GLD, SLV, And Negative Real Interest Rates

Summary

  • Overall, I am against holding too much gold or silver due to their drawbacks. As Buffett repeatedly said, they do not generate income/profit.
  • However, I change my mind when the facts change.
  • And in this case, as the real interest rates become negative, I see a few good reasons to consider more exposure to gold and silver.
  • In this article, I will use the SPDR Gold Trust ETF (GLD) and iShares Silver Trust ETF (SLV) to illustrate my thinking in more detail.
  • GLD and SLV are excellent diversification options in addition to other asset classes and now is truly an opportune time for an SLV-GLD trade.
  • This idea was discussed in more depth with members of my private investing community, Envision Early Retirement. Learn More »

Set of Snowflakes

Yuliya Soklakova/iStock via Getty Images

Thesis

If you clicked on this article, I assume you are familiar with the pros and cons of holding precious metals. Overall, I am against holding too much of it for considerations like lack of income generation ability, volatility, fees, etc.

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This article was written by

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Sensor Unlimited is an economist by training with a PhD, with a focus on financial economics. She is a quantitative modeler and for the past decade she has been covering the mortgage market, commercial market, and the banking industry. She writes about asset allocation and ETFs, particularly those related to the overall market, bonds, banking and financial sectors, and housing markets.

Sensor Unlimited contributes to the investing group Envision Early Retirement which is led by Sensor Unlimited. They offer proven solutions to generate both high income and high growth with isolated risks through dynamic asset allocation. Features include: two model portfolios - one for short-term survival/withdrawal and one for aggressive long-term growth, direct access via chat to discuss ideas, monthly updates on all holdings, tax discussions, and ticker critiques by request. Learn More.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of SIVR, IAU either through stock ownership, options, or other derivatives. 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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