…Unfortunately, investors must often navigate through a barrage of fake news, myths, misinformation, and fraudulent pitches surrounding precious metals before arriving at the simple truth – you don’t buy bullion to get rich quick; you buy it to preserve wealth over time against the threats of currency depreciation and financial crisis. That’s precious metals investing in a nutshell but, if you listen to financial and monetary establishment mouthpieces, you’ll likely be misled. This article exposes the five big lies about precious metals investing and sets the record straight.
This version of the original article by Stefan Gleason (moneymetals.com) has been edited ([ ]) and abridged (…) for the sake of clarity and brevity to provide the reader with a faster and easier read.
Lie #1: Gold Isn’t Money
Neither brokers, bankers, nor central bankers particularly want the investing public to view precious metals as a core holding. They prefer we think of gold as a “barbarous relic” of the past that no longer serves as money.
In an infamous exchange in 2011 between then Federal Reserve Chairman Ben Bernanke and pro-gold Congressman Ron Paul, Bernanke stated flatly that gold is “not money.” Current Fed Chairman Powell has made similar claims.
This is the big lie of fiat money pushers and their ideological allies.
It flies not only in the face of history, but also of the fact that central bankers themselves continue to hold and accumulate gold as monetary reserves. In recent years, central banks around the world, led by Russia and China, added hundreds of tons of gold to their reserves.
Lie #2: Silver Isn’t Money
Some mis-informers will concede that gold is money… but claim silver isn’t. The Founding Fathers of the United States would disagree strongly. They originally defined a “dollar” in terms of grains of silver (Coinage Act of 1792) which simply codified what was nearly universally in practice….
It’s true that silver has since been removed from circulating coins and replaced with cheaper metals…[and,] generally, isn’t held in monetary reserves by central banks but silver, however, remains the go-to tangible money of the masses. In the event of a currency collapse that causes the public to ditch fiat dollars, silver is more likely than gold to be used as barter money in everyday transactions.
Lie #3: Precious Metals Are Too Risky for the Typical Investor
This lie is propagated by Wall Street and by Main Street financial advisors who have bought into anti-gold propaganda and their conflict of interest is obvious – the financial industry loses out on commissions and fees when investors park wealth in hard assets so they portray gold and silver as “exotic” and “risky” investments.
It would indeed be risky to bet everything on gold and silver and no responsible voices in the precious metals community advocate that for the typical investor. Instead, they advocate a prudent allocation to the precious metals sector – from around 10%, perhaps up to 25% of a portfolio.
Gold shows virtually no correlation to stocks and bonds, meaning it can rise when paper assets fall. When the U.S. suffers a debt-driven currency crisis, as many economic forecasters think is inevitable, the biggest risk of all will be not having adequate exposure to precious metals.
Lie #4: Cryptocurrency Is More Valuable Than Hard Currency
The crypto coin craze has spawned a number of misconceptions, such as the notion that Bitcoin is “digital gold.” Whatever their merits (and there are certainly some), cryptocurrencies backed only by digits cannot be equated to gold and will never replace it…Bitcoin has speculative value, which can be fleeting, while gold’s value, on the other hand, is real, immutable, and eternal. Its unique physical properties combined with its rarity ensure it will always be worth something substantial.
Lie #5: “Collectible” Coins Are Better Investments than Bullion Coins
Sadly, some of the misinformation being spread about gold and silver investing comes from bad actors within the precious metals industry…numismatic coin promoters who try to trick people into paying huge markups for supposedly “rare” or “collectible” coins.
High-pressure salesmen will sometimes pitch nonsense about numismatics being “confiscation proof” or fantasies about how they’ll appreciate more than ordinary coins but they almost certainly won’t after factoring in bid/ask spreads. The truth is that these high-premium and relatively illiquid products are unsuitable for the vast majority of investors who are simply looking to acquire ounces of gold and silver. Common, low-premium bullion products are the better buy.