Precious Metals Articles

Article / Updated 10-09-2023

Before you start investing or trading in precious metals, you need to understand the concepts of saving, investing, trading, and speculating; otherwise, the financial pitfalls could be very great. The differences aren't just in where your money is but also why and in what manner. Right now, millions of people live with no savings and lots of debt, which means that they are speculating with their budgets; retirees are day-trading their portfolios; and financial advisors are telling people to move their money from savings accounts to stocks without looking at the appropriateness of what they're doing. Make sure you understand the following terms — knowing the difference is crucial to you in the world of precious metals: Saving: The classical definition of saving is "income that has not been spent," but the modern-day definition is money set aside in a savings account for a "rainy day" or emergency. Ideally, you should have at least three months' worth of gross living expenses sitting blandly in a savings account or money market fund. Although precious metals in the right venue are appropriate for most people, including savers, you need to have cash savings in addition to your precious metals investments. A good example of an appropriate savings venue in precious metals is buying physical gold and/or silver bullion coins as a long-term holding. Investing: Investing refers to the act of buying an asset that is meant to be held long-term (in years). The asset will always run into ups and downs, but as long as it's trending upward (a bull market), you'll be okay. Investing in precious metals may not be for everyone, but it is an appropriate consideration for many investment portfolios. The common stock of large or mid-size mining companies is a good example of an appropriate vehicle for investors. Trading: Trading is truly short-term in nature and is meant for those with steady nerves and a quick trigger finger. There are many "trading systems" out there, and this activity requires extensive knowledge of market behavior along with discipline and a definitive plan. The money employed should be considered risk capital and not money intended for an emergency fund, rent, or retirement. The venue could be mining stocks, but more likely it would be futures and/or options because they are faster-moving markets. Speculating: This can be likened to financial gambling. Speculating means making an educated guess about the direction of a particular asset's price move. Speculators look for big price moves to generate a large profit as quickly as possible, but also understand that it can be very risky and volatile. A speculator's appetite for greater potential profit coupled with increased risk is similar to the trader, but the time frame is different. Speculating can be either short-term or long-term. Your venue of choice could be stocks, but more likely, the stocks would typically be of smaller mining companies with greater price potential. Speculating is also done in futures and options.

Article / Updated 07-19-2022

Gold is a finite element (literally — it’s the symbol au on the table of elements) and has all the necessary qualities needed as money. It’s durable, portable, and divisible. It’s malleable enough to turn into coinage. It doesn’t decay or tarnish and is indestructible. In ancient times, it became an ideal medium of exchange and a store of value ever since. In short, it’s nearly an ideal form of money, especially when compared to other forms of money (such as paper and digital currencies). When you juxtapose gold against modern world currencies, such as the U.S. dollar, the euro, the British pound, and the Japanese yen, you come away with some compelling points. The following figure provides a snapshot of gold’s price performance since the beginning of this century (as of the first trading day in January 2000). Gold began in early 2000 at a price of $288, and when you measure its performance with the price in mid-2020 (June 30, 2020) — $1,817.50 — you get a 531 percent total gain (sweet!). But how well did gold do against other conventional investment assets? Take a look in the following sections. Gold versus the financial world in general So how did gold stack up versus the titans of the financial world? Gold’s “Tale of the Tape” Asset Price Jan. 2, 2000 Price June 30, 2020 Total Gain/Loss Dollar Amount $ Total Gain/ Loss Percentage % Gold $288.05 $1,817.50 $1,529.45 530.97% Silver $5.29 $18.58 $13.29 251.22% Dow Jones Industrial Average (stocks) $11,501.85 $25,812.88 $14,311.03 124.42% Nasdaq (Stocks) $4,186.19 $10,063.67 $5,877.48 140.40% S&P 500 (Stocks) $1,455.22 $3,100.29 $1,645.07 113.05% Average Savings acct* $100 $120.50 $20.50 20.5% Inflation** $1.00 $1.53 $0.53 more 53% * Assuming a savings account balance of $100 for comparison purposes. ** Inflation rate for the sake of comparison. What would $1.00 buy in January 2000, and what would it cost to buy that same item in June 2020? (source: www.bls.gov/data/inflation_calculator.htm) Well, well, well. The table speaks volumes about the past 20-plus years. How many people knew that gold — a dead rock — outpaced the stock market so dramatically?! Time to break it down: Gold crushed it! Generating a gain of more than 530 percent is awesome — who would have thunk it? It beat everything by a country mile. Our companion metal, silver, came in second place with a 251 percent gain — not too shabby! Next comes the primary stock indexes. Nasdaq came in at 140 percent, then the Dow Jones (DJIA) at 124 percent, with the S&P 500 index coming up at 113 percent. The savings account is there for those folks too skittish at investing and playing the safe route. But safety often means that you settle for a much lower return. In this case, you’re getting an average of 1 percent per year, ending up with 20.5 percent. And it didn’t beat inflation. Inflation — our yardstick and the nemesis of savers everywhere — was up 53 percent for the same time frame. The amazing thing is that the general public barely noticed the blistering performance of gold (and silver, too) during that time frame. The question is, how high can gold go once the general public starts to participate? Gold versus stocks versus currencies You see in the prior section how gold was the 800-pound gorilla in the battle royale versus other mainstream investment vehicles, but it’s important to measure gold versus its primary competitors such as stocks and currencies. In this, you’re comparing “apples to apples.” When you’re comparing gold to stocks, for example, I don’t advocate that you should be 100 percent in one or another. I could put on my “stock hat” and make a strong case for stocks in some economic conditions (such as the 1980s), and I could put on my “gold hat” and make the case that gold is superior in other conditions (such as 2020–2025). The bottom line is I think both stocks and gold are important and needed in your portfolio. The only thing is that you rebalance the percentages of your portfolio between regular stocks and gold-related investments. You keep more in stocks when times are good for stocks and more in gold when times are good for gold. But always have something in gold (say 2 to 5 percent of your investable assets at a minimum), even when it’s not doing as well because it excels as a hedge and a backup form of “portfolio insurance.” Sometimes you don’t see the market crash or financial crisis coming, and afterward you’ll be glad you were diversified and had some gold and/or silver on hand. Gold plays an important role as money and as a hedge against the issues of government-issued money, which is also referred to as fiat money. As this article is being written, all the major currencies — the U.S. dollar, the euro, the British pound, the yuan, the Japanese yen, and other currencies — are losing their value (depreciating) slowly but surely. Some currencies are rapidly losing their value such as those in Venezuela, Zimbabwe, and Argentina (more to come!). The main reason currencies lose their value is because they can easily be overproduced by the country’s central bank and typically at the behest of the country’s political leaders. Because paper currencies are easily inflated, each unit of currency (dollar, euro, yen, and so on) loses value — not so for gold. As the data from the World Gold Council (WGC) confirms, the mining of gold typically adds about 2 percent to the above-ground global supplies of gold. It’s very difficult to extract it from the earth, which is part of the reason gold can retain its value versus central bank–issued currencies. You can use this article to find out how gold stacks up as a tangible investment amidst all the investment choices available today. Part of what makes “money” retain value is scarcity. If it ceases to be scarce and easily created (usually leading to overcreating it), then this leads to its diminishing value. Some gold experts even make it a big point of their speeches that a paper/digital currency will always revert to its intrinsic value, which is “zero.” Gold, meanwhile, outlived every currency in the past two millennia and likely will do so in this millennium.

