Gold Investing, Silver Investing And The Importance of Financial Education

With all the turmoil and uncertainty in the markets these days, its more important than ever to be increasing your financial education for creating wealth, and specifically with regards to Gold Investing and Silver Investing.

gold investing, silver investing

Gold and Silver Bullion

Gold Investing & Silver Investing

As you are no doubt aware, the prices of gold and silver are continuing to climb higher and higher regardless of the rhetoric coming from Congress, the White House or the press.  As I type this, gold is at an all-time high of $1293.5 and silver as well at $21.20.

The biggest reason these asset prices continue rising higher is the weakness in the US dollar.  We can’t continue to create trillions and trillions of dollars with an already staggering $9 trillion deficit.  Treasury bills are producing no returns, the stock market is full of uncertainty including the housing market so what is someone to do with their hard earned income?

Investing in Gold could be just the place!  With one of the greatest bull markets in history – a 10 year orderly sustained upward climb – gold continues to out perform virtually all other asset classes and has continually done so for the last 10 years.

Does that mean the gold and silver markets have reached their tops?  Is it too late to begin gold investing or silver investing for that matter?  No one knows for sure, but when you realize that most people are still unaware of this current market trend and its strong fundamentals, the fast that hysteria hasn’t hit yet, you be the judge.  Yes, you are starting to see the commercials and ads go up but the media makes almost no mention of even silver investing (could that be due to the fact that they don’t receive a commission for recommending you buy gold or silver like they do stocks or mutual funds?  Hmmm…)

One of the more well-known financial news networks CNBC has only recently begun to address or even acknowledge gold’s undeniable performance over the last decade.  Alan Greenspan too has commented that gold is the canary in the gold mine, signaling a warning that the dollar or economy is in trouble and people need to be paying close attention!  (Side note: Greenspan was the original gold bug until all the power of being the Fed chairman went to his head – maybe all those bubbles were created to get the price of gold to rise?…)

So why would you want to be investing in Gold?

Gold is the ultimate insurance.  With the big inflation/deflation debate going on, regardless of the outcome – or even if we enter stagflation or especially if we enter a hyper-inflationary environment – gold investing/silver investing will allow you to preserve your wealth where you might otherwise lose it (or most of it).

With the costs for gold investing and silver investing rising over the past decade, some people have gotten involved to make money trading the precious metal.  The important thing is to treat gold like savings.  Park your money in gold and forget about it, keeping an eye on the overall market of course because it’s real money – not like the US dollar which is simply currency, backed only by the faith of the world in the US government’s ability to manage it’s own affairs… that’s a topic for another time!

In addition, you can’t hit a button and just print gold like you can dollars or any other currency not backed by a real tangible asset (like gold or silver).  Gold has and always retain its value because it’s a rare commodity and there is a true cost and work involved to bring it to market (among many other reasons).  Just as concerning, our foreign trading partners are all abandoning the dollar; even Bangladesh of all places just bought 10 million ounces of gold from the international monetary fund (to increase their gold investing holdings to 13 million – quite a large increase!).  That’s really saying something when even a country like Bangladesh doesn’t trust the US dollar!

Another reason for gold investing or silver investing (ue, American Eagles, Krugerrands or bullion): tax advantages.  The maximum rate for income tax on gold investing profits is 28%; compare that to 35% for regular earned income (always consult a qualified tax professional for your particular situation).

So how or what can people do with their IRA money to take advantage of all this?  By investing in gold through a gold IRA (with an IRS-approved custodian) who will store your gold in a depository. (Note: do not try to be your own custodian through an LLC or otherwise; doing so will blow your IRA completely and will add lots of penalties and fees on top of that if you try to touch or handle your own gold and silver yourself.  It is a specifically prohibited transaction; you need an outside custodian.  The IRS is really going after LLC’s that are managed by the beneficiaries of the LLC so just follow the rules and you’ll get lots of tax benefits; you must understand the rules!)

