Precious metals have long been used as a store of wealth. Not only that, but for thousands of years they were also the world’s main currency. The last few years have spawned what many call the “Investment Revolution” and some say it could all but eliminate precious metals from the spectrum of investment vehicles.
If you have been away for the last 20 or so years, the world is going high-tech. I bought my first cell phone about 10 years ago, and the fact that I still use a flip phone (as does billionaire investment mogul Warren Buffet, by the way) has been known to cause some pointing and whispering when I am around younger colleagues.
Recently, there has been a surge in high-tech investments. You may have own some. Have you ever heard of GLD? It is an exchange-traded fund (ETF) that is meant to track the price of 1/10 of an ounce of gold. This investment has no shipping fees, requires no storage and can be sold with the click of a mouse.
Some investors have opted for ETFs and other types of electronic gold, like pool accounts, instead of physical precious metals. Could these derivative investments be the end of privately-held, low-tech investments like precious metals? As John Wayne would say, “Not hardly, mister.”
While there will always be a greedy individual or a profit-hungry institution to give derivatives the attention they need to survive, the average American buys gold not for profit but for safety. Some people foresee simple inflation; some see hyper-inflation and the collapse of the dollar; some believe that the entire United States will collapse; some are preparing for Armageddon. In each of those scenarios, physically-held precious metals have a huge advantage over derivatives.
Physical gold and silver provide their owners with financial independence that is not tied to a computer or a company. Yes, precious metals will not only survive the Internet Revolution but could play a major role for the next generation of investors, especially if any or all of the above scenarios come to fruition.