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Pressing Questions from Gold &
Silver Investors...
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We get lots of questions from the
public about precious metals. Some people are curious about the basics.
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Others are skeptical
about the case for owning gold and silver. Still, others are longtime customers
who have highly specialized inquiries.
Here are two very
common questions...
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QUESTION: What???s Money Metals'
overall philosophy as to what precious metals products one should buy?
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ANSWER: We encourage folks
to focus on the lower premium items so virtually all their investment goes into
acquiring the metal itself.
Most importantly, that means
avoiding so-called ???rare,??? graded, or proof coins which generally carry high
premiums, mostly unrecoverable upon a later sale.
You will almost certainly be better
off if you stick with bullion coins, bars, and rounds where the cost is mostly
determined by the spot price. Within that group, bars and rounds almost always
offer the best value.
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QUESTION: What are the reasons
to own physical gold and silver versus owning mining stocks?
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ANSWER: Gold or silver bullion
and mining stocks are two entirely separate asset classes.
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Bullion is money itself, a
tangible asset with eternal value. You own it for insurance against a collapsing
financial and monetary system. The profit – and there certainly can be great
gains when measured in both nominal and real terms – is gravy.
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When times get difficult, though, the
action in the gold and silver mining stocks can get quite ugly.
These stocks are typically the
most volatile area of the entire stock market. They are not for the short-term
risk averse. They are for those who believe the potential long-term rewards are
worth the risk.
Bullion functions better than the
mining sector as a portfolio diversifier (physical gold is less correlated with
the stock and credit markets). Over the long-term, gold bullion also performs
better on a risk-adjusted basis (similar expected returns with a fraction of the
volatility).
Start by owning physical bullion -- whether it be gold or
silver.
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Build a solid foundation
in the metals themselves before even considering the purchase of mining shares,
which aren???t suitable for all investors.
You own gold and silver
mining companies not for their eternal value (they could go bankrupt), not for
insulation from the financial system (they are financial assets which are affected
by credit conditions and general market volatility), but for their profit
potential as operating businesses.
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There can be more
upside on your investments in mining shares during a bull market (and more
downside in a bear market), but you also take on an array of risks, such as:
- rising energy and labor
costs
- political risk (including
threat of nationalization)
- wider economic/financial
turmoil
- credit market tightness
- peculiarities affecting
profitability in the industry
- investor sentiment/risk
aversion
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Other Great Options to
Consider
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This copyrighted material may not
be republished without express permission. Offer only available through email
promotion. Offer does not apply to previous orders and may not be combined with
any other offer or program. Special shipping rates or other restrictions may apply
to international orders. The information presented here is for general educational
purposes only. Money Metals Exchange and its staff do not act as personal
investment advisors. Nor do we advocate the purchase or sale of any regulated
security listed on any exchange for any specific individual. While our track
record is excellent, investment markets have inherent risks and there can be no
assurance of future profits. You are responsible for your investment decisions,
and they should be made in consultation with your own advisors. By purchasing from
Money Metals, you understand our company is not responsible for any losses caused
by your investment decisions, nor do we have any claim to any market gains you may
enjoy. Money Metals Exchange is not a regulated trading ???exchange??? as defined by
the CFTC and the SEC.
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