All that Glitters is ... Silver?

Scott,

Why would you tell Mark (27th March) to get rid of his silver? If you were to do some deeper research on gold and silver, you would find they are likely to multiply many times. This will be due to the inflated world money supply producing a Ponzi-like bubble on world stock markets, and then crashing, making for a rush to silver and gold, even with a high AU dollar. Look ahead a bit!

Doug

Hi Doug,

Let’s do some ‘deeper research’.

First, I appreciate and totally agree with you that central bankers have put the world in uncharted territory. I also share your hunch that, when our day of reckoning comes, gold and silver and cans of tinned baked beans will all move higher, albeit temporarily, which could make you a trading profit.

The question is when this will happen. You don’t know. I don’t know. The doom and gloom newsletter publishers who make millions of dollars a year selling subscriptions don’t know either. A 20-year study by academic Philip Tetlock from the University of Pennsylvania tracked 82,361 economic and political predictions from academics, experts and gurus, and found they were about as reliable as a dart-throwing monkey.

So while you wait for the world to crash, you’ll be stuck with an investment that misses the secret source of wealth: compound interest. See, the problem with trying to predict the future price of silver, gold, or my grandma’s prized Victorian teapot is that none of them have any practical utility (other than looking pretty). They’re not like a company that generates profits and pays dividends, nor a home that can be rented out. You can only make money by trading it -- selling a lump of metal with no intrinsic use to someone who believes the same story that you do.

Finally, if you do some ‘deeper research’, you’ll see that over the past 100 years gold and silver have barely managed to keep up with inflation. Over the same time period, the US share market has risen a staggering 18,520-fold.

Scott