Article / Updated 09-01-2021

As part of your wealth-building approach, you seriously should consider adding some gold and silver, especially when you take a full, realistic view of what’s going on in our society, economy, and financial markets. In the modern age, most investors keep their investments in either paper or digital form, and each of them has a risk that hard assets such as physical gold and silver don’t have. Yes, we’re talking about gold and silver that you can hold in your hand and in your safekeeping and looks something like the above photo, which shows gold and silver bars. (Gold and silver also come in bullion and numismatic coins and commemoratives.) In the following discussion, I take stock of current global financial issues (pun intended) and explain how gold and silver can help your investment portfolio. Before you invest in gold and silver, you need to realistically assess yourself and your financial status (assets, debt, career, and so on), and you need to ask yourself, “Am I adequately prepared for what is happening now and what will likely come my way tomorrow?” Assess the world’s financial issues In August 2020, the world and financial markets looked so radically different from what they looked like in January 2020. The world had many problems and challenges that were percolating and financial bombs whose fuses were lit, but the game changed for the worse. Those events and conditions are part of the reason that gold and silver are a necessity in many portfolios. Here is a short list of global issues and problems to be aware of: Unemployment is up. In January 2020, unemployment was at a 50-year low, but six months later, with 50-plus millions of lost jobs due to the COVID-19 pandemic and government lockdown, unemployment was at a multi-decade high. Although unemployment is coming down, there are still millions of jobs that may not come back. Because of job losses, more than 5 million folks are behind on their mortgage or rent. This will cause problems with debt, home sales, and more. Government debt is exploding. Federal and state/local debt is skyrocketing. This may lead to high inflation. Due to the government lockdown, hundreds of thousands of businesses were temporarily shut down for months, but a huge swath of those may never reopen. Pensions and Social Security are dangerously underfunded by trillions. If the federal government bails these out by printing trillions, that can also cause high and punitive inflation. Diversification and financial planning are urgently needed before the next crash in the stock market or the next leg of the economic downturn. Keep reading to see how gold and silver fit into this plan. Know how gold and silver can help you There are many solid, reasonable, profitable reasons to own gold and silver. Here are the top reasons that consumers and investors should take a hard look: Diversification: Having stocks, mutual funds, and cash aren’t enough to achieve true financial safety. Gold and silver are true diversification that complements your paper and digital assets and investment vehicles. Safe haven: Gold and silver (although more with gold) are considered a safe haven asset, meaning that in times of economic decline and uncertainty, investors move to these “safe haven” assets, typically precious metals and cash (the U.S. dollar). But the dollar (and other currencies) is now at risk (see the next point). That leaves . . . gold and silver! A guard against inflation: For 2020–2030, currencies are in danger of being overproduced in an attempt to resolve economic and financial crises unleashed due to the pandemic of 2020. This means . . . inflation! Gold and silver excel during inflationary times. Take action before you invest in gold and silver So, what should you do next? The following sections describe steps to take before you dive into the world of gold and silver investing. (You should be doing these anyway, and given recent market chaos and volatility, you should do them today.) Review your portfolio You should understand what’s in your portfolio and why it’s there. If you’re talking about stocks that are part of your foundational, long-term positions, they should be quality stocks where the company is profitable, has a good balance sheet, and has products/services that are a necessity in the economy. In recent years, I’ve told my clients and students (I teach about investing and speculating across the nation) to make sure that at least 80 percent of their investment stock portfolio is tied to “human need.” Those companies should be (profitably) selling goods and services that the public will keep buying no matter how good or bad the economy is. Think of things such as food, water, beverages, and utilities. Boost your cash position Although cash can lose long-time value during inflationary times, here I’m talking about its short-term value. Everyone should have (during bad times) a minimum of three to six months’ worth of gross living expenses sitting in their savings account for unexpected events, such as losing their job, money for big-ticket necessities, and so on. In other words, if your gross monthly expenses are $3,000, then you should have a minimum of $9,000 (three months’ worth of gross living expenses) to $18,000 (six months’ worth). This is cushion money, or emergency funds. Use your talents in your spare time I’m one of the few certified financial planners (CFP) who recommends to his clients and students that they should have (or start) a part-time, home-based business in their spare time to be diversified in their active wealth-building pursuits. The primary reason is to generate income and be diversified from their job. During the COVID-19 pandemic and government lockdown of 2020, nearly 50 million people lost their jobs between March and June 2020. These are folks who didn’t see this catastrophe only a few months earlier. My point is that if all your active wealth-building income (100 percent) is coming from a single job, that means you are not diversified. A home-based business gives you the ability to generate extra income in your spare time. It also means tax benefits and the ability to turbocharge your ability to save and invest for retirement. With your own business, you can qualify to have more generous retirement accounts (such as a SEP-IRA). Do your research on gold and silver Yes, I realize that some of the preceding points aren’t about gold and silver, but they’re part of a sensible plan with both your passive and active wealth-building, and you can see that gold and silver play a crucial part in the passive wealth-building portion. Look, many investors and financial advisors are ignoring or avoiding gold and silver, and that will be to their detriment. Educate yourself on the pros and cons of all the major investment categories so that you know what can work for your financial security and what can’t. Gold and silver can be useful and versatile components of your overall portfolio, but keep your perspective on them. They’re merely tools for your financial security during a time they’re useful. The time will come again that they won’t shine, but that is on the other side of today’s brewing storms. Meanwhile, discover their benefits and how they can complement today’s (hopefully) weatherproof portfolio.

