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Gold and Silver: Accumulation and Liquidity

By Dr. Jeffrey Lewis

As history has shown again and again, hard currencies like gold and silver are perhaps the only truly safe long term investments.

Part of the safety of these assets arises from the fact that they are traditionally accumulated and hoarded by individuals, especially in financially challenging times and periods of high inflation. Even more importantly, precious metals like gold and silver are liquid assets that can be readily sold for currency or exchanged in a barter situation.

Those two qualities alone make the precious metals very unique investment assets. This is something that the anti-gold antagonists seemingly fail to understand. Alternatively, perhaps they understand it so well that they are actually scared of gold.

Even More Reasons to Invest in Gold and Silver

Although most individual investors want gold and silver for those two key reasons of accumulation and liquidity, many other investors want it for other valid reasons as well. Such additional reasons might include:

  1. 1)   Debt Concerns - National and corporate debt problems are becoming more and more obvious to the masses, thanks in large part to the Greek sovereign debt crisis. Heavily consuming countries with substantial budget and trade deficits like the United States currently have a huge amount of debt to service and roll over each year.

At some point the debt bubble will succumb to its huge size, but which country’s debt bubble will pop first: Japan, Europe or the United States? Place your bets now. As an example, Japan recently released an update about the total amount of its public debt, which was at the ¥983 trillion level on September 30th, 2012. Speculation about this debt number soon reaching into the heady quadrillion Yen zone seems very well justified.

  1. 2)   High Oil Prices - Denial of the existence of a peak oil situation is trendy, but high oil prices are not going away, and they will only strangle economic growth and boost inflationary pressures for years to come. Seeing $150 per barrel oil prices could seriously deepen a global depression.

  2. 3)   High Taxes and Regulations - How can the United States and Europe expect to grow their economies amid a stifling environment of high taxation and a multitude of regulations?  It is no secret that the average small business attempting to operate in these regions is being severely squeezed, and this situation is very likely to get worse before it improves.

  3. 4)   Currency Concerns – Worries about the virtually ubiquitous use of intrinsically worthless paper currencies are widespread, as well as the potential impact of the ongoing decline of the U.S. Dollar as the world’s international reserve currency. This trend might take a few years to unfold in a meaningful way, but it is clearly happening, and it will not help either the U.S. economy or the global economy recover

  4. 5)   The Bond Market’s Coming Decline – The bond market’s ultimate decline seems inexorable. Although it may take time for a bond panic to evolve, warning signals of higher U.S. interest rates to come could trigger a serious run out of U.S. Treasuries. Not only would this scenario very likely result in a currency crisis for the Dollar, but it could also lead the county into a deep depression.

All of the above factors help fuel individual investment demand for precious metals like silver and gold.

For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals, visit http://www.silver-coin-investor.com

 

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