Investing in Precious Metals (Mainly Gold and Silver) Explained in One Minute One Minute Economics

Most currencies used to be backed by gold and that is no longer the case. At this point, precious metals are simply traded like commodities. You buy and sell them on the open market. So, should you buy some. Here are some of the benefits.

1. Gold for example, had value for thousands of years and while this does not give us any 100% guarantee about the future, it is well close enough.

2. Time has proven that precious metals have good store value, something you can leave behind for future generations.

3. If something like a revolution occurs in your country, you can simply take your precious metals and leave, whereas assets such as realestate will have to be left behind because they are not portable. On the other hand, here are the cons.

1. Unlike stocks that can generate dividends or realestate that can generate rent income, precious metals don’t generate revenue

2. Let’s say gold has indeed proven to be of good store value, you should not expect it to do more than keep up with inflation in the long run. Precious metals are assets you choose for wealth preservation rather than enhancement.

3. Owning precious metals can be tricky. If you keep them at home, you have to at least buy a decent safe. You can of course invest in an exchange traded fund, but you would not physically own the metals and would expose yourself to counter party risk by letting a third party keep them. All in all though, there is definitely room for precious metals and pretty much all portfolios.

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