If you currently are –or ever have found yourself– living from check to check, you may have found yourself sitting around on payday with less than $100 wondering “Where in the hell did all of my money just go???”
Keeping a roof over your head, food on the table and a reliable form of transportation can easily eat up half of your paycheck –not including utilities, bills, debts & other expenses– and whether we’d like to admit it or not, many of us make it a point to at least spend something on our petty vices & entertainment. After all, life is more than working hard & paying bills.
Unless you manage to hit a lick, staying debt-free and building wealth requires time & consistent effort to increase, save & invest your income while minimizing your expenses. Depending on your living arrangements, the “minimizing your expenses” part can be easy. It’s the doubling-up, saving & investing part that takes the most discipline to maintain –discipline that I personally DID NOT HAVE!
If you suck as much as I did when it comes to stacking your bread, you may want to consider buying precious metals such as silver & gold as an alternative form of saving. In this blog I will discuss why you should consider buying precious metals: The pros, the cons, and the basics you should know before “Stacking”.
Silver & gold -as well as other precious metals- are recognized across the globe and can be sold or exchanged for national currencies or resources in any and every country. As they say “An ounce is an ounce wherever you are”.
Communities commonly referred to as #SilverStackers or #GoldBugs all consider the accumulation of physical silver & gold to be an alluring collectors’ hobby, and a fun way to save. This factor alone played a big role in my personal decision to begin stacking physical gold & silver, as it has the psychological effects of giving the collector an emotional attachment to his/her savings that is typically not present when dealing with our reserved value in the forms of paper & digital instruments that can easily be mismanaged. Collecting precious metals will inevitably prompt you to want to learn the history & cultural significance behind the various forms of metals that you will find yourself collecting over time. As a result of this new hobby, you may also find yourself building relationships with fellow stackers & bullion dealers across the globe.
Converting your national currency notes into silver & gold is an effective way to store your wealth, as well as hedge it against inflation. As a national currency (such as the US Dollar) depreciates in value, the costs [in relation to your currency] of precious metals will begin to rise along with other goods and services. As a result of inflation, what we perceive as “prices going up”, is actually the purchasing power of our dollars going down. When you purchase precious metals, you are buying a tangible, highly liquid asset that can be exchanged for roughly the same purchasing power it was originally bought with –despite the volatile fluctuations of the world’s currencies over time. In the event that your native currency (or other financial instruments measured in said currency) undergoes hyperinflation or an economic collapse, all of your reserved savings in currency-based financial instruments will be at risk of being reduced to nothing! One only has to look at the recent economic crises in Zimbabwe and Venezuela for recent examples of hyperinflation rendering national currencies close to worthless overnight.
Conversely, precious metals such as silver & gold will never be reduced to nothing because they are finite resources that cannot simply be created out of thin air like the debt-based paper & digital currencies we are accustomed to using today.
One of the final –and most important pros– to saving in silver & gold is that of financial privacy and hidden wealth from special interests groups. In our modern age of credit/debit cards, “tap-and-go” & “one-click buy” technologies, we have become addicted to the seamlessness of instant digital transactions. While these technological advancements have proven to be much more convenient than the olden days of writing checks & counting loose change, as we move closer into a cashless society, we do so at the cost of our personal privacy and freedom from financial institutions, corporate interests and government surveillance.
Sure, you may have the freedom to keep your checking account balance confidential when it comes to the gold diggers you’ve met, or that one relative that asks you for $20 every other week. You may even be able to hide a separate bank account from your girlfriend with bad spending habits. However, anyone who has ever experienced being sued, going through a divorce, child support obligations or other legal appeals will quickly tell you how easy it is for legal professionals to pull up your entire financial footprint –given the proper authorizations to do so. In other words, it is important that you understand that every bank account, retirement account, credit card account, and even certain currency transactions can be retrieved, reviewed and infringed upon by the very institutions that you choose to do business with, as well as the government agencies that they must adhere to.
I’m sure that upon realizing the aforementioned risks, some of you may ask “What if I just keep cash? After all, cash is king, right?” and to that I say “Eh, sure.” You can certainly go old school & hide a million dollars in your mattress if you like. The only problem with that is –with the threat of inflation– the purchasing power that a million dollars will grant you today, will be far greater than the purchasing power of that same million dollars in the future. This is why storing your wealth in the form of precious metals makes the most sense to hedge against inflation as well as to provide you with a form of “hidden wealth” that is invisible to the digital world of modern financial institutions.
Because physical precious metals like silver & gold do not gain interest or offer any significant return on investment, many people –especially most financial experts– do not consider buying silver & gold to be an investment. In fact, some will even go as far as to say that silver & gold aren’t even considered “assets”. If that is the case, then I encourage you to ask yourself why would national treasuries & elite circles across the globe continue to extract and hold virtually all of the world’s gold & silver.
While the classification of gold & silver as investments is debatable, one thing that financial experts are correct on is that when you buy precious metals, they aren’t necessarily “working for you” in the ways that conventional investments are supposed to in theory. Unless these precious metals are being used for industrial purposes, they are in essence, just sitting around somewhere as a physical possession.
If you are looking for an investment that offers interest, dividends, or a return on investment, then physical precious metals may not be the financial instrument best suited for this purpose. Silver & gold best serves as a form of saving wealth, as opposed to receiving passive income from it.
One of the biggest concerns for skeptics and new stackers is the threat of theft and/or damage. The reality is that yes, the possibility of burglars, pirates and nosey girlfriends stealing your hidden treasures are indeed a real threat. The way I see it, if you keep your wealth in the bank, then it can be stolen by banksters, and if you keep it out of the bank then it can be stolen by gangsters. Neither option is 100% safe, however, people can’t steal what they can’t see, and –if stored correctly– thieves will never know what you never show or talk about. This is part of the reason many precious metals collectors either don’t openly talk about it, or prefer to do so anonymously.
Precious metals are priced by their weight in troy ounces (otz). The market price for a precious metal based on its weight alone is called the spot price. This price fluctuates throughout each day based on supply & demand, and the current purchasing power of the currency you’re using to buy precious metals. Often times, when a buyer purchases precious metals, they will pay a “premium” in addition to the spot price of the metal. A premium is the charge that a buyer pays in addition to the spot price, which makes up the total cost you will pay for precious metals. (i.e. Current Spot Price + Premium = Total Cost). The premium charge is how private & national mints, bullion dealers and private sellers stand to make a profit from the producing and/or selling precious metals. Some stackers don’t mind paying higher premiums for numismatic (rare or collectable) precious metals, while other stackers prefer to avoid higher premiums and pay as close to the spot price as possible. I buy a bit of both, high & low premium precious metals, but every stacker is different in that regard and does what is right for their own approach to stacking.
Well, I’ll conclude my written lecture here for now. I’d like to thank you for reading this introductory blog covering why you may want to consider buying precious metals, along with the pros & cons of doing so. Feel free to let me know if you think precious metals are worth considering as an alternative form of saving; why or why not?
If you’ve enjoyed this blog I welcome you to stay tuned for my next article where I will provide an introduction to the different types of precious metal bullion, as well as their similarities and differences.
Until next time, Peace & Love
Marcus A. Brown
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