Recently a reporter reached out to me on Reddit asking for an interview on why I invest in precious metals. I thought it would be a good opportunity to write out some of the reasons I personally invest. When you talk to anybody, especially those who sell PMs, PMs are “a hedge against inflation” or “a sure investment” that’s all marketing bullshit. Any asset of value is “a hedge against inflation”, everything from food, to land, guns + ammo, If you have a hard asset you hold that somebody else wants will eventually go up in value as the dollar inflates or as the demand for it rises. It’s also not a sure investment, Gold goes up, it goes down. Like anything else, it has value because other people want it more than you do, so you’re willing to trade it for a value that makes sense to both of you. It earns no interest, pays no dividends, provides no ownership in anything other than itself. It is just a super shiny rock…. A rock that a lot of other people want.
Before I go into the why’s of buying PMs, let me go into the how much.
I see a lot of guys posting on the /r/gold or /r/silverbugs subreddits, asking about dumping their entire life savings into PMs. I think this is one of the dumbest things somebody can do. Before investing in anything, you should have 0 consumer debt. No car loans, no credit card debt, no personal or payday loans. Once you are debt free, then you should start investing into land. That should be your #1 investment, mostly a privately owned house. IF it makes sense for you to buy a house. If you already have a house or it does not make sense for you to own a house (like if you travel or move a lot for your work), then your next big investment should be mutual funds. I do not buy individual stocks. That’s gambling. I have a few different funds I invest in. I’m pretty conservative in that regard. Roth IRA, 401K, and my HSA savings that is then invested within the HSA.
After you have 0 debt and have a solid foundation in your more regular investments. I think it’s then OK to invest in what I like to call “hard assets” or collectables, things you own you can touch and use that have value. I have quite a few of these. I have sealed trading cards from the likes of Magic the Gathering, as well as pokemon. I have some high end firearms, art pieces, and classic vehicles. I also collect vintage electronics and video games. I enjoy buying them and refurbishing them. These are all part of my total net worth. I keep track of values and buy/sell as I can make substantial profit, and move to the next thing.
Precious metals are another hard asset I include in my total net worth. I have my number set at between 3 and 5% of my total networth in PMs. If that amount drops below 3% I buy aggressively. If it goes above 5%, I stop buying entirely. If it’s between the two I’ll buy something that I either really like or is a really great price. But I never buy if it is going to be a strain on my finances. I never want to buy if it means I would have to maybe sell later or will cause me financial hardship.
Now as to why I started with precious metals. I see it more of an insurance. There is a non 0 chance the US dollar will either become worthless or hit such a high inflation rate that gold/silver could be a means of trade, and I would rather trade shiny rocks for food than starve to death. There is also a non 0 percent chance we would have to flee where we live, and bringing some gold/silver coins is a lot easier than stacks of dollar bills.
But that is like the emergency food supplies I buy. I buy that just in case of the worst, expecting to never have to use it outside of rotating through it every few months.
I also love it, Touching it, feeling it, hearing it. Gold and silver make an almost musical tone when struck. There is just something about it that makes it special.
But the real strong reason I buy it is because when my father in law died he had nothing to leave to his kids/grandkids. Nothing to remember him by, nothing to tie his life to his posterity’s memories. I buy gold and silver to commemorate special moments, achievements, or celebrate something my kids love. Then when I pass, they’ll get it. They’ll each have a piece (or many) to remember me with. Something that will endure, something of real value. I hope my real legacy is them remembering me, and them living the best lives they possibly can, but there is something special about holding something that belonged to a loved one. My oldest is still a teenager, so no grandkids in the near future, but I hope that I am able to pass these down to them as well.
I have a chronic illness, I probably won’t live as long as I would like to. So it’s even more important to me to leave something behind, if I die before my kids are really old enough to remember me.
Are precious metals the best way to do this? Maybe not. I do a lot with my kids to make memories and to share the things I love with them; I just hope that this is one of the many things that lasts long after I’m gone. And that simply by holding a coin, it will bring back memories.