Are Gold & Silver Still Good Investments to Buy at these Prices?

As the global economy relapses back into recession again (some say it's a depression and we never left it) and Stock Markets seemingly falling further every day many people are wondering what they should be doing with their savings.

But before making any important investment decisions it's always wise to take a step backwards and look at historical events, because human history tends to repeat itself a little too often for a supposedly intelligent species, in fact it's a fairly certain but depressing bet that:

"What was before, will be again"

You only have to look back at a couple of hundred years of history to see the same patterns appearing again and again, across different races, civilizations and continents.If you go back a thousand years, or two the patterns solidify into what is very predictable behaviour in certain circumstances.

Therefore unless you are looking for short term speculative trading action rather than "investment", it is probably wiser to look to history for "the big picture" i.e. what is likely to occur over the longer term, perhaps half a lifetime or more, than to focus on daily or current events for long term guidance of any sort. With this in mind lets think about the long term history of Gold & Silver and their role in the collective history of mankind.

..is a very famous quote by the original (Mr) JP Morgan whose name is still part of the trading name of one of the biggest and most powerful investment banks in the world, JP Morgan Chase, and the man knew what he was talking about!

In fact as far back as we have written records Gold & Silver have always been mankind's primary vessel for storing and displaying (portable) wealth, records from ancient Egypt discuss Gold in detail from 2600 BC, and it has been in use as coinage since 610BC, some 2600+ years now.

Looked at in this light it's clear that Gold as an investment certainly has staying power, especially when you then consider how many mighty empires and dynasties have risen and fallen in that time, and more importantly how many of their different paper "moneys" have done the same.

Apart from the paper currencies we have now, it is an undeniable fact that every single paper (or FIAT - meaning backed by nothing tangible) currency ever devised by these great and mighty civilizations, EVERY SINGLE ONE has ultimately failed and is now worth nothing more than curiosity value.

..Whilst on holiday in Rome, would you prefer to find some ancient Roman paper money, or some ancient Roman Gold coins?

So now with the facts clearly shown that Gold & Silver have unparalleled ability to preserve wealth throughout the vastness of human history lets look at the last 110 years, as there are a few slightly different factors at play in the "short" term, but nothing out of the ordinary when compared to our bigger picture.

Since the end of WWII humankind marveled at their 'ingenuity' as they gradually moved towards cutting free of the bonds between paper "money" and Gold / Silver. In actual fact the United States as owner of the new world's reserve currency (because it was originally backed by Gold) were eventually forced to remove themselves from "the Gold Standard" ie, guaranteeing that their money was "as good as Gold" - which meant having to repay all their Dollar debt spending in Gold, or face a currency default.

This happened because (as always) the Government were creating money faster than their Gold reserves would allow, all Governments do, it's one of those historical human traits we mentioned that never change, Government's always feel the need to spend money they don't have to get re-elected next time.

Obviously the US chose the "soft" default route, i.e. to default on the convertibility of the $USD into Gold, promising now only to exchange one paper Dollar for another and since that time, due to the never-ending inflation caused by Government over-spending all paper currencies have been falling when measured against "real money" i.e. Gold.

This is only since 1971, just under 40 years. For 39 years we have been in a global experiment, which if you watch even the mainstream news, you cannot have failed to notice..

Is not going so well...

40 Years is the equivalent to the blink of an eye in historical terms, and that's about how long this grand experiment is going to last before the normal cycles of history reassert themselves and all the same things that always happen, happen again.

Now, bearing in mind that several years before the end of every Empire throughout mankind's history the citizens must have been saying to themselves

"Do you think we should get rid of these Bonds/ Stocks / King's promissory notes, Emperor's IOUs / etc etc" and buy Gold and Silver with the proceeds?"

..with the benefit of historical hindsight what was the correct answer? So really, now you have to ask yourself:

"Will this time be different?"

Whether you believe we are ultimately headed for a deflationary collapse or a hyper-inflationary apocalypse or anything in-between these two extremes matters not, what matters is that whatever the situation, that your current levels of wealth are preserved through it all, until the new regime is up and running, and what has an unbroken record of making it through, EVERY TIME, BAR NONE?

Do we have to say it? In the author's opinion, over the long term you need to have a portion of your wealth in a form no man can print, no fire can burn, that cannot be forged revalued, defaulted on in any way, and history agrees with the author.

This article does not constitute investment advice, you should consult your investment adviser about your personal financial situation before making any decisions.