Article / Updated 09-01-2021

Numismatics. Who thought up that name? Why not call coin collecting, uh, coin collecting? Numismatic coins are coins that have achieved value due to their rarity. Bullion coins are primarily acquired for their metal content. For numismatic coins, you need to consider (or be aware of) the following: Metal content: The major types of precious metals are silver and gold. Other metals exist (base metals such as copper and nickel), but they’re not a factor in the value as is the case with precious metals. Rarity: The fewer there are of a particular coin, the greater the potential value. Many old coins are valuable because of their rarity. Grade (or condition): The better the condition, the higher the value. The grade is a crucial factor in the coin’s value. Age: This is a relatively minor issue, but it’s worth listing. All things being equal, a 100-year-old coin has greater value than a 1-year-old coin. Popularity: Some coin series are more popular than others. The coin’s popularity may be attributed to its beauty or historical significance. Mint mark: Coins were minted at a variety of minting facilities throughout U.S. history. A coin in the same year but from a different mint could be more scarce, hence more valuable. As you find out in the following sections, numismatics can be a little bit more complicated than just the age and/or metal content. Of course, if you have an old coin made of a precious metal such as gold or silver that’s in excellent condition and is rare and popular, then you have a winner! Aim for profitable coin investing If you’re going to be successful in coin investing (certainly financially successful), some golden rules will enhance your efforts: Stick to precious metals. Because of other factors (such as inflation), it will enhance your long-term profitability to stick to gold and silver coins due to the metals’ appeal for a variety of reasons. As contemporary coinage becomes more debased (the government is using cheaper metals to keep coin mintage costs low), that means that more valuable coins will keep rising in price. Specialize. It’s hard to keep track of all the coin series. It’s advisable to stick to a single popular series (certainly in the beginning anyway) such as Mercury dimes or Morgan dollars. Get to know the key dates and grades. Focus on quality. Buy the higher grades because they’ll fetch a higher price. Investors will generally look at the uncirculated and proof grades first (grading explanations are in the next section). Depending on the year and mint, an uncirculated Morgan silver dollar, for example, could easily be worth thousands of dollars more than the same coin in good or fine condition. Making the grade Grading is a reference to a coin’s physical condition. The grading system, referred to as the Sheldon Scale (named after William Sheldon, who standardized coin grading in 1948), is an industry standard that helps dealers, collectors, and investors find an easier way to determine the coin’s condition. The Sheldon Scale (see the following table) works on a numeric system ranging from 1 to 70, with 70 being the highest and most flawless level. Sheldon Scale Rundown of Grades Level Grade Comments AG-3 About Good Lowest grade. You can barely make out the features on the coin. This is fine if you’re seeking coins for their metal content but the worst (and cheapest) choice for numismatic investors. G-4 Good This isn’t good in the true sense. It’s a notch above the worst. This is a poor condition. VG-8 Very Good In this condition, you see all the basic features of the coin, but they’re very worn. F-12 Fine The fine grades are still low grade. Much better condition than the good grades but not investment grade. VF-20 Very Fine This and the next two grades have strong definition of major features, but the intricate details are worn out. VF-30 Choice Very Fine EF-40 Extra Fine EF-45 Choice Extra Fine Choice Extra Fine is okay if you’re talking steak, but in the world of coins, it isn’t investment grade; it’s fine if you’re just a collector. AU-50 About Uncirculated Now you’re talking. Uncirculated means that the coins are in excellent condition. All the features are strong with very little wear and some nicks. AU-55 Choice About Uncirculated This is a level better than AU-50. Some minor wear and nicks keep it below investment grade. AU-58 Very Choice About Uncirculated This level is almost indistinguishable with higher grades, but there are noticeable nicks and very slight wear. MS-60 to 70 Uncirculated or Mint State (MS) This should be the lowest level for investors seeking coins with high desirability. The better the grade, the higher the price at sale time. MS-70 Proof This is the top grade. The coin has a mirrorlike look and is in superb condition with no blemishes, nicks, or other signs of wear or contact. The grades of MS-1 to MS-59 could really be called the collectible grades. For collectors who are simply seeking to add to or complete their coin collections, these grades are okay. Because the grades are low, the prices are also generally low, so coins at these levels are affordable. Those seeking coins with the best potential for investment gain need to concern themselves with the higher grades of MS-60 to MS-70. To get a truly good idea about these investment grades, it’s best to get it from the source, of course. You can find full descriptions straight from the Fifth Edition of Official ANA Grading Standards for United States Coins, published by the American Numismatic Association. Information sources As with most things in life, the more information you have, the better off you’re going to be. The top sources of information on numismatic coins are: Krause publications. Krause publishes World Coin News, Numismatic News, and Coins Magazine Coin World CoinWeek Daily Numismatic & Gold Investment News Numisma-Link

Article / Updated 03-24-2021

The whole point of buying collectible coins (at least from an investment perspective) is to gain by selling them at a higher price later on. This article helps you understand potential buyers and pricing information. For maximum investment gain, it’s best to hold your coins long term to give them adequate time to appreciate in value. Coins aren’t really appropriate as tradable vehicles. Potential coin buyers Keep in mind that to achieve maximum gains with your coins, the issue isn’t just when to sell (again, later is better than sooner); it’s also important to understand whom you sell to. The following sections give you guidance. Dealers The most convenient way to cash in your coin investments is to sell to a coin dealer. The reputable ones are members of the long-standing organizations such as the Professional Numismatists Guild, and you shouldn’t have a problem making a fast and efficient sale. However, keep in mind that what you’re seeking to get paid isn’t the same as what dealers are willing to pay. After you pore over all the price listings in coin publications, you have a preconceived idea of what your coins are worth. Keep in mind that you’re probably looking for the retail price while the dealers are looking to pay only a wholesale price. Oh sure, you read the dealer’s ad stating, “We pay the highest prices in the industry,” and it may even be 100 percent true, but in reality, the point is highest wholesale prices. Dealers are in business, and they need to make a profit to stay in business. If you think that the value of your coin should be, say, $100 (that’s what you saw in those coin publications), then the amount you’ll likely be offered will be in the $50 to $65 range. This is why you should consider your coins to be a long-term investment to give them enough time to appreciate. The difference will mean another 30 to 40 percent in the price to cover the difference between wholesale and retail. Of course, if the coins you’re seeking to sell were found in your attic or inherited, then the wholesale/retail price difference may not mean much to you because your purchase price was effectively zero. Dealers will generally pay a wholesale rate for your coins. Therefore, if you’re settling for dealers to make a fast and convenient sale, call several dealers to size up the offers. Other investors If you want to gain a higher price, then it may behoove you to skip past the middleman and go straight to the buyer: another investor. You may say, “Great! The heck with the dealer; I’ll go directly to the buyer and get more money!” Here’s where you discover the trade-off. If you want to realize more money from the sale of your coins, then you’ll need to put in the time, effort, and diligence. Realizing a higher price entails more marketing and sales efforts on your part. You can find coin investors in a variety of places, and the internet makes it easier to locate would-be buyers. There are numismatic clubs and chat rooms. There are markets for buyers and sellers of coins at websites such as CoinMasters. You can also go to coin shows and conferences. Selling directly to individuals will be easier if you get your coins certified. Investors are more apt to make a deal with you if a credible organization has certified the coin and its condition and authenticity. eBay and other auctions Online auctions are one of the most active areas of the internet. Unless you’ve been spelunking (a weird word that means exploring caves) for the past dozen years, you’ve heard of eBay. It is, of course, the premier online auction site, and lots of coins are bought and sold there regularly. A lot of great information sources are available on how to buy and sell on eBay, and it’s the first place to look when you’re considering selling your stuff online. eBay is a horizontal auction site, which means everyone sells all sorts of stuff to everyone else. If you can’t sell your coins on eBay, then consider finding a vertical auction site. This type of auction site means the buying and selling are in a narrow niche or specialty. There are auction sites that specialize in coins. Also keep in mind that there are dealers and auctions that do consignment sales. Consignment means that you sell your item through a sales agent, but you still retain ownership of the item until the sale is made. Here are some of the major coin auction websites: Stack’s Bowers Heritage Auction Galleries Spink Auction Zip Pricing information Whether you’re buying or selling, the price is everything. You shop around if you’re going to buy. If you’re going to sell, you need to verify with reliable sources regarding the market value of your coin(s). The following sources have pricing information that can help: NumisMedia Fair Market Value Price Guide PCGS Coin Price Guide Coin News A book that achieved renown as the bible for coin prices and values is the Red Book. The full title is The Official Red Book: A Guide Book of United States Coins. It’s inexpensive and compact. Although it gets updated annually, that’s enough. Coin values aren’t that volatile, so an annual book is sufficient for most folks. Find it at your favorite bookstore.

