Welcome to the deep dive. You know, lately, it
really feels like our paychecks just aren't stretching
as far, doesn't it? And that feeling of inflation
kind of nibbling away at your savings, it's definitely
hard to ignore. Yeah, it really is. So in this
session, we thought we'd unpack some, well, some
potential ways to maybe shield your financial
well -being a bit. That's right. The erosion
of purchasing power, it's a huge concern for
so many people right now. So today, we're putting
gold and silver under the microscope. Our goal
is basically to explore their historical track
record and their potential as hedges against
this inflation we're talking about. And we're
drawing insights from a really detailed article
that kind of walks through the ins and outs of
investing in these metals. OK, so gold and silver.
When people start thinking about protecting themselves
from insulation, these two almost always pop
up first. Why is that? What's really at the core
of their lasting appeal? Well, fundamentally,
it really boils down to their history. Their
history as tangible forms of wealth. Tangible.
For centuries, long before we had all this paper
currency, gold and silver were the money. Their
value comes from their scarcity. I mean, unlike
government money, which can be printed, the supply
of gold and silver is just, well, it's limited
by nature. And that basic fact has made them
pretty reliable stores of value through all sorts
of economic shifts and societal changes over
the years. You often hear that gold... holds
its value, even when things get really chaotic.
Is there a good example of that? Oh, absolutely.
The article we looked at brings up the hyperinflation
in Zimbabwe back in the late 2000s. I mean, imagine
your local currency becoming basically worthless
almost overnight. Right. In that kind of situation,
someone holding physical gold would have seen
their wealth preserved. Totally different story
for people holding Zimbabwean dollars. That's
been devastating. Oh, completely. Yeah. A tiny
bit of gold could still buy you essentials when
the actual currency was useless. That difference
really, it really highlights gold's role as a
sort of financial anchor in extreme situations.
So gold is like this bedrock. When everything
else feels like it's shaking, it's sort of the
financial world's emergency break. That's a good
way to put it. Yeah It acts as what economists
call a safe haven asset particularly during economic
downturns. Okay When stock markets are plummeting
or currencies are losing value, investors tend
to rush towards the perceived safety of gold
and that increased demand can help its price
hold up or even, you know, rise. Yeah. Think
back to the 2008 financial crisis. You ever remember
that? Global markets were in free fall, right?
But gold prices actually surged. It showed its
ability to weather those storms. And it's not
just individuals either. Central banks all over
the world hold massive gold reserves. That's
true. Why do they do that? Well, it's not just
tradition. It's strategic. It adds stability
to their national economies. The sheer amount
they hold is it's really a testament to gold's
enduring importance. OK, that makes gold's role
pretty clear. Now, silver often gets mentioned
right alongside gold. Does it work the same way
as an inflation hedge? Silver shares some of
gold's basic qualities. Yeah. Mainly the limited
supply and that historical status as, you know,
a store of value. OK. But it also has some key
differences. Its role is maybe a bit more nuanced.
How so? Well, one big advantage is just the price.
Silver is way more affordable than gold, which
makes it accessible to more people, you know?
Investors who might find buying gold requires
too much capital up front. That makes sense.
Yeah, for someone starting out or maybe with
less cash to invest, silver feels like an easier
entry point. Exactly. And another thing, silver
has tons of industrial uses. Oh, like what? It's
crucial in electronics, solar panels, all sorts
of things. This industrial demand can be a really
significant driver of its price. It adds this
whole other layer of potential value beyond just
being money, gold doesn't really have that same
level of industrial demand affecting its price.
So silver has this kind of dual appeal then,
score of value and an industrial metal. Does
that make it a better investment overall? Not
necessarily better, just different. That industrial
demand combined with market moods also makes
silver's price more volatile than gold's. Oh,
OK. More volatile. Yeah, much bigger price swings.
So while that could mean bigger percentage gains
if the market goes up, it also means bigger potential
losses if it goes down. Exactly. Higher risk.
So just to recap quickly. Both have value because
they're scarce. Gold is the classic safe haven
in rough times. Silver has that industrial kicker,
but it's a bumpier ride price wise. Got it. OK,
so let's say someone listening is thinking, all
right, maybe I should add some gold or silver
to hedge against inflation. How do they actually
do it? It's not like ordering groceries, right?
