Whether or not to invest in precious metals may seem like a ridiculous question to most of you here, but I'm relatively new to the Austrian School and to literature supporting the gold standard.
I've read here and there that people who buy gold as a hedge against inflation are for the most part kidding themselves. (I've also read that silver is actually the better investment.)
Let's say I make the decision to invest in gold. Presumably, websites looking to sell people "gold" are just looking to charge you vault fees on coins that don't actually exist. And then there's those plated "gold coin tribute proofs" which reek of scam. So what's the best way to invest in, or purchase gold?
Thanks in advance for any responses.
Joe Oliveri: I've read here and there that people who buy gold as a hedge against inflation are for the most part kidding themselves. (I've also read that silver is actually the better investment.)
If my understanding is correct, gold hedges against inflation because the amount of gold out there is finite, whereas the government can print out as much paper currency as it pleases. Gold is indeed subject to bubbles, which is an important concern for any interested investor, and I haven't the faintest clue as to whether or not current gold values are in a bubble now or not.
Joe Oliveri: Let's say I make the decision to invest in gold. Presumably, websites looking to sell people "gold" are just looking to charge you vault fees on coins that don't actually exist. And then there's those plated "gold coin tribute proofs" which reek of scam. So what's the best way to invest in, or purchase gold?
I think Smiling Dave said it a while back - make sure any gold you buy is gold that you can keep in-person. And don't tell anyone you have it. Investing in gold for the sake of protecting your investments is pointless if you're really just buying paper that says you own X-amount of gold.
For what it's worth, I'd argue not to put all your eggs in one basket. Invest in valuable commodities, but diverify elsewhere, too. Gold and silver are only as valuable as people want them to be. If, God forbid, the economy does collapse and people somehow decide that gold, silver, and paper money are equally worthless, you could have all the gold in the world and metaphorically have nothing of worth at all.
I'm certainly a novice but it seems to me that a lot of it would depend on the nature of the economic problems you expect to see in your lifetime. If you're expecting the whole bubble/bust cycle to continue and judge that a total collapse isn't likely then I would assume precious metals are for you. If you think that the total collapse that has to happen eventually with hyperinflation and the like I would suspect you'd be a lot happier on the day if you'd spent the money on guns, ammo, and durable foodstuffs. You could always sell the guns later if you needed liquidity...