The Gold and Silver Inflation Trade

The Gold and Silver Inflation Trade Strategy

Investing in Gold and Silver to profit off of the coming inflation crisis or to protect yourself from the risk of losing everything.

Buy Gold and Silver Low and Sell it High. 

The basic rule in investing and speculating is to buy low and sell high. When the cost of everything you want to own is getting more expensive because of inflation, even something that seems expensive today, possibly next week or next month, the current price could be considered cheap.

North Americans have been blessed in recent years with the most profitable decades in the stock market trading and investing ever. It’s sometimes thought that the stock market will only go up. This thinking has affected the spot price of silver and gold.

What is the Spot Prices?

“The spot price is simply the price at which a commodity could be transacted and delivered on right now. This is in contrast to futures or forward contracts. The spot price of gold refers to the price of one ounce of gold and the spot price of silver refers to the price of one ounce of silver.” -JM Bullion

Understandably the spot price of gold and silver is tied to futures contracts it doesn’t actually mean consumers will be able to buy gold at the spot price. In 2021 in many instances there were consumer shortages of silver yet the spot price did not move.

Is the Spot Price of Gold and Silver manipulated?

This has led many investors to believe that the Gold and Silver spot price is manipulated. I can produce no definitive proof that the market is manipulated. Although companies like JP Morgan Have been sued over manipulation charges and have paid millions in fines.

Reuters reported that “In Sept. 2020, JPMorgan entered a deferred prosecution agreement and agreed to pay $920 million, including a $436 million criminal fine, to settle U.S. government probes into spoofing in precious metals and Treasuries.”

So why is the spot price of gold and silver important? Because a rising Gold Spot Price is seen to many as a sign of a weak dollar. The Silver spot price is important to many industries seeing that silver is in so many electric products. Products such as electric cars, smartphones, solar panels, wind farms, and computers. Many industries rely on low silver prices to keep them profitable.

Gold and Silver are a hedge against Inflation.

Why do people traditionally buy Gold and Silver to protect against inflation? When governments print massive amounts of money and artificially keep interest rates low it facilitates massive borrowing and overheats the economy causing consumer price inflation. It takes more dollars to buy the same goods and services because of consumer price inflation.

Two metals, Gold and Silver have been known universally as inflation hedges because they are real hard physical assets. Unlike government money printing they cannot just be created out of thin air. This makes owning gold and silver highly desirable because they typically hold their value during times of inflation.

Differences between Gold and Silver.

The yellow metal is a monetary metal and it is used in fine jewelry. It has been used as money in every past society in human history. And because of its scarcity and its unique properties. Gold never tarnishes making it highly desirable.

Silver has been used as a monetary metal and it is a commodity. AG, aka silver is used in many industrial fields in medicine and now especially in technology as mentioned before cell phones, solar power, electric vehicles, and batteries. And silver has been used for money for thousands of years.

Gold and Silver Speculation.

With Gold and Silver speculation, the idea is to buy the asset when it is cheap and when you perceive that it will rise in price in the future. A key factor in Gold and Silver speculation is knowing when owning it will be desirable. When the Stock Market is reaching all-time highs many people do not see the need in owning Gold and Silver although most investors agree having at least 10% of their investments in precious metals is a good idea for insurance.

Ray Daleo said that if you keep 10% of your investments in Gold and Silver, when the price drops you buy more because it’s cheaper and you should purchase ore till it equals 10% and when the price goes up you should sell till that amount equals 10% only again. This makes sense so you have the right amount of cash on hand to pick up bargains.

Pros & Cons of Owning Physical Gold & Silver VS Paper Gold & Silver.

Quite literally the biggest difference between owning physical gold and silver vs an ETF, is that with a physical you know you have real gold or silver. But ETFs are liquid and physical metals you must find a buyer or take it to a refinery or metals buyer and you do not get the full spot value usually.

What is an ETF?

 FYI:  ETF stands for Exchange Traded Fund

Owning an ETF is not the same thing as having physical gold or silver. With ETFs it is not even certain that there is gold or silver backing the ETF. ETFs are like insurance for some as they promise to deliver the gold and silver if required to. Consequently, the main benefit of owning an ETF is that it is liquid, publicly traded on the Stock Market and you can get your money out by selling your shares.

More about buying Gold and Silver with Webull.

A plus to owning physical metals is you have the real thing and gold and silver are valued in every country. Owning gold or silver bars and coins is a long-term investment and a hedge against catastrophic losses.

Disclaimer

I am not a registered financial planner. In no way is this financial advice. I am just a crazy blogger, author and podcaster but I recommend everyone own some physical silver and gold. In times of crisis, the physical metals may become so expensive normal people cannot buy them. Even if you have the money you may not be able to find places to buy them.

Is Gold and Silver Cheap right now?

At the writing of this physical metals appear to be very cheap compared to other assets. My gold and silver I buy from various places online. One of my favorite places to buy gold and silver right now is Golden State Mint. I recommend you do your due diligence but oftentimes they have the lowest prices.

Before you start investing in gold and silver mining stocks, which I will talk about next, I would ask you first, if you have 10% of your investment assets in gold and silver first?

Ebook available: The Coming Greater Depression

Read more about the coming economic collapse with Nate Plissken’s book “The Coming Greater Depression”.