Friday, June 28, 2013

Saving Precious Metals is Still a Good Strategy

Saving the precious metals has been a good strategy for the past 12 years, but is it still a good strategy for the foreseeable future? Yes, for four reasons.
  • Accumulating savings is itself a worthwhile and valuable objective for everyone to prepare for an uncertain future, but saving a national currency results in the loss of purchasing power. In a continuation of the trend now well established over the past 12 years, gold and silver are likely to appreciate faster than the rate of inflation because central bank and government actions are debasing national currency, so demand for the precious metals will continue to grow
  • The precious metals remain undervalued, as explained by my Fear Index and Gold Money Index. Silver remains undervalued relative to gold as evidenced by their historically high ratio.
  • Owning gold and silver are useful diversifiers for everyone’s portfolio. Diversification is always a good way to mitigate unpredictable outcomes and the risks from an uncertain future.
  • Gold and silver are money outside the banking system, which is still teetering on the edge of insolvency, meaning that more events like Northern Rock, Lehman Brothers and Cyprus are likely.

Consequently, saving a weight of precious metals suited to your personal needs by accumulating them through a disciplined cost-averaging programme remains a sound strategy to provide for an uncertain future. So for now, I continue to recommend it.

- James Turk via a recent Gold Money interview: