Why you want to invest in precious metal?
Precious metals are a hedge against inflation. Part of the reason gold increases in value is because of inflation.
It is a lot easier for the government to create more money than go out and mine gold.
People also may be compelled to buy precious metals if they feel uncertain about the future of the country.
And there is a lot of reason to worry.
http://www.usdebtclock.org/
America is not a fiscally responsible country. We spend more money than we make. At the end of fiscal year 2014, our country will have run a deficit of $650 billion.
America has run annual deficits for the last several years.
http://www.usgovernmentspending.com/federal_deficit_chart.html
I think the last time we had a budget surplus was 2000, maybe 2001.
Our country spends over $800 billion on social security a year and almost another $800 billion on medicare/medicaid in a year.
Because our population is getting older, these expenses will increase year after year.
And without any reforms to the programs, these benefits are promised to most US citizens.
The problem is that, without reform, America as of today will owe $128 trillion.
With all these problems, it is safe to assume that the US dollar will continue to lose value in the future.
Ok, now back to precious metals.
Precious metals is one way to protect yourself against inflation.
This is the general principle. One ounce of silver today costs about $20 dollars.
Where I live, $20 will buy me 5.7 gallons of gas.
One ounce of silver will buy roughly 5.7 gallons of gas.
Say in ten years, 5.7 gallons of gas will cost $35.
Say in ten years, 1 ounce of silver costs $35.
You could sell your ounce of silver for $35 to buy one gallon of gas at a cheaper rate than using weaker dollars in the future.
Stocking up metals can also be a good storage of wealth in case the country goes towards economic weakness.
Gold and silver is valued and store in more countries than the US. China and India have been stocking up on it.
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