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Is Now a Good Time to Buy Silver?

2012 April 2

Should I buy Gold? Or is Silver a better investment? With all the volatility in the markets, Greece on the verge of default and Ben Bernanke contemplating pumping more money into the market it has many people wondering if buying precious metals is a good idea. If you’re like me, you see all these ads on TV for…“We buy gold. Sell your old gold jewelry. We pay top dollar! Guaranteed!” There seems to be so many of these ads – it almost drives you bonkers. Through it all, it’s hard to sift through the data and opinions.



Who I Follow for Advice

Robert Kiyosaki – In 2006, I started reading a number of Robert Kiyosaki Yahoo! Finance Blog posts (Most of the comments basically said he had no clue on how the markets worked). In them he was touting how everyone should be investing in silver – stating that silver was relatively cheap. At the time it was between $11-$14/ounce. For myself, I had no clue on whether this was a good price or not. I had read a little bit of his book Rich Dad Poor Dad, and could tell he knew what he was talking about. So I started buying a few Morgan dollars (90% silver) and 1 oz bullions.  From 2006, silver has since rose to $47/oz, and is currently at $32.48. On top of that, Mr. Kiyosaki continues to predict that 2010 – 2020 will see great gains from gold and silver. He states that the world economy will crash in 2016, and the US will be at the center of the problem. See the following video:

As you can see he lays out a lot of compelling reasons to invest in precious metals, but here are a few more.

Uses of Silver

Silver has a number of uses – which can’t be said of gold. Silver is used in jewelry, silverware, cell phones, computers, cameras, was used as currency (prior to fiat currency), mirrors, RF connectors, dentistry and medical devices. Silver has a great differentiator in that is has so many uses, but gold is mainly hoarded. Where do you see gold in use as widely as silver?

Federal Reserve Keeps Printing Money to Buy US Debt

Since 2009 the Federal Reserve has been monetizing our national debt. What does monetize mean? Wikipedia defines it as, “Monetizing debt is thus a two-step process where the government issues debt to finance its spending and the central bank purchases the debt, leaving the system with an increased supply of base money.”  Some of you might of heard of this as QE1 or QE2 – Quantitative Easing. To you and I this leaves the American people with devalued currency, and thus that is why gold and silver have more than doubled in the past 2 years. On top of that, China (the largest holder of US debt) has to be frustrated with the Fed’s action. The US currency they’re holding bonds against is being devalued right underneath them. I can’t think that China will allow this to happen much longer. I would be definitely keep an eye on gold and silver, if a QE3 comes about.

Robert Kiyosaki talks about the affects of the Fed printing money:

1971 – US Moves to a Fiat Currency

So how can the US print so much money? That is what I thought two years ago when we started going through QE1. Then I read from Robert Kiyosaki that the US moved off the gold standard in 1971.Thanks to Nixon, we switched from the gold standard to what is called a “fiat currency” (Nixon gold standard shock). What does that mean?

The term fiat money has been defined variously as (Wikipedia):

  • any money declared by a government to be legal tender
  • state-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard.
  • money without intrinsic value

In researching for this post, I found another interesting tid-bit: Any country that has switched to the fiat currency is seeing their currency value go to ZERO! It has essentially ended up having no value at the end. What Nixon did in 1971 in order to fund the Vietnam war and combat rampant inflation was make our money worthless. More than likely that is why gold & silver prices spiked in 1981.

So these are just a few reasons that I’ve found to invest in silver over the last few years. I’d love to hear some of your opinions. For or against!
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Charlie

An IT professional, Charlie also buys and sells liens, lives on the cheap, runs marathons and helps to run his family farm. In his spare moments, he raises 3 children, does the dishes and writes one post a week. His former blog, Frugal Retirement Plan, has been cited by US News and World Report.

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7 Responses
  1. Dan permalink
    April 2, 2012

    I was just reading about silver bars at http://www.independentlivingbullion.com/products/silver_bars.php but I’m not sure exactly what I’m interested in.

  2. lala r permalink
    April 2, 2012

    ive always been interested but how do you start buying silver/gold? these companies that offer them you never know if they are reliable.

  3. April 2, 2012

    I’m intrigued with purchasing silver, and I have spent some money purchasing silver coins. My problem is that coin collectors drive prices up past what the spot price is for silver. If I’m only purchasing so that I can have silver readily available, I don’t want to pay much (if any) more than it is worth on any given day.

    @lala – When I’ve purchased, I’ve gone through eBay. Generally, you can tell the reputable sellers from the non-reputable ones.

  4. Charlie permalink*
    April 2, 2012

    Ya Bryan I couldn’t agree with you more. I found buying coins on ebay was the best way for me to physically own it immediately too. I didn’t want to buy a fund that invests in silver, because ask a lot of the MF Global fund holders where there gold/silver commodity hedge is now. Gerald Celente saw first hand more than $100k invested in MF Global wiped out by this scam. To me it’s better to physically own it!

  5. tristan permalink
    April 2, 2012

    I use silvertowne.com…I have purchased about 20, 1 ounce bars from them over the past 6 weeks. I am new to the silver investing but after doing my research and learning more I have decided to purchase the bars along with my collection of pre 1965 coins. Silvertowne.com charges $0 for shipping on their silver 1 ounce bars. They are beautiful, and .999 fine silver. The price changes every few minutes based on the spot price so keep an eye out. I have purchased all of my bars under $35. I believe they charge a little over $2.00 over spot which with free shipping seems to be the best deal I have found. Hope this helps! Buy buy buy, silver will be the investment of our lifetimes!

  6. tristan permalink
    April 2, 2012

    p.s. ebay prices are about $5-$15 over the true value of what your purchasing, even if you find a reputable seller with free shipping, its more money then you would spend if you went to apmex.com or nwt mint….check out silvertowne.com and look at their 1 ounce bars compaired to silvertowne 1 ounce bars on ebay…you can see there is a $5-$10 difference and you pay ebay sellers for shipping…it makes me laugh…stay away from ebay, go to direct sellers (pan american, nwt mint, apmex, silvertowne)

  7. Charlie permalink*
    April 2, 2012

    Thanks for the info, Tristan! I’ll check them out!

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