There are two kinds of IRAs:

  1. (Traditional) IRA: where you get a deduction when you put money into the IRA; you are taxed at ordinary income rates when money is pulled out (tax deferred)
  2. ROTH IRA: where you don’t get a deduction when you put money in but your money (assets) grows tax free forever (different countries have similar programs)
    1. For example: if the price of the metal goes way up, you get to realize that entire per ounce profit when you sell with no tax liability.

Also, with regards to American Eagles for example (outside of an IRA), if you use them as actual coins like money (as opposed to selling them on the market).

For example, if buying $1200 worth of goods with that coin (or whatever coin is worth at that time), you actually have no tax liability when using that coin even if you purchased the coin for several hundred dollars less than you’re now essentially cashing it in for (only works with American Eagles).

One more benefit: some states also have no sales tax on precious metals (currently AZ for example).

So to increase your financial education with regards to gold investing and silver investing, here’s what you need to do:

Talk to experts – gold and silver coin/bullion dealers who have been in business investing in gold and investing in silver during both the bull and bear markets (so at least 10 years in the business) because virtually anyone can get into business selling precious metals (just need a business license) – so do your homework!

Next, check out the local markups/premiums around your area.  Premiums will vary per dealer above the spot price (price quoted in financial publications and on exchanges).  The best way to buy to get the best value is to buy directly from the futures market (in bulk basically) but of course you need to be buying quite a bit at a time; the best way to begin is probably at your local coin shop; if nothing else begin your education there (that information while free is priceless!).

So when is it time to sell?  Here’s how to tell: watch for the idiots.  Idiots always come in to the market late – that’s the time to get out!  When your grocery-bagger starts telling you about silver investing, you know it’s time to get out!  Learn what the masses are doing and do the opposite!

To preserve your wealth, you need to save gold and silver – not money (or more specifically not currency, ie, US Dollars).  Inflation and other measures coming may drastically drain or wipe out any accumulated wealth or assets you may have if held in US dollars.  Precious metals run on a 20 year cycle typically (this cycle started around 2000) and runs against the equities cycle (historically opposite).

In 1980 the DOW was at 800 and gold was at 800 (1:1 relationship); since then the DOW has risen to 14,700; now the DOW is around 10,500 and gold near 1300 (8:1 relationship); when or at what level will it come back in line to that 1:1 relationship?  At 3500?  5000?  Richard Russell predicts $3500 Gold & a 3500 DOW.  (He’s been in the business for 50 years and promotes the Dow theory letter)

But again, these are just predictions, no one knows for sure. Gold investing and silver investing could be very profitable because the metal prices should go up, could go up… but no one knows for sure.  So be careful with using any leverage in this market (not recommended at all) and don’t bet the house so-to-speak.

For more information about gold investing and silver investing and increasing your financial education, fill out the form at the top right of the page to get the latest updates and resources for creating wealth

Hans Schoff
Entrepreneur – Purveyor of
Connect with me on facebook

PS> If you got anything valuable or worthwhile out of this article, keep your money (better yet put it in gold or silver 🙂  All I ask is that you please let me know what you think about it below in the comment area and share it via facebook (or just hit the like button) or twitter for anyone you think who may benefit from this important information.  People are not getting the right information out there so I’m doing what I can to share what I know to help others get prepared.  Believe me people will appreciate you thinking of them.  Let’s get the word out!  Thanks!

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  • Hello, just wanted to mention, I enjoyed this blog post.
    It was funny. Keep on posting!

  • peter@sälja guld says:

    Thanks for a good article.. I was wondering what you think of investing in gold mining companies vs actual gold? Do you think those investments are comparable or do you still favor the investment in actual gold so to speak?

    • Peter, great question. The gold and silver mining stocks are way undervalued, where you’re basically able to buy metal in the ground for a fraction of the price (like 20% or so of the metal’s spot price). Some argue the introduction of ETFs and the like have changed the dynamics of the market, but in my opinion with prices so low and the fact that some mining companies are even offering dividends – some in the form of bullion – its seems like a pretty good deal all around. Thanks for your comment.

  • Karen@seo los angeles says:

    Great article, thanks for sharing. I hear people all the time on tv and in other ads talking about buying gold, but I never really understood why. You do a great job of explaining the reasoning behind buying gold and silver. It used to seem kind of silly to me, but I’m rethinking that now.

