In an age of market manipulation, it’s becoming increasingly difficult for the average man or woman to penetrate through the noise. Financial information today buries you with details but reveals little to no insight. Details are infinite and ceaselessly changing. Principles are few and timeless. More importantly, principles are the organization factor of details. Without them, we are loss in an ocean of facts. I wish to help you by providing a few principles that will aid your buying of gold and silver. Use this article as a guide to help you make the best decision.
The first principle to consider before buying gold, silver, or any investment is to learn how to properly sell the asset. You must be crystal clear in how gold or silver can be liquidated. To stack gold and silver without having the skill or knowledge to properly sell them is foolish. Many people stacking gold. or silver fall under that category. This is a fatal mistake. No investment should be made without first having an exit strategy. Who will you sell this gold or silver to? What’s the minimum price you are willing to accept? What is the time horizon for liquidation? These three little questions will shift your perspective when buying precious metals.
Every asset requires a level of skill and knowledge in order to properly sell it. Whether it is real estate, stocks, or silver, the buyer needs to be confident in his personal ability to sell the asset. Blindly stacking an asset will make you end up having more than you know what to do with, inevitably forcing you to sell them at a discount to someone that does.
Once you figured out how to profitably liquidate precious metals, it’s time to buy them. Since you now have an idea of what price you can confidently sell gold or silver for in the market, you will be a competent buyer. You will know what price is too high, for high prices making your future selling more difficult, and you will also know what price is too low, recognizing opportunities when others don't.
To buy gold or silver I recommend using a trusted and reputable dealer like APMEX. I also recommend buying bullion coins only. You will know that the coin is an official bullion by recognizing the BU initial along with the name of the government that mints it. Bullion coins serve the dual purpose of being currency while holding the melt value of their respective weight. Choose coins that are beautiful and diversify the countries you purchase them from. My favorite mints are Canada and the United Kingdom. Their coins designs are stunning and the mintage quality superb.
You will eventually have two storage for your coins, a local and a remote one. The local storage is kept at home in a safe. The remote storage can be placed through a Chase Private Client account or service like Brinks. Since you are just starting, a local safe alone is sufficient. Having a private safe shifts the perception you have of yourself. You feel more wealthy and respectable.
So let’s recap. You now understand that you must first learn how to liquidate gold and silver before you can buy them. You are using a trusted dealer like APMEX for your monthly precious metals purchases. Upon the arrival of your gold or silver, you store them in a safe hidden inside your home. So far so good. Now that we have the fundamentals, let’s look at timing.
Is now a good time to buy gold or silver? Many gold bugs will tell you that yes it is always a good time to buy precious metals. After all, they are a store value, have industrial utility, and blah blah blah. A thoughtful analysis of market conditions however reveals a different story.
We are currently living in a period of bubbles. In fact, our current bubble is the bubble of all bubbles. Price valuation of every asset is off the charts. The stock market is hyper inflated, real estate is super inflated, bonds are in 30 year inflation run, art prices are inflated, even food have not escaped the inflation genie. All this might look dazzling until one realizes that it isn't assets going up, but the dollar going down. Since all assets are denominated in dollars, the price of everything gets higher and higher.
During a crash however, the exact reverse happens. All assets go down in price, including gold and silver. What goes up in value is the dollar. So the very dollar the gold bugs shun is the actual winner during a crash. This makes sense for two reasons: 1) A crash is the result of debt being destroyed as margins are called. Less debt means a smaller quantity of dollars chasing assets, forcing asset prices downward. 2) We live in a world abundant with stuff. More stuff is produced every year. Wages, on the other hand, are stagnating. This creates a liquidity crisis. In other words, while they are tons of goods, the amount of money circulating to buy those goods become more and more scarce. In this scenario, cash buyers rule them all.
What does this all mean to you? It means you should stack up on cash. During a collapse, cash is king. Everything will be on sale. Cars, houses, bonds, gold, silver, stocks, real estate, you name it, everything will be on sale. That will be your opportunity. Real estate will be selling for as little as $20,000 or even $5,000 in depressed areas. Silver will be worth only a couple of dollars. Gold may be a few hundred dollars. And stocks will be worth pennies.
Armed with this foresight, begin saving capital today. If you observe charts from the 2008 crash you will notice that everything went down except the dollar. Houses originally priced for $1M were selling for a fraction of the price. Countless property developers became bankrupt. The stock market was selling for less than half its price. And they were many other opportunities I care not to mention.
The crash that is coming is similar but will vary in degree. This upcoming one will be deeper and much more violent. There will be a plethora of assets for sale, and plenty of wildly profitable opportunities for those that are willing to clean up the debris. You will make money as an investor by buying the bargain assets you know how to liquidate. You will make money as an entrepreneur by doing work that will clean up and restructure the economy.
