Silver, however, remains the go-to tangible money of the masses. In the event of a currency collapse that causes the public to ditch fiat dollars, silver is more likely than gold to be used as barter money in everyday transactions.
Lie #3: Precious Metals Are Too Risky for the Typical Investor
This lie is propagated by Wall Street and by Main Street financial advisors who have bought into anti-gold propaganda. Their conflict of interest is obvious. The financial industry loses out on commissions and fees when investors park wealth in hard assets. So they portray gold and silver as “exotic” and “risky” investments.
Or, as in a recent documentary financed and distributed by The Financial Times, they deride gold as “shiny poo.”
It would indeed be risky to bet everything on gold and silver. But no responsible voices in the precious metals community advocate that for the typical investor. Instead, they advocate a prudent allocation to the precious metals sector – from around 10%, perhaps up to 25% of a portfolio.
A study by Ibbotson Associates found that investors who put 7.1% to 15.7% of their portfolios in precious metals enjoy superior risk-adjusted returns. Gold shows virtually no correlation to stocks and bonds, meaning it can rise when paper assets fall.
Yet the average investor has nowhere near even the bare minimum suggested by Ibbotson Associates to hedge against risks in financial assets.
When the stock market crashed in 2002, precious metals shined. When the financial sector melted down in 2008, gold finished the year with a modest gain. When the U.S. suffers a debt-driven currency crisis, as many economic forecasters think is inevitable, the biggest risk of all will be not having adequate exposure to precious metals.
Lie #4: Cryptocurrency Is More Valuable Than Hard Currency
The crypto coin craze has spawned a number of misconceptions, such as the notion that Bitcoin is “digital gold.” Whatever their merits (and there are certainly some), cryptocurrencies backed only by digits cannot be equated to gold and will never replace it.
Unfortunately, some cryptocurrency promoters are trying to sell their digital storylines by bashing gold.
Grayscale Investments, which runs an exchange-traded Bitcoin product, recently launched a “drop gold” campaign. It even produced an anti-gold TV commercial, portraying gold buyers as “living in the past” and out of step with the “digital world.” The commercial’s narrator states, “Digital currencies like Bitcoin are the future….and unlike gold, they actually have utility.” |