It’s unavoidable that within the next five years the US dollar will essentially be a near-death currency, the US will be effectually defaulting on its debt through inflation, and the greatest transfer of wealth from the middle-class to the politically connected will be underway. This will make gold go much higher than it is now.
Does this mean you should buy gold with leverage? Put your entire portfolio into gold and silver? Sell your house for extra bullion money? Absolutely not. Some people who tried that got destroyed when silver corrected last month, and they deserved it for making such poor investment decisions. In this article, I’ll be explaining what to expect with gold and silver, and how to cautiously prepare for it.
We Both Agree on Gold and Silver
This article isn’t about convincing you why I think gold is going to keep increasing. I’ve written exhaustively about this in the past. This article is specifically for those who are bullish on gold and silver — those who think gold and silver are both going to increase.
The same generally goes for silver. While they’re not connected directly, they generally head over the same direction in terms of pricing — they’re both part of the same macro-investment cycle.
What’s Going to Happen to Metal Prices
As we published in an earlier guest post, the journey to high gold/silver prices isn’t going to be a gradual, steady increase. It’s going to get bumpy — really bumpy. As we published earlier:
“Inflation doesn’t operate smoothly; it is a disrupter for both the economy and for the political system. From time to time over the next five to ten years, the Federal Reserve will come to see inflation as its most urgent problem. And every time that happens, the Fed will slow the creation of fresh dollars or even put up a big INTERMISSION sign and stop printing altogether for a while.
Such seizures of monetary virtue won’t last long, but while they do last, they will hammer most investment markets, including the market for the yellow stuff and for stocks of companies that produce or look for it. You could be absolutely correct about where the dollar is headed in the long run and still have a scary ride.”
This has to be said. Too many self-proclaimed gold-bugs believe that because gold and silver will probably be going up a heck of a lot over the next few years that they’re somehow justified in making extremely risky investments in the metals.
So what’s going to happen to metal prices? Assuming gold goes to 2.5k and silver goes to $75 in the next five years, here are two ways this can happen:
- Currency Crisis Now. For silver and gold to get that high anytime in the next few months, it’s going to literally take a currency crisis. There’s just no other way for gold and silver to go that high, that quick. And I don’t just mean “fears” of a crisis or the “beginning” of a crisis. I’m talking about what all of the other crisis predictors have predicted actually happening. The whole panic and hyperinflation event. I hope this doesn’t happen, of course.
- Currency Crisis Later. This is more likely in my book, though I won’t make any concrete predictions. This is when the currency crisis is at least a year or 5 away, and in the meantime people get too comfortable with stocks and other investments, and metals drop like, well, rocks. Gold and silver might be amazing 10-year investments, but that doesn’t mean they might not drop incredible amounts in the short run. If this happens, I’ll be shopping for silver and gold bullion.
So this begs the question… what should you do about investing in gold and silver?
What Not to Do About Gold and Silver
Making a risky investment in a possible “sure thing” completely defeats the point of investing in the “sure thing” in the first place.
As I’ve said before, I’m a fan of The Elevation Group. I’m a member and an affiliate partner. It’s the best hundred dollars a month I’ve spent in several years. It’s really a fantastic resource.
But one of the readers in the group wasn’t so smart. He posted a message on the Facebook page saying that he was using “leverage” (read: debt) to buy into silver. He said anyone who didn’t do this obviously didn’t understand how money works, obviously didn’t understand hyperinflation was going to hit, and was “stupid”. His word choice, not mine.
Sadly, he made this passionate comment just a few days before silver prices started to tank something like 30% in a week or two. It was an interesting time because I edit Live Silver Prices, a website with silver market commentary.
I had received a lot of flak for months because I warned investors to be cautious of silver since it was increasing so rapidly that it was needing a major correction. I got cussed out for saying that — I guess I ended up being right.
What You Should Do About Precious Metals
I suppose this subtitle is a little misleading, because I don’t give personalized investment advice. While I think everyone should own some gold, silver, and should be debt free overall, I won’t tell anyone exactly what steps they should take right now about that.
No investment portfolio or financial plan is a one-size fits all model.
That said, when it comes to gold in silver, I operate two sections of my finances this way:
- Physical Security Metal. I own physical gold and silver bullion. Both in safe locations I can immediately get to, and other locations I can get to if necessary. I don’t really want to go into much more detail out of pure concern for privacy, but yes, there you have it. Physical bullion for security. I buy automatically every month through these guys.
- Low-Fee Speculation Metal. I own some investments for pure speculation purposes. This is me playing over the next few months to make money from the volatility of gold and silver — especially silver. Simply out of ease, I’ve used silver ETFs like SLV. I know — if the world ends, that investment isn’t worth the paper it’s supposed to be written on, but that’s not the purpose of this investment — this investment is about short-term profits, not security.
Treating both types of metals as complete different investments allows me to have a kind of mental break with treating them the same way, allowing me both the ability to profit in the short-term without jeopardizing myself in the long-term.
Click here to learn where I buy my gold online for a more in-depth review of gold brokers you can access right now.
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