If you're new to the idea of investing in Gold & Silver - this is the place to start !!
Gold & Silver (along with Platinum, Palladium & a few others) are a sub-section of the broader commodities market, referred to as Precious Metals. Investing in commodities in general (buying directly, through futures contracts or ETF's etc.) means you are buying a physical, tangible substance which has real, practical uses in industry & society - e.g. Oil, Coal, Steel, Wheat, Rice, Orange Juice etc. This is different from investing in stock & bonds (directly or through mutual funds) as these are purely paper based shares yielding a return and/or some capital appreciation.
Gold & Silver are a special class of commodities (precious metals) because they are attractive, relatively rare, difficult to mine, easy to fashion into different sized coins/bars and don't rust or corrode. This has made them the de-facto choice as money for over thousands of years. Gold in particular, has been the only commodity suitable for large scale holding of wealth - and as such has traditionally been the asset of choice for Kings, Rulers, Banks & Millionaires for over 5000 years.
Historically, the last 40 years have been unusual, in that gold has not been used as an investment. This is because prior to 1971, the US Dollar was fixed to Gold at $35/oz, so all banks around the world were using US Dollars as reserves as it was easier than holding & moving gold around. However, the US took their dollar off the gold standard, and as long as everyone continued to trust the US Dollar, it didn't matter that it was not backed by gold. As such, everyone began to think of gold as a 'barbarous relic' without any place in modern finance - the consensus being that banks & governments could be trusted to run the money supply & economy without needing the security of anything physical & tangible backing up their economies. People began to move away from gold, banks started to sell it, and investors chased each latest 'hot' sector in a series of financial bubbles. After initially rising to over $600 in the first 10 years, banks gradually sold gold, and the price dwindled to just over $250 in 1999.
From 1971 onwards, the US could print as much money as it liked, and banks around the world readily accepted them, because historically the US Dollar was 'as good as gold'. They were accepted without question worldwide & were therefore good for all payments & debts. However, as successive US administrations continued to print & spend trillions of dollars (resulting in various bubbles - dotcom, housing etc.) some banks & large investors began to get nervous. The tidal waves of US Dollars flowing from the Federal Reserve & US Treasury meant that their value was decreasing - however given that all other currencies were also based on the US Dollar, the value of ALL currencies began to decrease. What does it mean when the value of your money decreases ? It means it will take more money this year to buy a loaf of bread than last year. The intrinsic value of the bread did not change, but the value of your currency went down. This is inflation, and is solely caused by governments & banks printing money.
The only way to protect your money from inflation (which will make your savings worthless over time) is to invest in physical, tangible assets. Commodities. While you can invest in Oil, Wheat, Rice etc. through ETF's and other investments, generally these assets are held on your behalf by your bank or broker. This means there is real risk of your assets being confiscated/stolen/raided. This happened only last year in the US when MF Global used billions of dollars of clients funds (supposedly separated by law) to pay off debts before going bankrupt. It is difficult to therefore invest safely in Oil, Wheat, Rice, etc because you have to take them yourself, store them, and find somewhere to sell them when you want to cash out. Gold & Silver however are ideally suited to personal direct holdings.
Physical holdings of Gold & Silver have been one of the safest investments for 5000 years for the following reasons
Gold & Silver are both exempt from Sales Tax in Canada (as long as they are pure bullion products >99.5% pure), but this is not true for other commodities (copper, platinum etc.) You can buy and sell a variety of denominations of both gold and silver just by walking into our store. You do not need to give any personal details, and you can pay by a variety of methods. As such it is as easy as buying a loaf of bread.
Almost all our stock is sourced from the Royal Canadian Mint, and we are experienced in examining and testing gold & silver sold back to us by clients. We can explain to you the basic ways you can tell if something is real gold or silver. However, once you have handled precious metals, you soon become familiar with the colour, weight and feel (just like handling bank notes) If you are concerned about anything, we can also use electronic testing or send materials away for assay tests if needed.
If you are interested in learning more, we have a range of books in stock (such as Rich Dad's guide to investing in Gold & Silver), or you can phone or drop in for a chat.
We believe Gold & Silver will be the best asset to hold in our lifetime, as confidence in every other asset crumbles. We urge you to explore & understand the fundamental reasons for the huge rise in precious metals prices recently, and not to leave buying until too late. The next few years could see prices eclipse everything we've seen so far.
David M. Ford
President & Founder
The Atlantic Gold & Silver Centre.
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