Nowadays, it seems a bit paradoxical to be investing in gold and silver, as well as other precious metals. Since we’re riding on a wave of 7.5 percent inflation, it can seem a bit absurd to keep all of your wealth in precious metals. We’re all aware that politicians and leaders are incapable worldwide. The only thing left might be investing in cryptocurrencies since they’re the only assets with a massive return.
However, that niche looks more like the Tulip bubble that happened in the Netherlands a couple of centuries ago. Here’s a speculative scenario. Let’s say that the grid of the United States happens to fail one day while everyone is using Bitcoin. Click here to read more.
What would happen at all of the terminals and the ATMs when there would be no power running in the wires. Cryptocurrencies will not work. Maybe some phone payments will go through, but that’s not enough to power the entire country. Whenever there is a time of crisis, people resort back to precious metals as a natural law.
We saw that happen a few days ago in Russia and Ukraine. The Russian ruble is being devalued, and it experienced a 36% loss against the dollar. The people living there are starting to use precious metals as a medium of exchange once more, which resulted in the price of gold moving up after a long trend of stagnation.
Modern investors think that polished rocks are something that is an archaic type of saving money, and yet some of the most successful in keeping a massive percentage of their portfolio in gold and silver. Warren Buffet had an interesting remark back in 1998. He said that people dig gold out of the ground and then refine it in other countries.
Then, they take the same gold, put it in vaults of banks, which are again, located underground, and hire guards to stand around and make sure that it doesn’t get stolen. If there were other forms of life watching over us, they would either be laughing or scratching their heads due to confusion. Visit this page for more info https://www.livemint.com/market/commodities/gold-rates-today-fall-further-down-rs-2-500-from-highs-in-just-two-days-11646882954248.html.
Even though he said that the year before, he acquired more than a fifth of the world’s reserves in silver. He bought 130 million ounces of silver, and yet he was spewing against the entire concept of precious metals. It seems like gold is at the bottom of the pyramid since it doesn’t give out any dividends, there’s no interest, and it doesn’t pay you rent. But, there’s a catch.
How is gold different from all other assets?
For thousands of years, gold was the only form of investment that people had. That is imbued in society, and it’s still regarded as the highest form of wealth that someone can achieve. That’s why there are gold watches, phones, cars, and jewelry.
People wanted to show off their wealth, and the easiest way that was accessible to them was wearing something shiny and different. Now, we have the internet, so things are a bit different. However, the basic premise has not changed.
Whenever you’re investing, you’re putting your cash at risk. You could lose it all, or you could earn some more of it. If we look at history, we can figure out that the safest thing to invest in is bonds that were issued out by governments. That’s especially true about the United States.
During times of peace, and when everything is going well, these bonds always deliver back on their principal, as well as interest payments. Stocks are a bit risker since you can lose a hundred percent of your entire investment. If the company you bought shares from goes bankrupt, you can say goodbye to your money. However, if everything goes well, the returns can be enormous.
That’s especially true about companies that bear their name after a common fruit. You can sit down, take a calculator, grab a piece of paper, and compute exactly how much returns you can get from those investments over a given period of time.
But those projections rarely happen in real life. That’s the absurdity of the entire process. On the other hand, precious metals like gold and silver are completely inert, and they don’t produce additional cash flow. But in buying gold coins also lie their power. When events that are out of our control take place, these two metals sit back on their thrones and govern the markets.
No one thought that in the 21st century, we would have another war, and yet here we are. The United Nations and NATO are watching as Russia bombards Ukraine with missiles, and the entire Western world is ready to enter in a new nuclear war after signing peace treaties to never use those weapons of mass destruction again.
Opinions change, but history is bound to repeat itself. At the moment, the safest choice to keep your wealth in is definitely gold. The ruble got devalued in a single day. Who knows what can happen to national currencies in the future. Precious metals have no boundaries, and they’re traded across the world.
Not everyone in the world will know what a dollar is, but everyone knows the peculiar shine of a gold coin. Gold doesn’t change, but the things you can buy with it do. When you look at historical charts, you can always buy more in the future than in the present. You can’t say that about any other currency of the world.
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