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Are Gold And Silver A Good Investment?

Apr. 06, 2021 1:18 PM ETAGG, GBTC, GLD, IAU, SLV34 Comments
Logan Kane profile picture
Logan Kane


  • Gold and silver have shown throughout history that they preserve purchasing power for their holders.
  • With all eyes currently on cryptocurrency, I find value in gold and silver. You should own Bitcoin, gold, and silver concurrently.
  • Investing in gold and silver isn't "cool" right now, but should be profitable. That's how value investing works.

A pile of gold bars in storage
Photo by sl-f/iStock via Getty Images

If you don't own gold, you know neither history nor economics.

- Ray Dalio

In 1792, the United States Congress established the US dollar as the nation's currency and set a price of

This article was written by

Logan Kane profile picture
Author and entrepreneur. My articles typically cover macroeconomic trends, portfolio strategy, value investing, and behavioral finance. I like to profit from the biases and constraints of other investors.You can read some more of my work for free here.

Analyst’s Disclosure: I am/we are long IAU, SPY, SLV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (34)

If the US government has an ounce of worry that Bitcoin is being used as "financial weapon" against the US by the Chinese, they will immediately, and I mean immediately, change the game. Once the public and news media get a hold of this, they will blow Bitcoin out of the water. The Fed will be pressured to make a move. It's a fools gold.
maddaj19 profile picture
I like buying silver in situations like Spring 2020 or Fall 2008. When the whole market and real economy hit the rocks, industrial demand for silver drops significantly and the price is hit hard. Silver behaves like both an industrial material and PM. And inevitably the central bankers do a lot of idiotic things and try to spend their way out of the crisis. Along with irresponsible monetary policy and the natural recovery of the economy marked by increasing industrial demand, silver sees a very nice trough to peak recovery. Gold doesn't do that. However gold is attractive for other reasons as a store of wealth, precisely because it doesn't exhibit these characteristics of an industrial material. You can lever up this style of bet which for me is SLV with a silver streaming company like WPM or a junior silver miner ETF.
mfposa profile picture
@Logan Kane "GBTC currently trades for an 8.5 percent discount to its net asset value. There is a 2 percent annual fee for it, but this isn't terrible compared to the fees on Coinbase."

Have you looked into Robinhood? They don't charge any fees for buying or selling. It baffles me how they do it given the crazy fees in Coinbase and Greyscale. Maybe use the lightning network?

If they use the lightning network, is it safe? I understand bitcoin. I don't understand what makes the lightning network safe.

Thanks for another great article. My optimizer program only likes about 1% gold (using CEF) in your portfolio when optimizing portfolios based on data from the last 30 years. I did not check silver.
LikeaRock profile picture
Interesting "juxtoposition" between PM's and Bitcoin these days.
Shrekish profile picture
I'm a big fan, Logan. I appreciate your insights. My only comment is that I would be in PSLV rather than SLV. With current pressures (?) on the COMEX vaults and the whole Reddit group pressing for people to stand for delivery, the fact that the Perth Mint is having delivery issues and the Mexican mint stopping production of Libertads, I think that being in an ETF that is backed one for one rather than the nebulous ownership that SLV presents. (YMMV.) I guess I should say that I AM in PSLV, (along with PAAS & DOLLF).

For those who can or have the patience to wait to collect, owning GBTC or ETHE in one's Roth would be genius, as you can dodge most of the capital gains taxes should either of those cryptos go to the moon, IMHO, (which should not be construed as financial planning or tax advice). ;-)
Logan Kane profile picture
@Shrekish will definitely look into this. Thank you!
Logan Kane profile picture
You guys will want to do your own due diligence on this and consult with your own tax and legal pros, but I don't think the wash sale rules apply to gold and silver ETFs, nor Bitcoin.

