Buy Silver Coins as Part of an Overall Sound Investment Strategy

What constitutes sound investing has changed over the years; especially following the 2007 global financial collapse.  While the stock market has since recovered, many individuals lost their fortunes following the most recent crash and withdrew their investment funds from the stock market.  At the moment, many financial experts believe that the stock market is highly valued.  Considering that bond yields are near record lows, and cash investments slowly lose their value due to the effects of inflation, on the surface, there appears to be very few sound investment options at the moment.  In this writer’s opinion, one of the soundest investments one can make is to buy silver coins.  We’ll highlight below why precious metals in general and silver coins, in particular, make sense in a well balanced investment portfolio.

Inflation Hedge

Inflation is one of the most devastating effects to one’s wealth.  Considering that the dollar has lost approximately 98% of its value due to inflation since the Federal Reserve was first formed in 1913, it may in fact, be the most important factor to consider when investing.  Because inflation is ever present, and at times, has been crippling, such as the high inflation years of the mid 1970’s to early 1980’s, it’s important to have inflation hedges in one’s portfolio.  Historically, silver has been one of the best inflation hedges, and in fact, was at its highest levels in 1980 in the midst of high inflation rates.

Correlation

If you’ve seen investment commercials on TV, have read investment books, or have sat through a 401(k) tutorial, you’ve probably heard that one of the strategies when investing is to include a number of high performing non-correlated asset classes in an investment portfolio to smooth out the ups and downs of the market.  Silver fits the bill from this standpoint, as it has a low correlation to stocks, bonds and cash.  Some financial experts recommend an asset allocation of up to 20% in precious metals to help moderate the volatility that one will inevitably experience with their investments.

Tangible

Unlike shares of stock, mutual funds, or ETFs, silver coins are tangible.  Being in possession of something tangible in the form of a hard asset tends to provide a sense of comfort knowing that no matter what happens to the financial markets that you’ll always have something of value in your possession.   While this may be a more extreme reason for owning silver coins, many survivalists purchase silver coins as not only a form of investment, but also to be used in the event that there is a currency collapse.  The thought process is that 90% silver coins minted in 1964 and earlier will be recognized for their intrinsic silver value and may be used to barter in the future.

Conclusion

In summary, we’ve highlighted three specific reasons why one should consider buying and owning silver coins as part of their overall investment strategy.  Not only do silver coins serve as an inflation hedge, but they have a low correlation to other popular asset classes, such as stocks, bonds and cash.  Lastly, having something tangible in your possession can help to create a sense of comfort, knowing that the silver coins are always available to turn to if and/or when the need arises.

 

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Updated: September 3, 2013 — 10:34 am

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