time to open or expand a position in gold. Here are some of the positives in doing so. The price of silver is often tied to the price of gold, but this ratio has been known to fluctuate. This gives you the option of buying a bit of both to be more diversified within your precious metal holdings.

Gold is currently at a low over the past few years, yet still remaining stable, making this an excellent buying opportunity for one of the world`s oldest currencies and stores of value. There`s a huge market for gold and silver, so if you decide to sell them it`s very easy - there`s always a buyer waiting. You`ll never be stuck with gold and silver that you can`t get rid of, and you`ll never have to sell it below market price. There are people waiting for it, at the current market value, all the time. Governments all around the world are stocking up on gold as a hedge to the US dollar, so why not follow suit?

Cons Of Investing In Precious Metals Like Gold And Silver

Like any investment, there are always downsides. It`s up to you to decide whether they outweigh the positives or not, but keep in mind that it`s always a good idea to have a balanced portfolio. You would never want to be 100% in gold and silver, but you also wouldn`t want to be 100% in cash or the stock market either. It`s all about balance and your risk tolerance and personal philosophies will determine how heavy or light your portfolio should be in gold and silver. Everyone should have some amount of gold or silver in their portfolio, here are some of the downsides to consider.

People use gold as a safe-haven in case the economy hits an absolute disaster, they often cite situations where people will be rioting in the streets and paint a very grim picture of civilization. Let`s be realistic, will things ever get that bad? If they did, gold is going to be the least of your concerns.

The value of gold is tied to fiat currencies even though the USD is no longer backed by gold. So even if you`re using gold as a way to diversify away from other currencies, the value of your gold is always going to be determined by how much of a currency it will get you. On the plus side, as currency loses value, gold will get you a greater amount of said currency. You can see James Turk`s predictions regarding the future price of gold in the video above.

Final Thoughts On Investing In Silver And Gold

If you`re simply looking for a place to diversity some of your holdings, and to hedge against currency devaluation, gold and silver are the way to go. They may be not perfect for an "end of the world" type of situation, but nothing else is either so that`s not necessarily a fair criticism.



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