Article / Updated 03-24-2021

Gold and silver have endured all the tumult and chaos of history. They have survived humanity itself. The smartest money people throughout history always had them. Sometimes more, sometimes less, but the wealthy possessed them. Here are ten reasons you should possess them today. One benefit to mention is counterparty risk, which is a crucial benefit of gold and silver but one that is rarely mentioned. It’s a risk that maybe only one out of ten financial pros mention or think of. Gold and silver provide diversification Virtually every financial advisor and financial planner recite the word “diversification” in their sleep and in almost every meeting with their clients. Gold and silver belong in a diversified portfolio. That’s right. Most financial professionals exclude gold and silver as they discuss diversification. Their diversification is principally among paper assets (such as stocks, bonds, exchange-traded funds, and mutual funds), and the only hard assets they typically include are real estate and personal property (cars, collectibles, and so on). Of course, this isn’t true all the time. At the height of major economic crises, a plurality of financial professionals do mention gold and silver, but all things being equal, they usually leave them out. Good and bad times do change often, so of course, your portfolio should adapt. But no matter how good or bad times get, possessing some gold and silver will always make sense to some degree. When times are bad, gold and silver excel as players in your portfolio. But when times are good, gold and silver make sense as hedges or as a form of insurance because bad times can return in sometimes unexpected ways. Using these eternal metals as a form of insurance (at a minimum) is a powerful reason to keep some because paper assets can become problematic before you know it. Why? Gold and silver allow for privacy In this day and age, when privacy is at risk given how easy it can be to get details in public records or splattered on the internet, your assets and other holdings are a public display of your potential wealth. There are plenty of folks out there that you should by wary of; whether it is thieves or snoopy relatives, there are plenty of reasons to guard your privacy. This is where gold and silver can shine. If your neighbor lived in a mansion and you lived in a very modest home, you could easily and privately store a fortune’s worth of gold, for example, in a drawer and no one would be wise to you. The purchase of gold and silver isn’t easily detected by the world at large, and when the day comes to sell them, you would only need to report the gains on your taxes. But so many nosy folks would have difficulty finding out about your shiny stash of precious metals. Gold and silver are portable wealth If you need to leave your home or your area — or your country — you can take gold and silver with you. Part of the value and appeal of having physical, precious metal in your hand is that you can take it with you. It’s portable wealth, and the wealthy throughout history knew it full well. When a country changes political parties or entire political systems (either through votes or violent means), it means that a segment of the populace has a reason to flee. Heck, in some parts of the world, political regimes seem to change with the seasons. A person’s ability to be mobile was part of survival. In today’s unstable world, mobility becomes a plus again. You can carry thousands of dollars of value with a few gold coins very easily. Of course, silver is valuable, but a sizable amount is very heavy and not as portable. But both can come in handy because gold can pay for large transactions and silver can pay for the smaller ones. Now another person can chime in with, “Paul, there are many things that are portable wealth — copper is a great example!” But copper is about $3 a pound. Even $100 worth of copper is just too heavy and unwieldy to even carry across the street, never mind another part of the country or the world. Yet another person will say, “Physical cash is very portable, and you can easily put a debit card or a checkbook in your pocket.” Hopefully, folks will have both cash and precious metals, but remember another drawback of both physical and digital cash. Physical cash is portable, but it does deteriorate physically over time, and its value can decline over time due to inflation. Digital cash is great in the age of internet technology, but what happens during a blackout? Even in dark times, you have metal in hand! Gold and silver ease retirement concerns For 2020–2030, retirement concerns will reach important levels. Due to the dangerous gyrations of markets and underfunding due to shortfalls in payroll taxes coupled with rising pension and retiree costs, millions of retirees will face difficulty. These difficulties stretch from corporate and municipal funding shortfalls to Social Security shortfalls. Given that, the government (both the federal and also the state and local authorities) open the spigots of spending to address this deficit. Ultimately, this will cause inflationary pressures and other unforeseen problems. What should retirees do given this dilemma? Buy gold? Gold will retain its value and help boost wealth when the retirement funding crisis hits. Gold is a safe haven asset This reason is more attached to gold than to silver. Gold is, by and large, a monetary metal and a “store of value,” and it has earned from the mainstream financial media world the well-earned reputation as a “safe haven” asset, meaning that when storm clouds are pelting the economy and the financial landscape, nimble investors flee to gold for a measure of safety that often eludes many other conventional assets (such as stocks and bonds). Note: Silver has many of the features of gold, but it doesn’t tend to share “safe haven asset” status due to its dual nature as both a monetary metal and an industrial commodity. Gold’s strength stands up very well to most of those potential systemic risks. Gold has been a safe haven asset since humanity first started using it thousands of years ago. It survived numerous and endless wars, chaos, and economic crises, and its unique nature will most likely carry it through the next batch of worries. Of course, if we’re talking about humongous meteors coming our way or if our planet careens toward the sun . . . uh, don’t sweat the economy. The value of gold and silver is never zero Well, before humanity came along, I’m sure gold or silver didn’t seem to be better than any other rock, but as soon as civilization got started and people needed to barter and trade, folks tried all sorts of materials for barter such as rice or beans. But because of gold’s unique properties that made it ideal as money, it quickly gained acceptance across many cultures and societies. This acceptance only strengthened over time. Why? Yes, humanity invented paper currencies, but paper currencies were subject to the political whims of government corruption time and time again. When you give politicians and central bank bureaucrats the power to create “money” out of thin air, how soon do you think abuse and greed set in and money is overcreated? This “flaw” in man-made paper currencies leads to overproduction of currencies and the inevitable collapse of the currency itself. This is why the most common collapse in human history has been a currency collapse. Literally thousands of currencies have collapsed since (and during!) ancient times. I can confidently predict that most (all?) of today’s currencies will collapse, especially given historic and massive problems tied to the crises unleashed during the COVID-19 pandemic of 2020 and the fallout from it. But as sure as night follows day, gold will outlive today’s currencies. When a currency collapses, it reaches the value of zero. However, gold (and silver, too) will most likely always have value, so the attraction and attachment to gold will continue. Got gold? Gold retains its value in bear markets When stocks get hit hard and their prices decline substantially (20 percent or more), then it’s called a bear market. You’ll find as you analyze past bear markets that gold (more so than silver) tends to be strong and generally does well and retains its value during this type of economic and market condition. Bear markets also tend to be times that are referred to as deflationary, where prices of consumer goods and services are generally flat or declining. In these moments, currencies tend to hold their value. But the record is clear that gold holds its value very well. Gold actually did well during high-profile deflationary periods such as the Great Depression during the 1930s and in the aftermath of the 2008 financial crisis. Gold and silver have enduring demand As the world population keeps growing, demand for many things will keep growing. Given that, gold and silver will keep growing as demand for both (for different reasons) keeps growing. When the world population surpassed 7 billion (circa 2010 give or take a month), gold was in the general range of $1,000 to $1,200. As the world population is near or at 8 billion people (give or take a city block), gold is around $2,000. Silver had an average price around $15 (or so) back then, and in the summer of 2020, silver was around $27 per ounce. The point is simple: More people on the globe means more overall economic demand. Couple this dynamic with the fact that currency production (dollar, euro, yen) is growing even faster than the population means an environment conducive to rising gold and silver prices. Gold and silver make good inflation hedges When most people think of inflation, they think that it means that the general prices of goods and services have gone up. Actually, when the price of goods and services go up, that isn’t a problem of inflation; it’s a symptom. Yes, it may be called “price” inflation, but it’s a symptom of “currency” inflation and that is the problem. The prices of goods and services don’t just go up for no reason as if the weather changed that day. Those price increases are caused by something. Goods and services go up for two basic reasons: “supply and demand” and overproduction of the currency that filters down to consumer markets. Price inflation is the condition where “too many dollars” are chasing a finite basket of goods and services. So really true inflation isn’t about goods and services being more expensive; it’s about the currency being too plentiful and too cheap! Gold and silver do well in an inflationary environment because precious metals aren’t subject to being overproduced in a nanosecond the way currencies are quickly overproduced. The Federal Reserve (the central bank of the United States), for example, was able to create trillions of dollars during the global COVID-19 pandemic of 2020 with a few mouse clicks. Gold and silver can see their supply increase only through the hard and slow task of mining. New gold and new silver are added to aboveground supplies at the annual rate of only 2 percent (give or take a hundredth of a percent). So, when dollars (or yen or euros or whatever currency) are overproduced, gold is overproduced at a much (and I mean much) lower rate. A currency (to retain value) has, by dint of creation, to be scarce to keep its value. Given this, gold and silver tend to be fantastic inflation hedges and very important in a portfolio when the risk of inflation grows. As I write this, the risk of inflation is indeed growing. Gold guards against financial bubbles As I write this in the summer of 2020, there are bubbles everywhere waiting to pop — and collapse. The U.S. Federal Reserve pumped trillions into both the economy and the financial system to reinflate an economy that was devastated and in desperate need of resuscitation after the government lockdown (which was the response to the COVID-19 pandemic that reached virtually every corner of the economy in the spring of 2020). The Federal Reserve, in an unprecedented and far-reaching effort, was producing currency in an unbridled fashion, attempting to rescue as many asset classes as possible. The newly minted digital currency went to stocks, mortgages, junk bonds, and many other venues on the financial landscape. The net effect is reinflated financial bubbles greater than at any time of modern history. The problem with bubbles is that they don’t keep going up endlessly. Factors such as demand and supply (which are indeed evident in both the economy and in financial markets) do in fact puncture bubbles, which ultimately collapse, ending in tremendous and pervasive financial pain for those on the losing end of failing and falling investments. But as you know by now, gold, especially physical gold, is virtually impossible to inflate. It takes tremendous effort to extract even a single ounce of the shiny metal from the ground. Keep in mind that gold is a better guard against bubble possibilities than silver.

