5 Reasons Why Everyone Should Own Gold and Silver

In today’s post I want to discuss 5 reasons why I think everyone should own some gold and silver.

1. Real Money- Gold and silver are real assets and are always going to have its intrinsic value. Now, Money is typically defined as a store of value (meaning it can be saved), unit of account (meaning its used to value goods and services) and medium of exchange (meaning people can use it to buy and sell goods from another so need to barter). Right now, in my opinion, the dollar is failing to meet the definition because it’s really not a “Store of Value”. Every year consumers lose more and more purchasing power due to inflation. We know poor people are hurt disproportionally by this. A lot of people argue against gold and silver being money as it’s not a great medium of exchange, when compared to cash and credit cards. There’s a solution to this in having a currency backed by gold, silver and a basket of commodities. Critics will argue that this won’t allow the Fed to stimulate the economy, but I think we need to let the business cycle play out its natural course. Recessions happen and we need to rely on technological innovation (Read why technology not free money boosts the economy here) and productivity increases to boost the economy. Not free money.  
2. Insurance- Gold and silver retain their value and provides security against economic and political turmoil. We’re already beginning to see countries de-dollarize and as more and more global trade settles outside the dollar, this is going to weaken the dollar’s strength. Now, this is going to take time as about 50-60 percent of international trade is settled in dollars (Why should Saving Be Rewarded?). 
3. Very liquid. – Gold and silver are easy to sell and there is always a buyer for this asset. If I’ve got 10 ounces of gold(Read about fractional gold here) and I went to sell it, I can move it quickly and get either spot or slightly over. Other hard assets take longer. A house can take months to sell, cars the buyer might want to look at the engine and cars depreciate as well. 
4. They are a good inflation and deflation hedge. Gold and silver are going to retain their value during high inflation(weaknesses of CPI stat- read here) and your purchasing power won’t change. Now, personally I have hard time believing Deflation will happen anytime soon. People are spenders today and not savers. It’s just how American culture is. Historically, we saw deflation happen in the 1880’s and this was due to productivity increases, as we moved from an agriculture economy to industrial. Also, the 30’s and this was due to bank failures mainly. How are we going to become more productive? Maybe AI, but that’s not proven yet. If consumer demand starts falling, we know the fed has no issue printing money and lowering interest rates. 
5. Weakness of the US dollar- There’s a lot of reasons to start thinking what will happen down the road. The dollar is inversely correlated to gold and silver prices. The dollar is the world’s reserve currency but that probably won’t last much longer as other countries look for other options (Gold and the Great recession).