This should mean that anytime you have a loss you can sell and immediately buy back to book the loss for tax purposes. Feel free to share any additional info you guys can find here!

j. hughes profile picture
Nothing like a good logical thesis, laced with humour, to start your day.
FDVXF .23 next CGOOF and it has the same geologist as them in the same exact geography

3-4 stock

gold results have started to be calculated too
I see Gold and Silver just as a hedge against market shocks and very difficult times like war when a monetary system collapses, to store value. The so called analists writing Gold & Silver to heaven's heights do this simply bacause of their interests possessing Gold & Silver shares. But let's face reality. People who dream that Gold price will soar one day to 5000$ or even 50000$ wake up. Gold is produced in ever massive amounts. Even Silver still has a stable world production. Last year the Gold production world wide was higher then the year before. Although the demand is also climbing that is not enough to push the price up. So there is no real shortage of Gold any time soon.

So before the Gold & Silver price will soar to 10 or 25 x the current prices, I want to see first is that all Gold & Silver miners will show a clear reduction of their production figures. A year on year reduction instead of growth which they all celebrate in their fantastic company balance sheets. But for investors in Gold or even Silver this is no good news at all. Growing production figures are terrible for us all.
Gold-Silver, Land, Ammo (i.e. .223 for your Mini-14) and Fishing Poles..............BTC?

Off the grid preparation is the best Insurance........
stoney500 profile picture
As of now it is a good idea to hold both gold and crypto. Be aware that eventually crypto will become worthless (thanks to the Fed)
@Logan Kane Very enjoyable article. Your insight is appreciated. I agree with a lot you have to say including your gold, silver, and BTC allocation. I'd amplify with three points:

1. Holding some physical gold and silver alongside the 'paper' doesn't hurt. An additional benefit with physical gold and silver (in Canada) is they are considered currency and profits made aren't taxed.

2. Diversifying from purely BTC to a 'dealer's pick' of the top five cryptocurrencies can be useful.

3. GBTC incorporates risk if there isn't a guarantee that it will be permitted to become an ETF down the road (whole other conversation). BTCC, BTCC.B, and BTCC.U on the TSX are already there.
stevenb_1 profile picture
Always good to have some gold. I do agree that GBTC trading at a discount is crazy. I think ETHE may be the better choice considering that it traded 1000% over nav at one point in the past and is also at a discount.
Nice article.. Bitcoin and gold.. owning both makes a lot of sense.
Rational Bull profile picture
Love it. I used to have a cash allocation, but I now realize how stupid that is with cash yielding -2% relative to inflation. Over the long term, precious metals will roughly stay even with inflation, and are a better place to park your money than cash.
Mangia2015 profile picture
physical metals ,if you don't have it in your hand you don't own it
Why focus on gold and silver when some PGM metals continue to perform so much better? Rhodium was at around $6,000 an ounce at the start of 2020. It is now $29,000 an ounce. Gold is mined at around 150 times the rate of rhodium, yet rhodium is only around 17 times the price of gold. Iridium went from from around $1500 to $6250 an ounce over the past 15 months. I'm long the largest miner of rhodium, SBSW. They are also the largest platinum miner, and second largest palladium miner. They also mine iridium. SBSW is trading at only around 5 times 2021 expected earnings. SBSW has more cash than debt and pays high dividends.


@6228371 Thanks for the heads up on SBSW.
@Stillhunter888 Check also IMPUY.

"Check also IMPUY."

Impala isn't nearly as cheap as SBSW.

Sprott PSLV and PHYS are CEF alternatives for gold & silver
Gold and silver can be decent portfolio hedging vehicles and do present a reasonable store of value. But the key drivers of their price are either inflation, or concerns over rising inflation, or financial/geopolitical crisis. We can predict neither of those and it is still way too early to determine with certainty if we will get a sustainable rise in inflation. So, for most people, I believe one is much better served owning quality dividend paying stocks which also offer characteristics of an inflation hedge through their ability to grow earnings and raise dividends. One easy way to play gold and silver is through the ETFs: GLD and SILJ. Gold looks like it may be trying to make a bottom but is certainly not flashing concerns about inflation.. SILJ has been in an interesting basing pattern for the past 9 months and it looks like a breakout above 16 would be an interesting entry point. Gosh, wouldn't it be great if we could actually predict the future :).
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