Article / Updated 03-24-2021

Long term, silver is a good part of virtually any portfolio. Silver bullion is the best and easiest way to start participating. Here are several ways to get involved in investing in silver. American Eagle Silver Bullion Coins The U.S. Mint started minting these beautiful coins in 1986. With nearly 135 million coins sold since then, the American Eagle Silver Bullion Coins have become the world’s bestselling silver coins. The design of these 1-ounce coins (0.999 silver content) was inspired by Adolph A. Weinman, the designer of the 1916 Walking Liberty half-dollar. A primary advantage of the Silver Eagle is that it’s very liquid, so buying and selling are easy and convenient. A primary disadvantage is that the premium can run as high as $2 over the metal content value (depending on the dealer). One-ounce rounds These bullion coins weigh 1 ounce and are 0.999 pure silver. They’re like the silver eagle in the previous section, but they have lower premiums. Private mints create them, and the premium is typically 40¢ to 50¢ above the metal content value. Silver rounds aren’t as well-known as silver eagles, but they make good choices for investors who want to get more silver bang for the buck. Junk silver bags This may sound like an odd way to invest in silver, but it’s actually a great consideration. A junk silver bag has $1,000 of face-value silver coins issued in 1964 or earlier. The reason it has that less-than-appealing name is because the coins in the bag are in poor condition and you won’t find any coin that’s rare or has numismatic value. The coins are generally worn down from usage and wouldn’t be considered at any numismatic grade above good. The $1,000 bag weighs about 55 pounds and contains about 715 ounces of pure silver. What kinds of coins are in the bag? If half-dollars were used, there would be 2,000 coins. If the coins were quarters, then there would be 4,000 coins. Dimes? 10,000 coins. Because the bag of coins is bought as a bullion investment, the price of the bag would move in correlation with the price of silver. Many firms can sell you half bags that have $500 of face-value silver coins to make it easier for storage and handling. Even though these old coins are generally priced as bullion, they are coins that are no longer minted. That tells you that the supply is finite, so prices for these bags could rise further if demand increases. The difference between the buy and sell is fairly constant, and there are investors who buy bags when premiums are cheap or negative and trade them when premiums increase substantially. Keep in mind that you’re required by law to report your sale of $1,000 face value 90 percent bags on IRS Form 1099B. Smaller quantities of 90 percent aren’t reportable. (Ninety percent silver means that all the coins are 90 percent silver content and are typically U.S. dimes, quarters, and/or halves issued 1946–1964.) The $1,000 bag of silver dollars This interesting play in silver isn’t exactly a bullion investment, but it’s not a rare coin investment either. Circulated silver dollars struck between 1878 and 1935 carry higher premiums, yet they’re a prime source of legal tender silver coins because they’re so recognizable. These early dollars are divided into two price categories: the more expensive Morgan dollars struck between 1878 and 1904 and the Peace dollars struck between 1921 and 1935. The Peace dollar being the less expensive is quoted by the bag. Such coins are always in average condition and grade VG (Very Good). A Morgan dollar bag and better-quality coins are available at slightly higher prices, so it pays to ask questions before placing an order. This option is popular because silver dollar bags have represented real, portable wealth for more than 100 years. The 40 percent silver bag The last silver coin the United States made for general circulation was the 40 percent silver clad 50@@cs struck from 1965 through 1969. This is another popular way to own silver bullion in legal tender form. Like circulated 90 percent coins, these $1,000 face value bags are traded primarily for content. Because they’re 40 percent pure, a bag contains substantially less silver (296 troy ounces), which is reflected in a lower selling price. The 40 percent silver bag has a number of advantages: These are real U.S. coins and therefore are legal tender. In an emergency, this could be significant. The bag has a high face value ($1,000), which limits the money anyone could lose should silver move lower. This is easily seen in a down market because premiums almost always move higher. Unlike 90 percent silver bags, you’re not required to fill out IRS Form 1099B on 40 percent bags when you sell. Silver bars and ingots In terms of getting the most silver metal content against the purchase price (in other words, paying the least amount of premium over metal content), bullion bars are the way to go. Ingots are really just small bars that are imprinted with designs to make the bar attractive and/or collectible. Ingots are more appropriate for collectors rather than for investors. In the following list, I concentrate on bars (uh, bullion bars, not adult drinking places): 1,000-ounce silver bars: These bars tip the scales at about 68 pounds. They’re typically used to settle the delivery obligations of futures contracts at NYMEX (the New York Mercantile Exchange, which is part of the CME Group). A typical futures contract is tied to 5,000 ounces of silver, so five of these bars will cover the physical requirements for delivery. The bottom line is that this size isn’t practical for average-sized or small transactions typically done by investors. Besides, why get sued by the delivery guy for his backache? 100-ounce silver bars: Another popular way to own bullion silver is the 100 troy ounce bar, which is 0.999 fine. At a tenth of the size, it’s also a tenth of the weight: 6.8 pounds. This is the most typical weight for large retail transactions among investors. 10-ounce silver bars: These are popular and the most common for small investors. They come with a slightly higher relative cost, but as an absolute transaction, they fit the small investor’s budget. There are other bar sizes (such as odd-weight retail bars), but these are the best sizes due to their acceptability in the marketplace and the high degree of liquidity (being able to convert to cash). The common popular brands that most investors will come across are Engelhard and Johnson Matthey. There are more obscure sources, but these two have a long-time reputation for their standards such as metallic quality and authenticity. So, what kind of silver is best? Some of this is tied to your preference. Those who are purists like the bars and 1-ounce rounds. Those who want a more popular, more liquid, and easier bullion transaction would opt for the U.S. Eagle coins. Your budget will also dictate the transaction. Some buy a large lump sum now. Still others will allocate a portion of their monthly budget and do some dollar-cost averaging. Serious investors may consider a portion into bullion as a part of their precious metals foundation and then allocate a portion of their investable funds among some of the paper assets (such as mining stocks and ETFs). Over the long haul, accumulating your investing among the different classes of physical and paper assets will prove rewarding as the precious metals bull market unfolds.

