Why Bullion
Why Physical Bullion
There are several factors occuring that individually would make the case for a precious metals portfolio allocation. When taken together, some think they make for a "Perfect Storm" scenario. They are:
1. Recent Unprecedented growth in the world's money supply, which may create inflationary pressure when excess money on the sidelines enters the market for goods and services. Inflation usually results in less confidence in paper money as it is being eroded in value.
2. Continued market volatility creates fear/concerns about further losses, creating a flight to the safety of tangible assets, like real estate or precious metals. Given the excess supply in the real estate market, increasing demand for metals by central banks, institutions and individuals moves gold from a fringe investment into the mainstream.
3. China is diversifying its reserves away from US dollars and into gold, and other reserves.
4. A decade of low gold prices in the 1990s caused an extended period of low exploration and production as mining operations turned unprofitable, resulting in shrinking supplies failing to keep up with investment demand.
5. Current recession and banking crisis have created tighter liquidity, resulting in Federal Reserve rate cuts attempting to stimulate demand for borrowing. Lower interest rates put downward pressure on currency values as investors move out of US dollars seeking either better returns or protection from the deterioration in purchasing power.
India's central bank buys 200 tons of Gold
Sprott's Embry warns investors to make sure ETFs backed by precious metals
Hedge manager Sprott sees trouble when easing ends
Greenlight Hedge Fund Holds Bullion
Gold alternative investment choice shines brighter than ever
Why Gold
Gold is a hedge against inflation. Given the unprecedented overtime of the world’s Central Banks’ financial printing presses, an inflationary environment is unavoidable. Some experts predict this will be the death of the US Dollar as a reserve currency. While no one knows with certainty exactly how this will play out, ultimately inflation will result. Whether it will be mild, or “hyperinflationary” is not our prediction to make. Historically, it acts more like a currency than an investment in times of economic uncertainty. Given the state of the world & US economy’s, recommending a shift into physical bullion is a conservative investment option that will help you and your clients.
WGC Report: Protecting Your Investment Portfolio with Gold
Why Silver
The major complaint many investment professionals have about gold is “what do you do with it?” Gold is just stored. At least, other assets like a business can pay a dividend or generate cash flow, earnings and stock price appreciation. Therein, lies the case for Silver. Unlike gold, silver is in more limited “known supplies” and is experiencing increasing worldwide demand in industrial semiconductor applications, like cell phones, computers, etc. Often referred to as “poor man’s gold”, silver has been traded as a currency since Biblical times, so it has a key benefit that gold doesn’t. Industrial demand AND it acts as a currency, like gold.
Silver Institute Investment Mkt Report 4.2009