A Short History Of Gold And Silver
Did you know that gold and silver are one of the oldest forms of currency in the world? These two metals have been traded around the world for thousands of years. Printed money doesn’t even come close to the value of gold and silver. In many ways, people still consider it the de facto standard for currency.
In the past, gold has always been known as a symbol of the rich and the elite, silver is also precious but in more functional ways. Gold, we see as jewelry, and silver as silverware. Gold and silver are signs of money and power. They are soft enough to be molded into different forms and their form gives beauty that entrances people.
Unlike currency in the form of paper money, you can’t print it out of thin air so it is inherently valuable. The Gold Standard is what governments use as a comparison of currency. When a government is using the Gold Standard, it means that they are basing their currency and valuations on a worth equal to an amount in precious metals (namely gold and silver).
The United States used to use the gold standard.
Why The Price Of Gold And Silver Is Rising
In 1971, President Nixon severed the U.S. dollar’s ties with the gold system.
The U.S. treasury was running out of gold as more and more people were exchanging their U.S. dollars back for gold. People were starting to lose confidence in the U.S. dollar and more and more people were emptying the gold reserve.
In an act of desperation,
President Nixon severed the gold standard thus enabling the U.S. to continually
print money - they were effectively creating their own debt and generating as
much debt as they wanted in the form of currency.
Over the years, the U.S. dollar
started dropping and the price of goods started to go up. Now, why is that? It
is because the U.S. dollar is continually losing its value to the point that
compared to 40 years ago, the U.S. dollar is only worth a fraction of what it
used to be.
The Advantages And Disadvantages Of Investing In Gold And Silver
Advantages:
Preserve your wealth
Anyone can
trade gold for any other currency if anything happens to a country’s currency
Jewels made of gold or silver can also be easily traded
You can find other buyers for your form of currency because gold and silver is a universal currencies.
Disadvantages:
You can’t easily liquidate your metals - you will need to find buyers.
The spread can be high - in other
words, you will pay a lot of commission to gold and silver sellers.
It is a
defensive strategy - even if you ‘gain’ money through gold, your currency
devalues. You do not earn interest from the bank.
Next, we will look at 5
questions to ask yourself before making any investment.
5 Questions To Ask Yourself Before Making Any Investment
Are you buying paper metals or real bullion?
The Psychology For Any Precious Metal Trader
A trader’s mindset is very important. Psychology is infinitely more important than how much you have to invest.
A trader with little money but strong psychology is infinitely better than a trader with a weak mind and lots of money. Why is that? Because a person with the proper mindset can double, triple, or quadruple their money while a person with poor psychology can lose it all overnight.
The key is to be detached from your money. It is better to trade with money that you can spare rather than money you depend on (life or death money).
Can you hold a trade? What happens when the price takes a plunge? Do understand that gold and silver trading is like buying a house. No matter what the price of a house will always go up but it is a matter of how long can you hold it.
Above all, remember not to rely on gold and silver trading as your only source of income. Most people, when they put all their eggs in one basket make bad decisions because it represents all or most of their wealth. When you have income coming in from diverse locations or even other commodities you are trading with, you will make better decisions.
Knowing when to exit is critical as well. If you feel that you have earned ‘enough’, it’s better to cut the trade and invest it in another commodity. Likewise, it is okay to cut your losses and invest elsewhere.
Next, we will
look at why you should invest in gold and silver now.
Why You Should Invest In Gold And Silver Now
Start diversifying your assets! Do not trust your local currency which fluctuates with events. Protect your wealth. Gold and silver are always in demand and are limited in supply so you can always find buyers.
Always scout around for desperate buyers who are trying to liquidate their gold and silver for currency. They are the best people to target when you are buying gold. You can even offer ‘lowball’ offers and see who will take the bait.
Like attracts like - so the more wealth you store away,
the more you are likely to attract. Besides, keeping it as precious metals is a
form of saving. You are not tempted to spend your money and remember that a
penny saved is a penny earned.
There you have it. Be sure to
invest wisely.
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