Ah, not quite. Well, you can actually buy physical
bullion. That means actual coins and bars. OK,
physical metal. Yeah, and that's the most direct
way to own it. For some people, actually holding
the gold or silver, that tangible aspect, gives
them a real sense of security, especially when
the economy feels shaky. I can definitely see
the psychological comfort in that. But what about
the practical side? Storing it? That must be
tricky. You've hit a really important point there.
Storage and security. I mean, keeping a lot of
gold or silver at home, that brings up worries
about theft or even damage, you know? Sure. So
a lot of people use secure vaults, maybe at a
bank or these specialized storage facilities.
But of course, those have fees. Right. Nothing's
free. And also, when you buy and sell the physical
stuff, you usually pay what's called a dealer
premium. Premium. Yeah. It covers the dealer's
cost of getting and handling the metal. Plus,
you might have shipping costs. Insurance, it
adds up. OK, so definitely some logistics and
extra costs with physical ownership. Are there
other ways to get exposure to gold and silver
without actually having bars under your bed?
Oh, yeah, absolutely. A very popular way is through
ETFs, exchange traded funds, or mutual funds
that basically track the price of gold or silver.
ETFs, right, I've heard of those. So when you
invest in these, you're buying shares in a fund.
That fund either holds the physical metal itself,
or it uses financial instruments derivatives
to mirror the price. But you don't own the actual
coins or bars yourself. Okay, that sounds way
easier from a storage point of view. What are
the main upsides and downsides there? The big
advantage is liquidity. It's super easy to buy
and sell shares in these funds through your normal
brokerage account. Much simpler if you want to
adjust your position quickly. But the downside
is these funds have management fees. Ongoing
costs? Yeah, they chip away at your returns over
time. And also, because you don't physically
hold the medal, you have what's called counterparty
risk. Counter -party risk. What's that? It basically
means you're relying on the company managing
the fund. If that financial institution ran into
serious trouble, well, it could potentially affect
your investment. Gotcha. So you're trusting the
fund manager to do their job and stay afloat.
Okay, what was the third way the article mentioned?
The third route is investing in stocks of mining
companies. Companies that actually dig gold and
silver out of the ground. Ah, the miners themselves.
Exactly. The thinking here is if gold and silver
prices go up, these companies should become more
profitable, right? And their stock prices might
rise too. So an indirect play on the metal prices.
Pretty much. But, and this is a big but, it's
crucial to understand their stocks are affected
by way more than just metal prices. Like what?
Oh, all sorts of things. How much it costs them
to operate, how good their management team is,
geological surprises in their minds. Political
issues, too, maybe. Definitely. Political instability
in the countries where they operate can be a
huge factor. So their stock price might move
quite differently from the actual gold or silver
price sometimes. You really need to research
the specific companies. OK, so. Multiple ways
to invest. Physical, ETFs, mining stocks, each
with its own pluses and minuses. Now we've talked
a lot about them being inflation hedges, but
what about the risks? Are there inherent dangers
we need to keep in mind? Absolutely. No investment
is risk free, and gold and silver are no exception.
One of the biggest risks is just market volatility.
Those price swings you mentioned with silver.
Exactly. But gold can be volatile too, just usually
less so than silver. Prices for both can fluctuate
quite a bit. depends on global supply, demand,
big geopolitical events, even just investor mood,
you know? So the price isn't guaranteed to go
up just because inflation is high. It can still
drop. Oh, absolutely. There can be big swings
both ways. Now, that volatility can be an opportunity
if you're trying to trade short term. But that
sounds risky. It is. It's challenging. It also
means you could face losses, especially if you
need the money quickly or you try to time the
market perfectly. The article makes a good point.
A long -term view often helps navigate these
ups and downs. And diversification, I imagine.
Crucial. Absolutely crucial. Spreading your investments
across different types of assets helps cushion
the blow if one part of your portfolio takes
a hit. We also touched on the risks with physical
storage. Anything else on that front? Yeah. Well,
beyond theft or damage at home, there's also
liquidity. Selling physical bars or coins might
not be instant. like selling an ETF share. Right,
finding a buyer agreeing on a price. Exactly.
