Why Invest in Gold and Silver Bullion?
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. – Alan Greenspan
Hedge Against Inflation
A one ounce gold or silver coin represents the capital required to prospect, mine, refine and produce the coin. Gold has intrinsic value and by this definition, provides a hedge against inflation. In contrast, fiat currency, has no real value but only a perceived value and is affected by government reserve bank policies. Silver has a “negative feedback” price control mechanism, it's value is usually less than it costs to produce. Paper money or fiat currency, as opposed to silver has a positive feedback loop, as the cost to produce paper money is negligible. Throughout history the amount of paper money in circulation has always grown, which inevitably leads to inflation. Inflation is caused when there is an increase in the money supply, caused by the printing of currency, monetisation of debt, etc. All too easy for central bankers controlled by politicians seeking re election.
Many analysts believe that substantial devaluation or collapse of the Dollar is inevitable. The United States national debt stands at over $21.2 Trillion and is growing. (A staggering $174 321 per taxpayer.) This does not include any of the United States un funded liabilities, which have been estimated to be as high as $ 210 Trillion [$210 000 000 000 000]. President Obama has said that Americans should be prepared to face “Trillion dollar trade deficits for years to come.”
Supply and Demand
Silver bullion production is not increasing quickly enough to satisfy the increasing demand. When silver bullion prices were low, with high production costs, there was no incentive for miners to increase capacity. Production has been declining since 2000 and it can take up to ten years for a new silver mine to reach full production. As traditional investments continue to disappoint and the intrinsic value of silver bullion becomes apparent to investors, the increased demand will result in higher silver prices.
There is no default risk when you invest silver bullion and gold bullion coins. An investment in a silver bullion coin or a gold bullion coin can be contrasted with an in vestment in AAA rated Lehman Brothers or Bear Stearns bonds or a share portfolio invested with a “reputable” investor like Bernard Madoff. Madoff is alleged to have lost $50 billion dollars of investors money in what federal agents described as a massive Ponzi scheme.
Silver and Gold have Safe Haven Status
Silver is a safe haven for cash in times of geopolitical uncertainty. Geopolitical tension is often increased in times of economic uncertainty and, in the current economic climate, increasing geopolitical tensions are inevitable.
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