Article / Updated 03-24-2021

The first area of bullion to consider investing in is the ancient metal of kings: gold. With its beauty, reputation, and long history as a store of value and safe haven investment, holding some in your hands is a great experience. Fortunately, there are plenty of ways to do it, starting right here in the United States. One of the first things you learn about is karats (also known as carats but definitely not known as carrots). The karat is a measure of fineness. A karat in gold is equal to 1/24 part of pure gold (in an alloy). Here’s a rundown of how many karats you need to be aware of: 24-karat gold: Equals pure gold (100 percent gold). 22-karat gold: Equals 11/12 gold and 1/12 other (such as copper). A bullion coin or bar that is 22-karat gold is roughly 92 percent pure gold. 18-karat gold: Equals 18/24 gold (the other 6/24 is copper or other metal). Basically, 75 percent of the item is pure gold. 14-karat gold: Means that 14/24 of the item is gold. In other words, 58.3 percent of it is pure gold. One hundred percent pure gold is too malleable (soft) for regular use, and it needs to be hardened by alloying it (mixing or combining it) with another metal, such as copper or silver (or other metal). Twenty-four-karat jewelry, for example, needs to be handled with much greater care than 22-karat (or lower) jewelry. This is why I try to get my wife to buy 0-karat jewelry because, you know, it’s a heck of a lot more durable — really. But I haven’t succeeded in presenting my case. Oh well. American Eagle Gold Bullion Coins For gold investors, this coin is the first bullion vehicle to look into. In 1986, the U.S. Mint first starting minting the Eagle coin series (22 karats). The gold eagle caught on very fast, and it’s the top-selling gold eagle in the country today. They are beautiful coins. The coin’s design echoes the original design of the $20 gold eagle done by Augustus Saint-Gaudens as commissioned by then-President Teddy Roosevelt. Check it out in this figure. The authenticity, content, weight, and metallic purity of gold eagles are guaranteed by the U.S. government, which makes them an acceptable investment, not only to American investors but also in international markets. The advantages of gold eagles are numerous. Many financial advisors see them as a good way to diversify the typical portfolio. Gold is well known as an inflation hedge, and gold eagles are a convenient way to add this benefit to long-term investment strategies. Gold eagles are very popular and the market for them is very large, so buying and selling them isn’t a problem. Buying or selling them is usually private and nonreportable when done in small quantities. Gold eagles are typically sold as 1-ounce bullion coins. However, you can also get them in 1/2-ounce, 1/4-ounce, and 1/10-ounce denominations. This makes gold affordable for just about any portfolio. Sites such as the US Mint’s page provide more details. The American Buffalo Gold Bullion Coin As gold rose in value in recent years, the interest in gold bullion picked up. Because the gold eagle was hitting record sales levels, why not other gold coins? It was at that point that the newest gold bullion kid on the block showed up: the 24-karat American Buffalo Gold Bullion Coin. The face value of the coin is $50, and for the first time ever, investors can get 1 troy ounce of pure gold in bullion coin form. These coins were manufactured by the U.S. Mint at West Point, and they come in special protective holders. (Remember that pure gold is soft.) The Krugerrand Issued in 1970 by South Africa, the Krugerrand (see the following figure) was the world’s first gold bullion coin. Since their issuance, nearly 55 million coins have been bought and sold across the globe. The 22-karat coins are available in 1-ounce, 1/2-ounce, 1/4-ounce, and 1/10-ounce denominations. Because they have a huge market and are highly liquid, buying and selling them are easy. The Canadian Maple Leaf Issued by the Royal Canadian Mint, the Maple Leaf is one of the world’s most popular gold bullion coins. Guaranteed by the Government of Canada for its authenticity and metallic content, the Maple Leaf has a purity extremely close to 24 karats: It’s 99.99 percent gold, making it the world’s purest gold coin. In addition to its reputation and quality, the Maple Leaf is also very liquid and accepted internationally. Other gold bullion Gold bars (see the following figure) are popular and safe choices for investors and have relatively lower premiums than minted coins. It’s a good idea to buy them from sources that get these bars manufactured by Pamp Suisse and Credit Suisse. The gold bullion bar available sizes are 400-ounce bullion bars 100-ounce bullion bars Kilo bullion bar (32.15 ounces) 10-ounce bullion bars

