Wealth preservation refers to strategies and actions taken to protect and maintain the value of one’s assets over time. It involves managing risks and minimizing potential losses to safeguard wealth and ensure its long-term sustainability. These strategies can include diversification, risk management, asset allocation, regular monitoring and review, and tax-efficient strategies. Wall Street will not endorse physical gold and silver as wealth preservation because they generate fees and commissions on paper assets. What good would boring old gold and silver do for them?
Silver is a precious metal that has been used as a store of value and a medium of exchange for thousands of years. It is often considered an investment option for wealth preservation purposes due to its historical stability and potential as a hedge against inflation and economic uncertainty. The earliest coins in the world were minted in the kingdom of Lydia in Asia Minor around 600 BC. The coins of Lydia were made of electrum, which is a naturally occurring alloy of gold and silver that was available within the territory of Lydia. The oldest mass-produced silver coins trace back to the Greek drachma in the 4th century BC.
Silver is a store of value
Silver has been used as a form of money throughout history. It retains its value over time and can serve as a hedge against currency devaluation and inflation. The increased demand for silver because of currency devaluation and inflation could not be more relevant than in today’s environment. One of the reasons silver is poised to go higher is because it is a store of value.
Industrial demand plays a huge role in using silver
Silver has numerous industrial applications, including electronics, solar panels, medical devices, and electric cars. This industrial demand can contribute to the metal’s value, as it is consumed in various sectors. Much of the silver pulled out of the ground and refined is consumed and used up. Industrial demand will continue to provide demand for silver and contribute to its increase in price in the future.
Silver provides diversification for gold investors
Investing in silver can provide diversification within a precious metals portfolio. It offers an alternative to gold and other assets, helping to spread risk and potentially enhance overall portfolio performance. Because silver is a lower-priced commodity than gold, the percentage moves in silver are typically greater than gold. When gold doubles in price during a certain period, it would be reasonable to assume that silver would do twice or three times better.
Market factors are as leveraged and as risky as ever
Silver prices are influenced by a range of factors, including global economic conditions, geopolitical events, currency movements, and supply and demand dynamics. The banking system is leveraged and risky based on the failures that occurred in March. It is inevitable in such a fake monetary system based on fractional banking and printed fiat money that more bank failures occur soon. The demand for silver will increase as investors pull paper assets from the banking system and own physical silver that they can hold and control. This will contribute to the silver price heading higher.
The US Mint is not making as many Silver Eagles as they normally do
The United States Mint, which is the official mint of the United States Government, produces the American Silver Eagle coins. The American Silver Eagle is a popular and widely recognized silver bullion coin that contains one troy ounce of .999 fine silver. It was first introduced in 1986 and has since become a popular choice for both investors and collectors. The typical annual supply of Silver Eagles is around 40 million per year. The US Mint this year is on track for roughly half of that. Because the US Mint is basically breaking the law for Silver Eagle production, the lower expected supply of Eagles will increase in price due to even regular demand.
Investors are losing faith in fiat currencies
Some investors have expressed concerns about fiat currency and have sought alternative investments as a means to preserve wealth. The term fiat currency refers to money that is not backed by a physical commodity like gold but is instead based on government decree or regulation. Since 1971, we have been on a fiat currency experiment issued by Richard Nixon. As this experiment fails because of unlimited money printing, the value of fiat currency has no choice but to continue to go down. The lack of confidence in our fiat US dollar will continue to fuel demand for silver as a way to protect purchasing power. We will ultimately see new currencies introduced that will be backed by some gold and silver.
Many Americans are not confident in the banking system
According to a March 2023 poll by the Associated Press-NORC Center for Public Affairs Research, only 10% of US adults say they have high confidence in the nation’s banks and other financial institutions. That’s down from the 22% who said they had high confidence in 2020. A majority say the government is not doing enough to regulate the industry. One of the big problems with the banking system is the use of derivatives. Legislation passed protects the Wall Street money-making machine. US investors always end up footing the bill. Silver will see increased demand from those who are not confident in the banking system and are looking to put their paper assets into something else not connected to the banking system.
The price of silver has fluctuated significantly over time, influenced by various economic factors, market conditions, and investor sentiment. In the 1970s, the price of silver experienced a substantial increase, driven by factors such as increased industrial demand, geopolitical tensions, and the weakening of the US dollar. The price reached a peak of around $50 per ounce in 1980, primarily due to the Hunt Brothers’ attempt to corner the silver market.
After reaching its peak, the price of silver experienced a sharp decline in the early 1980s. It then traded in a range between $4 and $10 per ounce throughout most of the 1980s and 1990s, influenced by factors like reduced industrial demand and stable inflation rates. In 1997, Warren Buffet bet silver again as he predicted shrinking stockpiles would push up the silver price.
The early 2000s saw a gradual increase in the price of silver, driven by factors such as increased industrial demand, growing investment interest, and a weakening US dollar. Silver reached around $20 per ounce in 2008, largely influenced by the global financial crisis. It reached its highest level in history, surpassing $48 per ounce in 2011, as investors sought safe-haven assets during times of economic uncertainty and as a result of monetary stimulus measures. However, it subsequently faced a period of correction and consolidation, trading in a range between $15 and $25 per ounce for much of the decade and it is currently near the upper range for those prices.
The price of silver as an investor today is irrelevant. We spoke about why you would want to own silver today:
- silver is a store of value
- it is very important to the industry
- it provides diversification for gold portfolios
- the markets today are as risky and bloated in history
- the US Mint is on track to only produce half of its normal production of Silver Eagles
- fiat currency is a mess
- most people don’t trust the banking system
Besides being a medium of exchange for living expenses, what use is there to hold onto the dollar? You get no interest, the bank lends your money out so it’s technically not even there, and it continues to dwindle in value. As an investment, fiat money is a guaranteed loser.
There have been allegations and claims of price manipulation in various financial markets, including the silver market. Price manipulation refers to the intentional interference or distortion of market prices through illicit activities to benefit certain individuals or entities. Big bank players have paid fines for manipulating the silver. It is not a secret that the banking cartel is trying drastically to hold onto the fiat monetary system that they have. A soaring silver price erodes this faith in paper money and investors flee the paper system making banks insolvent. We saw this last May as some banks became insolvent in a day.
The “everything bubble” that we are currently in will eventually implode. The debt bubble we have will eventually pop and destroy the bond market and the assets behind that debt will lose significant value. The system we are in just believes we can print our way out of it and take on more debt. Most people that leave all of their money in that type of system stand to potentially lose it all. If you don’t want to be one of those people it would be a good idea to get out of some of those rotten dollars and get some physical silver.