And you might face extra costs when you sell,
depending on the dealer. And while professional
storage is secure, like we said, it's an ongoing
expense that eats into your potential profit.
OK. And what about just compare the cost generally
between physical ETFs, stocks? They differ a
lot. They definitely do. Physical has those upfront
dealer premiums, maybe shipping, then potentially
ongoing storage fees. ETFs and mutual funds,
they have those recurring management fees, plus
maybe brokerage commissions when you buy or sell
shares. Mining stocks have brokerage commissions,
too. So you need to factor those in. You really
do. You need to compare the costs for each option
and think about how they fit with your overall
plan and how long you expect to hold the investment.
You don't want fees eating up all your gains.
sense. So thinking strategically then, how should
someone actually incorporate gold or silver into
their portfolio? Is there like a rule of thumb
percentage? That's a really key question. And
yeah, the source material does touch on that.
A common guideline you often hear from financial
advisors is maybe think about allocating somewhere
around, say, 5 % to 10 % of your total investment
portfolio to gold and silver. 5 % to 10%. Yeah.
That level can act as a potential inflation hedge
and add some diversification, hopefully without
dragging down the growth potential from your
other assets, like stocks too much. So it's about
balance, not putting all your eggs in the precious
metals basket. Exactly. all about diversification.
Stocks, bonds, maybe real estate, gold and silver
should just be one piece of a broader balanced
strategy. And it's not something you just set
and forget either. You should regularly review
your whole portfolio, see how things are performing,
and rebalance your allocations if needed. Market
conditions change, your goals might change. OK.
And what about your investment time frame? Does
that affect how you should view gold and silver,
long term versus short term? Oh, definitely plays
a big role. For long -term investors, gold and
silver can potentially act as that reliable store
of value we talked about, protecting wealth against
inflation, eroding its power over decades. So
patience is key. Patience helps ride out those
price swings, for sure. Short term investors,
they might try to trade the fluctuations, try
to buy low and sell high quickly. The higher
risk strategy. Generally, yes. More speculative
needs a really good understanding of the market.
So aligning your investment horizon with your
financial goals is just, well, it's essential.
The article also mentioned putting gold and silver
in your retirement fund. How does that actually
work? Yeah, it brings up the idea of a gold IRA.
Gold IRA. So unlike a typical IRA, which usually
holds stocks, bonds, mutual funds, that kind
of thing, a gold IRA lets you hold physical precious
metals, actual gold or silver bullion, inside
your retirement account. Wow. OK. Physical metal
in your retirement account. Yeah, our source
material actually points to a couple of other
articles specifically on this. What is a gold
IRA and how does it work and how do you start
a gold IRA? Yeah, they go into the details like
how you might transfer or roll over funds from
an existing retirement account. So it's another
potential way to use gold and silver for inflation
hedging specifically for your long term retirement
planning. That's definitely a different angle
for retirement savings. Well, this has been incredibly
insightful. A real deep dive into gold and as
potential inflation hedges. Any sort of final
takeaways for our listeners as they chew on all
this? Sure. I guess the main summary is that
gold and silver, they have this long history
as stores of value. They can be useful tools
for potentially protecting your wealth against
inflation's bite. Right. You've got different
ways to invest, holding the physical metal, using
ETFs for convenience, or investing in mining
stocks. Each has its pros, its cons, its risks.
The really crucial thing is to understand these
options. Think hard about your own financial
goals, how much risk you're comfortable taking,
and then strategically fit precious metals, if
you choose to, into a well -diversified overall
portfolio. Don't go all in. Good advice. And,
you know, the article does mention some analysts
are pretty optimistic about gold prices for 2025
and predict a possible surge for silver too.
Now, obviously, those are just predictions, right?
No guarantees. Of course. Crystal balls are always
fuzzy. Exactly. But it shows there's ongoing
interest. So, maybe the final thought for you,
the listener, is to consider what role, if any,
these medals might play in your long -term plan.
And maybe, if retirement saving is top of mind,
looking into something like a gold IRA might
be worth exploring further. The author of the
article we used, Doug Young, he's got a lot of
experience in this area, so it's a credible perspective
to consider. Definitely a lot for everyone to
think about. Thanks so much for breaking all
that down for us. It's been really helpful.