  • Karen @ seo los angeles says:

    So I definitely understand and agree that gold investment is important, it always has been, right? But with the state of the world, the economy, food crops, world power, etc etc, don’t you think in terms of long-term financial stability that land and real estate are where people should really invest? I know it isn’t that easy to do, but I still think property is the best investment.

    • Hard, physical assets – things that retain their value – is where you want to be if/when inflation or hyperinflation takes off. Whether that’s real estate, gold/silver, etc depends on so many factors, many of them political – especially now during silly, er, election season. Gold and especially silver is easier to trade with so that may be something to take into consideration as you can take it with you and use it to buy food, water, other supplies.

  • Micki@getting silver jewellery it is critical says:

    Hi i am kavin, its my first time to commenting anywhere, when i read this piece of writing i thought i could also create comment due to this good piece of writing.

  • I’ve been exploring for a little bit for any high-quality articles or weblog posts in this kind of house . Exploring in Yahoo I ultimately stumbled upon this site. Reading this information So i’m glad to show that I’ve a very excellent uncanny feeling I came upon just what I needed. I such a lot surely will make sure to do not overlook this website and give it a look on a continuing basis.

  • You have written an awesome site.

  • Walter@Why Buy Gold says:

    Hans, great article! There is an increasing percentage of businessmen engaging in precious metals investment. The booming industry of Silver and gold investment is surprisingly high compared last year. And silver is catching up with gold so I guess investing in silver bullion or coins is the most ideal investment.

  • Alyssa@Credit Card Payment says:

    You made a great insights in investing your money in a certain thing. I most prefer in investing gold. That is actually the real one investing the precious one.

  • Sally Thompson says:

    You have given me a great insight about investing. Thanks for sharing.

  • Kimberly says:

    Great article. Very perspective and informative.. I learned so many things.. Thanks for sharing!

  • lanalavigne @ rushcardpro says:

    Hi Hans…I am glad that you have this kind of post to let people read it…I think this is the thing that people should know and be aware of…I hope this can help more people aside from me…

  • Julia@CNA Training says:

    Great perspective Hans, I really appreciate it. I enjoy reading your article very informative and I learn so many things of investing money in a right way either gold or silver. Thanks for sharing this.

  • Charie@wsoxfactor says:

    Very well said Hans… I agree that investing with gold and silver is an excellent investment. Just like with the lot investments, their values are keeping higher as the time goes by.

  • Robin says:

    Hi Hans…I agree with you that the biggest reason these asset prices continue rising higher is the weakness in the US dollar…All people know about it,…

  • Helen Chris says:

    Hi Hans..You always continue us to inspire with your blogs and it is always the best…

  • Thomas says:

    Hi…Thank you for the very inspiring post you have shared…I am sure a lot of people will like the blog…

  • Joyce Penner says:

    Hans, I had no idea that investing in gold and silver the tax rate was lower. I am going to have to check that out and see what the rules are in Canada.

    Another excellent and informative post. Thanks !

    • Hey Joyce, yes many people do not realize that precious metals have a separate tax schedule. It’s more than you’d pay with the current capital gains rate, but still less than the highest tax bracket rate. This was something I hadn’t considered when I first started investing in this sector – definitely a good idea to run it by your tax advisor for your particular situation. Also, Canada is very “mining” friendly and has many mining companies there so I wouldn’t be surprised if your tax advantages were even greater.

  • Andy Clint says:

    Hi Hans…This can be of great help…Thanks a lot for sharing the post…

  • Amenda Winter says:

    I will definitely sign up with this Hans…Thanks!!!

  • Mandy Swift @ Your Online Marketing "Personal Trainer" says:

    Hi Hans, coming to your blog is a bit like a day out at the stock exchange … I don’t really understand everything that is going on but it is fun to watch. You certainly seem to know your money markets. There has been talk for a long time about the need to invest in soemthing other than the ‘money markets’. Thanks for all the knowledge you pack into each post here 🙂

    • LOL. I think that just goes to show how lacking our educational systems are in terms of providing us with decent financial education. There’s no need to have to become a daytrader, commodities expert, real estate broker or financial planner, however having a basic understanding of how the markets work and underlying fundamentals that drive markets really help to explain the bigger picture and how everything’s all interrelated. “They” have done a great job at complicating things further and making them more complex than they need to be to try to keep as many people in the dark as possible – that’s by design. It makes it that much easier to take everyone’s money!

