Investing in Gold & Silver 101

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What is Silver and Gold Investing

Silver and gold investing is buying gold and silver as a means of obtaining some profit, but most importantly, hedging your savings ie a way of reducing the chances of your savings worth from becoming less and less due to inflation. In other words, instead of saving in cash, you are converting your cash to gold and silver and keeping your money in that form, in an attempt to beat inflation.

So how badly does inflation affect your money? Take a look at the chart below and see for yourself:

Silver Coins Singapore

Silver Coins Singapore

 

Historically, gold and silver is the go-to commodity that many people turn to when the value of a country’s currency goes down. That is because gold and silver IS money since ancient times.

That started to change when banks are formed and was being used as a public safe house for gold and silver. In exchange for their safe keeping, people are given receipts, stating how much gold they have in the banks. These however in turn becomes a form of money, because people don’t want to go through the hassle of going to the bank to withdraw their gold and silver.

Greed then takes over. The banks started to print more receipts than they have gold and silver. This causes several financial collapses throughout history, until the economy completely changed in 1971 when the United States took their US dollar off from the gold standard, and gold and silver no longer becomes money.

How economic troubles affect Gold and Silver

Gold and silver prices generally goes down due to strong economic data and the strengthening of a country’s currency, especially true for the US dollar.

But when the US economy is not doing so well, and the US currency weakens, gold and silver becomes the popular vehicle for investors to ride on in a bid to go the opposite of the falling economy, because of gold and silver’s stability as REAL money.

In Other Words:

  1. When the US economy becomes strong, the US dollar becomes more expensive to convert.
  2. People sell off gold and silver to buy US dollar to gain profit.
  3. More gold and silver sold, more cheaper it gets. Prices goes down.
  4. Reverse is true: Bad US economy, weak dollar, stronger gold and silver.
  5. Recent example: The US Housing Crisis that saw gold and silver prices reaching its all time high!

Check out the video below to understand the history of money and why gold and silver is still real money:

Article is contributed by Silver Coins Singapore.

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