When we are about to have a snow storm up north, and it looks like we are going to be snowed in for a bit, I run to the store and pick up a few things.
Bread. Check.
Milk. Check.
Butter. Check.
Eggs. Check.
Gold and silver. Wait… gold and silver?
Gold and silver have fascinated man for centuries. Whether stamped with the King du jour’s face or cut into “pieces of eight,” man has had a habit of collecting shiny things. Man has stolen and cheated, started wars, fought, and even died all in the vain pursuit of gold and silver. Now I’m not condoning all that we have done in order to get some sparkly stuff, but it is nice to have some bling around, especially for the average homesteader. Because when it all inevitably goes to pot and life’s winters rage, it’s nice to be the one with the pot of gold when the rainbow finally shows up in spring.
I’ll be honest with you, I love the feel of metal currency. There is just something substantial about coins and metal. It has staying power that paper just doesn’t, and I’m uneasy about crypto or other non-physical currencies. I figure if I can’t physically touch my money, I don’t want any part of it. Because all it would really take is for someone to switch a 1 or a 0 somewhere and then what? A person could lose everything! Nope, not for me, thanks.
I like to think of gold and silver as a universally recognized store of wealth. It doesn’t matter who you talk to, or what country you’re in (or even what century it is), if you were to ask someone if they would like a gold or silver coin, they would almost definitely say yes.
Now, the prices of gold and silver have fluctuated throughout the years, but they have never lost their value. If you’re thinking, “Allyson, that doesn’t make sense. In 2000, the price of gold was $312 an ounce back in 2000 and now it’s nearly $2000!”
Well, yes, that is correct, but it’s more accurate to say that the U.S. Dollar has lost its value over time and it takes more dollars to buy the same amount of gold. Think of it another way: a loaf of bread in 2000 cost an average of $1.26; today it’s about $2.12. The same loaf of bread costs more, or the dollar just doesn’t stretch as far as it used to.
The value of that dollar in your bank account can swing wildly depending on war, famine, economic collapse, energy crisis, or just because it’s an election year. That same dollar in gold, not so much.
“Okay,” you ask, “why not invest in something like corn or oil? Doesn’t that retain its value because it’s a physical thing as well?” Well, yes and no. Corn, oil, and other commodities do tend to retain their value but they can be used up. They can also be lost for many reasons like fire, disease, or natural disaster. Gold and silver are basically bullet-proof, fire-proof, and you don’t have to water them. They just sit there until you are ready to do something with them. They’re also very easy to move around, you don’t need specialized equipment to figure out if it’s genuine or fake, and there are no serial numbers or third parties required to purchase it.
Buying precious metals is actually quite easy. It can be as simple as walking on down to the local coin shop with cash in hand and walking out with gold or silver. No credit cards or ID needed. Simple! You can also buy online from any one of dozens of bullion dealers and have your new bullion shipped directly to your house.
There are a few things you should know, though.
Every gold or silver transaction will be based on the “spot price.” The spot price is the base price of one troy ounce of the metal you are trying to buy. The spot price is determined by the trading activity in the futures market. It is reflective of the current trading price of the metal. Spot prices can fluctuate dramatically from day to day, and even minute by minute, so make sure you are up to date when it comes time to buy.
Now, when you buy gold or silver you will have to pay a premium. “What is a premium,” you say? Think of a premium like a mark-up that the coin shop or bullion dealer puts on the metal you’re buying. After all, they have to make a profit, too.
The larger the quantity of metal you are buying, the lower the premium tends to be. Also, the form of metal can have an influence on the premium. Bars tend to have a lower premium than coins because of the lower cost required to pour a bar than to mold and stamp a coin. Older or non-mint condition coins also tend to have lower premiums as well.
The best time to buy precious metals is during an economic boom. Why? Because when the future looks bright, investors are more likely to gamble a little more with their money, invest in more risky ventures, and buy less gold, thereby lowering the price.
In my opinion, selling precious metals is the hardest part of the process. Sometimes it’s just hard to part with the shiny stuff. “Dragon sickness,” as J.R.R. Tolkien would say, can be a real thing, but when it comes time to sell, remember, buy low and sell high.
Selling can be just as simple as buying. Just walk in with coins or bars and walk out with cash. You can also pack it up, and ship it off to the same bullion dealer you bought it from.
The best time to sell gold and silver is actually during a crisis. That is because, as mentioned earlier, the stability afforded by precious metals is second to none. When the world turns scary, people instinctively gravitate to the tried-and-true, and the spot price jumps as traders seek to secure their wealth and snatch up precious metals left and right. And if things get scary enough, you might be very glad you had some gold bars and silver coins stuffed under your mattress!
Gold and silver don’t have to be for the rich and famous. A little around the house could be a real lifesaver when things head south. I mean, we store food up for the winter, why not store up some wealth as well? Because if there is anything I know, it is that after every fall, whether man-made or not, there is a winter and it’s best to be prepared for it.
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Because silver coins are more readily converted into money we can imagine trading for something, I figure a silver one oz coin, be it a Maple Leaf or a Silver Eagle is the equivalent of a $20 bill. Figure a gold one oz coin to be the equivalent of $1800 now...tough for someone to make change, and you'd probably get ripped off if you were trading it in a major crisis. I'd give one silver coin for a gallon of petrol, for example...but it would be difficult for me to give a gold coin in exchange for even a tank of gas.
Silver is more the currency of the people.
Just my opinion.