  • David Morgan Analyzes a Dollar Collapse, ROLLOVER 1981 | FrontPageSearch says:

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  • princess says:

    hey,for me inverting gold and silver is very good in market but i never try this yet but one day im going to try this with this article it give me a lot idea in making my business…
    all u need to do is wait till the price down and you can bargain the silver and gold.

  • Lynda says:

    Great post. I hadn’t thought much about investing into either gold or silver but you’ve made it sound like it is definitely the smart thing to do. Thank you for explaining it so I can understand as well.

  • Hey Mandy, it’s all about fundamentals. When $0.43 cents of every dollar is borrowed from foreign nations, you know something is not right, yet they continue to print greenbacks causing inflation and the loss of purchasing power of our dollars. To maintain your purchasing power, you need your money to be held in something tangible that has real intrinsic value, not something that is based on hopes and dreams (and made out of paper). Gold and Silver have been used as currency for thousands of years because they have these properties. A great book that covers this topic is “The Creature From Jekyll Island” Thanks for your comments Mandy!

  • Mandy Swift says:

    Hi Hans, I am totally impressed with your knowledge of financial markets and investing. I have been hearing whispers for a long time that Gold & Silver are the markets to be investing in but I have never come across such a wealth of knowledge on the subject in one place.
    Thanks for opening my eyes 🙂

  • Matthew says:

    Hi Hans,

    Your article was a great alert for me today. I have almost all my money deposited in a US bank, in dollars. I think it is the silliest thing I could do.

    Thank you for this great article. I have no doubt that with gold being the strongest asset (the ultimate insurance) I should invest my money in it, not necessarily to increase money’s value, but at least to preserve it. However, my question is, where can I buy gold? I live in Greece. I am not a US citizen. What do you recommend?

    I subscribed to your letter.

    • Matthew, with all the US debt outstanding (and growing), we may have the world’s reserve currency but already countries like China and Russia and beginning to trade outside of the markets in order to avoid having to trade in US dollars, so it’s already beginning. There really is only two options for the US, either to default on our debts or inflate them away, either way the dollar is in trouble. No fiat currency has ever survived, the US dollar is I believe the longest one in existence today.

      My suggestion for gold purchase is to simply pick up silver and gold bullion on a regular basis. Here in the US you see shops all over advertising “WE BUY GOLD” but just do a google search for coin dealers and I’m sure even in Greece you’ll have a number around. I’d suggest just sticking with rounds or bars, don’t worry about special minted sovereign coins or numismatics as there’s likely to be a strong premium for them. And just continue adding to your collection until the dollar situation (and Euro situation in your case) stabilizes or perhaps is even replaced. When silver and gold down in price, view is as a sale where you can get a bargain! Hope that helps! Thanks for your comment.

  • SilverGuru says:

    Great information, check out this video:

    • Hans Schoff says:

      I am familiar with Mr Morgan and follow him regularly. That video in particular is a great visual example of what could happen should the dollar collapse. Food for thought…

  • There are many reasons to buy silver bars now. While their performance and tendency to increase in value during hard times is certainly reason enough for many investors, there are other reasons why investing now is a good idea as well. The price increase rate of silver is considerable, and purchasing now as a means of investing for the future promises the highest possible rate of return over time. This means that you will be able to provide much more for your family with a smaller overall investment price. By buying now, you will also be able to invest more in the future to create larger assets.

    • Hans Schoff says:

      Armil, I agree with you. The price of gold but especially silver is up. And although the price of silver has nearly doubled in the last 6 months, the fundamentals remain the same and the price of silver and gold I believe will continue to rise, silver upwards of $100. So do not let the recent price increases fool you – it is still a great time to buy silver. There is a lot further still to go! Thanks for your comment Armil!