Remember the old saying, a bird in the hand is worth two in the bush? Now is the perfect time to begin to apply that adage to your own personal financial situation. I am not advocating a wholesale dumping of every investment and buying physical silver and gold, but with the recent slump in metals prices, it is time to take stock of what financial instruments you have and take responsiblity for your own future wealth.
The COMEX is currently leveraged nearly 9 to 1 (possibly more since figures come out later today) in the silver category. As many silver hawks are quick to point out, that means 8 of the 9 people are not covered and would have to take paper money instead of actual silver if push comes to shove.
For the smaller investor, the cost of investing in a small home safe and securely placing it in your home can reap large rewards in something called peace of mind. If things go to h--- in a handbasket, you have at least a little bit of something that the majority of people around you don't have. All the silver on the COMEX (both available for cover and not) would not even provide an ounce of silver to everyone in the US of A. So if you buy just a single American Eagle or 1 Troy Ounce, you already have more than two-thirds of what could be distributed.
It is all about supply and demand.
I understand that you can't eat silver (or gold), but silver is much easier to trade than gold (given it's current value) plus you get the added benefit of the health aspects of silver. (See medical uses of silver). It's not a shock that since silver was removed from coins, we seem to be more prone to easily transmitted illnesses.
Back to the point at hand. Silver can be accumulated over a period of time, taking advantage of price dips (I will be personally buying if it slips below $15 as I expect it to do) to begin building a supply of silver that the majority of people will accept in barter transactions. Unlike produce (which rots), baked goods (which go stale) or meats (spoil), Silver holds a value that can be traded from person to person to person, for product or service once the two sides have come to an agreement on the value. It holds its value until it is melted or divided and then the result still has value in trade.
Trade your shares in an ETF and you don't get metal, you get paper money. If its in a retirement account, you can't take the money without paying a penalty (unless you are a certain age). In essence, the silver represented by an ETF is a promise that your paper money is still available, you just might play heck getting it.
Again, I don't propose buying pounds of gold and silver and hording it. I do seriously suggest that everyone who wants some peace of mind purchase some metal to have securely in hand, taking responsibility for their own financial future, instead of relying on banks, investment houses and ETF's. What is "enough?" That depends on each persons current position in life and who they have responsiblity for the well-being of. For those with the funds, a little gold doesn't hurt. For most of us smaller investors, silver is a more affordable choice which doesn't tie up as much, but provides for a fall back (preparation for a rainy day). At current prices, 10 ounces of silver is less than $200 (once shipping and handling and insurance are all counted in). At minimum, I would consider 10-20 ounces per family member as a cheap insurance policy against financial disaster and given the fact that there is only 500 Moz of silver supposedly available in the market, getting your share would put you in the minority of those who have something for when the "full faith and credit of the federal government" begins to show serious cracks.
Look at silver as an insurance policy against what could go wrong, just like car, home, health insurance. But unlike those other policies which you have to renew each year, once you purchase the silver and have it in hand, you don't have to pay for it again, unless you want more insurance. You won't find financial insurance that cheap from anyone.
Disclosure: Long GLD, SLV, Physical Metal, retirement accounts
Silver in hand is worth 9 times what is in an ETF
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