Article / Updated 03-24-2021

It was not that long ago when choosing gold (and/or silver) for your portfolio was a similar dead-end singular choice. To look around and find out that the choice was, uh, “gold” was too stifling and limited. But it’s different today. Here we are in the modern age, the “golden age,” with choices on a “silver platter.” The choices for gold and silver investors and speculators today are truly varied (fabulous dah-ling!). No one should say “I don’t know how to get it into my situation” or “but I have a 401(k) plan so forget about precious metals!” By the way, in this article you’ll see some gold- and silver-related considerations for your portfolio that are new and different. Major gold and silver stocks For standard, relatively conservative investors, you can add some major gold and silver mining stocks that are available on the New York Stock Exchange (NYSE). I think a few quality shares in your regular brokerage account or your retirement account are a good consideration, especially when you’re in the midst of an extended bull market (as we are during 2020–2022 or longer). Make sure the stock is profitable with good fundamentals and a solid portfolio of mines with provable reserves. Top that off with good reviews from industry analysts, and you’re good to go! Junior gold and silver stocks For those who are seeking more aggressive growth potential in your stock portfolio, junior mining stocks are good speculative choices. They tend to be low-priced stocks, so buying a few hundred shares isn’t that expensive. If the share price is less than $10 per share (and often less than $5 a share), then the risk from a financial point of view isn’t that great. In other words, if you have 100 shares of a $3 stock, the worst that happens is that you may lose most or all of that $300 risk capital. Unless you’re eating hot dogs and ramen noodles every night, it’s not a life-changing amount. But what if the stock does strike gold (literally!) and it’s in the middle of a historic bull market? Then it could be a life-changing windfall. Imagine how many cases of hot dogs and ramen noodles you could get (all cash, of course)! Mutual funds For those who want exposure to precious metals but don’t want to keep watching it, then consider mutual funds — an investment that has been popular and in use for a very long time. There are all types of mutual funds, but for our purposes, we seek a sector (or industry) fund that specializes in precious metals. Typically, it would have a portfolio of mining stocks. As a mutual fund, the investment managers actively buy, sell, and hold a portfolio of various mining stocks. The managers choose the stocks using their selection criteria. Essentially, you choose the industry, and the managers of the fund choose all the individual securities. If the industry is doing well, then your mutual fund will do well, too. In the late 1970s, for example, the most prominent gold mining mutual at the time earned more than 1,000 percent gain during that gold bull market that lasted from 1976 to January 1980 (when gold and silver had their highs), but the fund was among the biggest losers in the subsequent years. So, the lesson is clear: Choose your sector fund when that particular sector is doing well — in a bull market! For 2020, gold- and silver-related mutual funds were among the big gainers. If the bull market continues in 2021 and beyond, the gains can continue, too. Physical metal ETFs After physical bullion coins (see the following section), the next safest way to get gold and silver into your portfolio is through physical metal exchange-traded funds, or ETFs. A physical metal ETF is the safest (all things being equal) vehicle you can add to your stock portfolio (whether it’s a regular stock brokerage account or a retirement account). It’s not leveraged or speculative, so it can be a conservative way to add exposure conveniently with a few mouse clicks. Bullion coins It’s easier than ever to buy physical gold and silver, and investors should consider some of both in their portfolio for the 2020–2025 timeframe (give or take a month). Besides all the practical and financial reasons cited, these coins are also beautiful works of art that would definitely grace your vault. Numismatic coins Getting some quality (and I mean quality) gold and silver numismatic coins can be a great long-term investment (holding five years or longer) — long term because it takes time to appreciate enough to offset what can be a large part of the initial purchase, which is the dealer markup. Of course, this is an issue only if you plan on selling back to dealers down the road when you’re ready to cash your coin(s) in. When I say “quality,” I mean that your selection is a top grade (brilliant uncirculated or Mint State 60 or better) and that the other numismatic aspects of it (coin series, scarcity, professionally certified grade, and so on) are also excellent. Numismatic coins are beautiful and can easily grow in value, especially when a bull market in precious metals is sandwiched nicely between when you bought it and when you’re selling it. Leveraged ETFs For those who want to speculate with gold and silver but are too skittish to get into aggressive vehicles, such as futures, and don’t want to settle for merely matching gold and silver’s gains, leveraged ETFs are a happy medium. Because leveraged ETFs are regularly rotating positions offering some combination of futures, options, and other derivatives right inside the portfolio, I like them because they don’t have the risk of expiring, which is the primary risk with options. A good approach (to minimize risk) is to stagger your purchases of a leveraged ETF. Perhaps buy 50 shares in the beginning and buy some more shares in a week or so to take advantage of a pullback. Junk silver Junk silver is a reference to silver coins (usually dimes, quarters, and halves dated 1964 or earlier) that have been in circulation and have no collectible or numismatic value. The coins are bought essentially due to their silver content and are actually a convenient way to put silver in your physical portfolio. These coins do have currency value and you could use them to buy goods and services — but don’t! They are much more valuable as bullion, and their value grows as the price of silver increases. Besides simply finding them in your change much the same way you find other coins more valuable than their mere face value (such as Lincoln wheat cents dated 1909–1958), you can actually buy a quantity with most gold and silver bullion dealers. Junk silver is based on silver content and no other consideration, so do price-shop this one. Ask for price quotes from multiple dealers, including any shipping and insurance charges, for the lowest cost. Gold and silver cryptocurrencies Cryptocurrencies (such as Bitcoin) hit the general investing public’s consciousness during 2017–2018, and they quickly became attractive alternatives on the financial landscape. They were “the new kids on the block,” and after some roller-coaster times during 2018–2019, they seem to have found a sound footing as an alternative for those dabbling with currencies. During 2020, there are at least five new cryptocurrencies available with a nice twist — backed by precious metals. Those that are backed up by gold and silver offer some strength and advantages that aren’t present in the conventional cryptocurrencies. Gold- (or silver-) backed cryptocurrencies have the dual benefit of being today’s digital means of transactions while being supported by metals with a 5,000-per-year track record, so yeah, I’d take this route if I was enamored with cryptocurrencies. Buying through Goldmoney and OWNx Now this isn’t a new twist on gold and silver as if it were a stock or ETF or other vehicle; it’s simply a neat way to buy, sell, and accumulate purchases in gold and silver. These are buying services, and it lets you easily set up a purchase plan to buy a set amount of gold or silver on a schedule that you choose. What’s that? You want to buy $50 of silver per week or $100 of gold per month? Not difficult at all. The transactions are done through a website account, and every week you can see how much of either (or both) metals you accumulated. If you need to sell a portion or all of your metal holdings, you can do it in a few clicks (or taps). Silver is purchased in ounce units, and the minimum for gold is 1 gram. To find out more, go to their websites: Goldmoney OWNx Be sure to find out about their fees and service charges and see whether they make sense for you.

