Why Buy Silver and Gold?

If you ask gold or silver investors why they save some of their hard earned cash in the form of precious metals, they will probably give you a long list of reasons. The first reason most give is that the metals tend to hold their value and create a hedge against inflation. They bring up examples like one silver dime could buy a soda in 1964 when it was worth 10 cents. Now the silver bullion within that same coin would be worth about $1.20. So, either way, now or n 1964, you could purchase a soda or a candy bar. That's what they mean by using bullion as an inflation hedge.

In fact, if you look at putting money into a safe investment like US treasury bonds, you would have seen an increase under 3% a year since 2002. During that same period, the price of gold has increased by an average price of 26 percent a year. Furthermore, the price of gold has increased by an average of 36% per year.

Now look at the actual buying power of that money. If you take inflation into account, the true value of the money in a treasury bond would have decreased by 1.2 percent during the last 5 years. But if you had invested just half of that money in gold and silver, you could have seen an increase in your money's buying power by almost 59%.

So while the value of money may fluctuate wildly, many investors look at their gold or silver savings as a way to keep their purchasing power intact. Now that does not mean the dollar value of gold or silver always rises. Sometimes it remains fairly stable, and sometimes it drops. But over time, and especially during tough times, precious metals tend to hold the actual purchasing power of their investment in a more stable way then currency does.

Now, as with any investment, do your own research and learn from experts. It is up to you to take the next step and investigate precious metals. You need to do this in order to avoid any overpriced purchases. You will learn which offers will give you a good value, and which ones are simply too good to be true. Nobody has a crystal ball and can predict what will happen in the markets next week or next year. People lose money when they do not buy or sell at the right time. As with any market, the trick is learning how to buy low and sell high!

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