The Importance Of Diversifying Into Precious Metals

Even with the ongoing economic chaos many investors are still aversive or simply

do not contemplate the importance of diversifying and investing in gold and silver. Wealth protection and capital preservation seem to be strange concept to some individuals. Older generation still believe that if you invest in the stock market for the long term you will not only make money but also preserve your capital. Perhaps that was true prior to 2000 when in every decade the stocks delivered positive return. However, things have changed in the past 10 years when the return for stocks was zero, negative in real terms. It appears that the fundamental nature of the markets has changed and long term now is considered milliseconds.

An additional point to consider is that a dollar in 1913 when the Federal Reserve was established is today worth a meager cent. That signifies you lost 99% of your purchasing power and the stock returns had to be greater than 100% just to be in the maintain your purchasing power. Now, lets examine if you had invested in Gold and Silver. The best analogy I have heard concerning the constant value of gold is that in 1913 with a once gold coin you could buy a mens suit, and today with that same coin you would be able to do the same.

The predicament is that we romanticize with stock market returns made during the late 1990 until 2000 and the again until 2007. The problem is that these returns were aberrations and not normal. In pursuit of those returns many investors lost a significant amount of capital when the market returned to normal state. We have to comprehend that the worlds financial landscape has changed and wealth preservation has become the most important idea. Investing in gold and silver and in precious metals is the best alternative for that.

We as a nation are nostalgic and would like things to remain as they once were. The quicker we awaken to the fact that investing in 2010 is not the same as it was in 1999, the more capital preservation will achieve. Perhaps in a few years things will stabilize economically and the investing landscape will once again change. In the meantime, we must strive to protect our capital and play the game of wealth protection.

by: Irene Masterson

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