Article / Updated 03-24-2021

We entered a gold and silver bull market in 2020. In early August 2020, gold was above $2,000 per ounce, and silver was about $28 per ounce. Both assets beat most asset classes handily during the first eight months of 2020. There’s no reason that both can’t be at significantly higher price levels for 2021–2022. For investors, the considerations are physical gold and silver, mining stocks, and exchange-traded funds (ETFs), and all of these have performed well so far. But how about those who want staggering, life-changing gains that can be possible in a historic bull market? Yes, I’m talking about speculators and traders. The gains can be great, and as long as you understand (with discipline) how to deal with the volatility and risk for loss, you’ll be good to go. Focus on some “golden rules” (the tips in this article) to enhance your chances of success. Although these tips are being applied to the world of gold and silver, many of these can serve as guidelines with other assets and investment vehicles in the world of speculating and trading. Focus on a specialty Even though some aspects of trading tend to be in a variety of venues (such as technical and fundamental analysis), develop expertise and knowledge in a specific market or asset versus being a “jack (or jill) of all trades.” Here, the focus is obviously gold and/or silver. Focus is important because your success will be a laser, not a shotgun. Get intimately familiar with an asset, specific market, or investment vehicle. Find out “how it ticks” and what drives it both up and down. This focus is part of the foundational success leading to your financial rewards. Do research and more research Once you choose what you’ll focus on, get all the information you can about it. Get the data. Find out what the experts are saying in that specific category. What are the popular industry blogs reporting with news and views? What are company CEOs and fund managers saying? How about market statistics? What is going on with demand and supply? Are there market drivers or other factors that can influence price in the industry? How about other markets that affect the market you’re in? Be a contrarian Long, long ago, the billionaire J. Paul Getty was quoted as saying, “Buy when everyone else is selling and hold until everyone else is buying. That’s not just a catchy slogan. It’s the very essence of successful investing.” During gold and silver’s most recent bear market (2011–2019), both metals were unloved by the general market. No one had a positive remark about either in the mainstream financial media. But the contrarian “looks under the hood” and sees whether the ingredients are there for the next bull market. After all, bull markets start in moments of pessimism and despair. If no one wants this asset or vehicle, that means that prices are very low. It means that demand and supply favor the discerning buyer. The same point is true when everyone loves a specific asset or vehicle. If everyone wants it, then how much more upside is there really? The contrarian understands that bear markets start at the height of jubilation and optimism. Markets get overbought and conditions then favor the discerning seller. Gold and silver are in a major bull market. As it gets mature and even your neighbor or the Uber driver starts giving you advice on gold and silver, start planning your exit! Limit your grubstake Before you get enamored and plan on betting the farm on gold or silver or whatever is being loved in the media, become disciplined about how much you plan on using for your speculative and trading pursuits. Very, very often I have seen how people got burned when they bet too much of their money on a jubilant choice. Limit how much you’ll deploy, and keep in mind that the bulk of your financial assets should be in quality investments, cash (savings accounts), hard assets (your residence), and strategies that give you proven gains, such as paying off debt. Stagger your entry A common approach (unfortunately) is that as soon as someone opens his account for the purpose of speculating/trading, he deploys the full amount of the funds immediately. If he started with, say, $10,000 on Monday morning, the entire amount has been used for positions by that afternoon. Then, when opportunities arise the next day or later that week, he has no funds to use. Keep in mind that you can’t foresee every short-term twist and turn. A good approach to consider is to limit your entry point to, say, only 25 percent of your tradable funds. Wait a week or two, and deploy the next 25 percent if you see a buying opportunity. Again, wait a week or two, and deploy another 25 percent. Keep the remaining 25 percent of your funds for buying opportunities that arise. Use the right speculative vehicles The “how” in speculating and trading can be just as important as the “what.” This is especially important for the beginner and intermediate traders and speculators. For example, you may be all set to speculate with futures (the “what”), but if you don’t know how dangerous they can be, then I suggest call and put options on futures (the “how”). Futures can be very volatile and risky, and you can possibly have a greater loss than the amount you used; therefore, limit your risk by using options. What’s that? You want to speculate on gold and silver by getting in call and put options on, say, gold and/or silver ETFs (the “what”)? Sure, but beginners (and beginning-intermediates) should use long-dated options. Many folks use options that typically expire in nine months or less. I prefer (especially for beginners) options such as LEAPs (long-term equity anticipation options), which is the “how.” Why? LEAPs typically expire in a year or longer, frequently much longer. As of August 2020, call and put options on many gold- and silver-related vehicles such as stocks and ETFs expire in June 2022. That is nearly two years of time value — cool! All things being equal, buying an option expiring in, say, two years, is much less risky than an option expiring in three or six or nine months. But I bet you knew that. Have multiple positions When possible, have multiple positions on so that you have flexibility given market conditions, both current and expected. If, for example, you’re bullish on gold, and the call option you bought on it is profitable, you’ll be asking yourself, “Gee, should I hold on or sell it?” Of course, there may be other factors at play, such as whether you need the money, see other opportunities, and so forth. If you’re bullish on gold, and if you have the cash, then consider multiple positions such as two or more call options (for example). That way you’re not in an “all or nothing” position. You have more flexibility. You can sell a portion of your position so you can have some cash “on the sidelines” that’s ready for deployment on new opportunities. Of course, don’t go ape and have 100 options on. But be diversified and have some cash on the side if possible so that you can take advantage of opportunities when the market ebbs and flows. Use technical indicators When you’re investing (investing, not trading or speculating), you could probably do fundamental analysis all by itself and do very well because real investing is a long-term pursuit (measured in years and maybe decades). Some speculating can indeed be long term, but most speculating is short term (typically measured in months). Trading is almost exclusively short term (measured in days or weeks — and sometimes hours!). Given that, serious short-term speculators and experienced traders will generally rely on technical analysis. Moving averages, charts, and volume data become very important. I personally don’t trade that much, but I’ve done plenty of short-term and long-term speculating so I take seriously data that helps see “oversold” and “overbought” conditions such as the relative strength index (RSI). Do some hedging When you see that your positions are doing extremely well, consider hedging. Hedging is basically a bet against your primary position or expectations; it’s essentially a form of insurance if the market unexpectedly turns against you. Keep in mind that markets turning against you are typically unexpected turns! Say that you have 20 call options you purchased recently on silver, for example, and that currently they are very profitable. Silver was on a tear and at the moment you’re not sure whether it will continue or correct (pulling back or declining temporarily but still in a long-term bull market). Experienced folks start to hedge, even if only on a limited basis. Perhaps they’ll write some covered calls or buy some short-term protective puts. Learn about hedging to protect positions. Take a profit When you’re investing, time is on your side, which is why “long term” is a vital component. Well-chosen investments (stocks, ETFs, mutual funds, and hard assets) will zigzag upward over time. Time helps you make money. But shorter-term vehicles such as futures and options have a limited shelf life. Futures and options can be great for speculative wealth building, but they’re no good at all for preserving that wealth. Given that, don’t be hesitant with profit-taking to some extent. If, for example, you have a profitable call option on silver futures and it’s deep in the money (ITM) and expiring in the near future, cash it in ASAP. Take the profit before it declines significantly or evaporates outright. Fortunes can change rapidly with your futures and options positions, so take profits knowing that you can always add other positions just as readily. Use brokerage orders I’m adding an 11th item. Please utilize the various types of orders that are available with your brokerage account. I use limit orders, stop-loss orders, and trailing stops regularly in both my investing and (especially) in my speculating. These orders are very powerful and useful tools that can help you optimize gains and minimize losses.