Concerned about America’s future, wondering if you will ever retire? What will your savings buy tomorrow? American’s have a lot of concerns about the future˳ Government spending is out of control, unemployment is running at over 9%, and foreclosures are setting monthly records almost monthly˳ Discussions are going on concerning another round of quantitative easing, another attempt to increase the money supply and stimulate the economy˳ I would like to discuss if silver is a good inflation hedge˳
Ready? Then let’s start˳ First the Pro, in favor of:
The number one point in support for owning silver as an inflation hedge will be U˳S˳ government spending is out of control˳ Deficit spending for this current year is running near $1˳4 trillion dollars˳ The national debt is currently $13˳44 trillion dollars˳ If you count the US governments unfunded liabilities for Social Security, Medicare and Medicaid, and pensions we are talking over $105 trillion dollars˳
Where is that money coming from? Think about it˳ $105 trillion is a number that most people can’t understand˳ It’s $105,000,000,000,000˳00, boy that’s a lot of zeroes˳ Face it the government is going to print money out of thin air˳ The purchasing power of your savings or your pay check is going to decrease˳ How can silver help? Read my 2nd point…
The 2nd supporting point is going to be silver has increased in value from $4˳07/oz in November 2001 to as I write this article (Sept 2010) $19˳90/oz˳ That’s an increase of nearly 500%˳ The dollar has lost over 33% of its value since 2001˳ If you had purchased $100 of silver bullion in 2001 it’s now worth nearly $500˳ So if you didn’t buy the silver bullion in 2001 the purchasing power of your $100 is now $67˳ But if you had the silver bullion, now worth $489, its purchasing power in dollar terms is $328˳ Still almost 500% more than your original dollars˳
Maintaining buying power or your wealth is key to your future and your children’s future˳ Consider this in 1920 you could buy a nice suit for one twenty bill or 20 silver dollars˳ Today the 20 dollar bill will buy you the right sleeve maybe, but sell the 20 silver dollars and you can still get a nice suit with the dollars you got for the silver dollars˳ That’s an example of maintaining purchasing power over time˳
The third supporting point is during the late seventies and 1980 the all time high for silver is just above $50˳ Adjusting for inflation the new high for silver could reach the $150 to $175 range˳ With silver around the $20 level today, you can see the potential is there for big increase in the purchasing power of your savings˳
And alternatively, to keep this balanced, there’s Con; against:
The initial point in contra for owning silver as an inflation hedge will be deflation˳ Deflation is simply put the destruction of money˳ The result would be the increase in value of the dollar˳ Cash is considered king during deflationary times˳ Silver is a small market, and with a large number of people selling assets, including silver, to raise cash will result in a drop in the price of silver˳
The second point in contra will be as I mentioned above silver is a small market, and because silver is a small market the moves up can and will be big, plus the moves down can and will be big also˳ You have to have a strong stomach and believe in silver to stand these large price swings in the silver market˳
A third significant point against is storing your silver˳ If you buy a large amount of silver where are you going to store it? Once you get above 1000 oz you start to take up a lot of room˳
That’s it, the good qualities and then the cons, the points in favor along with the points against˳
Finally then, what is the “bottom line” here? Is owning silver as an inflation hedge a good or bad investment?
Both sides of the question appear to have a “yes” answer! Owning silver as an inflation hedge is depended on what you believe is going to happen within the world economy˳ Is there going to be wholesale debasing of currency, will there be inflation or deflation, or can you stand the big price swings, both up and down˳ Yes there definitely seems to be both good AND bad! It is left up to you, the reader to determine which side, the good or the bad, outweighs the other˳
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