6
Oct

Buy Physical Gold and Silver Before Precious Metal Stocks or ETFs

More and more investors are waking up to the need to hold gold and silver precious metals in their portfolio. They are worried about the fall of the U.S. dollar and have concern about the real strength of the U.S. economy….and for good reason.

But what are financial advisors recommending an investor buy when it comes to diversifying their portfolio into gold and silver?

Most Financial Advisors Only Know Paper Investments and Nothing About Buying Physical Gold and Silver

There is a reason your financial advisor recommends you put your money in precious metal mutual funds, individual mining stocks or gold and silver related Exchange Traded Funds (ETFs) rather than physical gold and silver. The fact of the matter is, advisors don’t know how to go about buying physical gold and silver for your account. They also don’t know that physical gold and silver can be bought with your IRA.

I heard a story recently where a person asked their financial advisor where they could buy physical gold and silver. The advisor recommended they ask their accountant.

Ask their accountant? I had to laugh at that one (nothing against accountants, but they are tax experts, not investment or monetary experts). What this shows is the lack of training and education for financial advisors about gold and silver, as money and as a legitimate asset class for ones portfolio.

About six years ago I made some phone calls to the main investment houses as I wanted to find out if they sold physical gold and silver. I called up Morgan Stanley and they passed me on to their broker of the day. I asked the broker whether they sold physical gold and silver, and he said no. The thing is, I already knew they did, but this broker had no clue they did.

Ask Your Current Financial Advisor about Buying Physical Gold and Silver and See What They Say

I have a challenge for you. Call or see your financial advisor and see how much they know about buying physical gold and silver. Note: this won’t work if your financial advisor is an insurance agent, as their answer for everything is either cash value life insurance or annuities.

When you ask your current financial advisor how to go about buying gold and silver, their answer will be to push you towards the ETF; GLD, a proxy to buying physical gold or the ETF; SLV, a proxy to buying physical silver.

They may tell you the problems with storing physical gold and silver, possibly scare you about the theft of your gold and silver, but the real reason they push you towards paper gold and silver is because they just don’t know how to go about buying the real thing.

Ask them simple questions like, what type of physical gold and silver should I buy and why? Can I buy physical gold and silver for my IRA? How? Why would I buy one metal over the other? What percentage should I buy of each?

You will shortly see that your financial advisor probably doesn’t know much about physical gold and silver.

Push Your Financial Advisor To Answer This Question Too

Along with asking your financial advisor the questions above about physical gold and silver, ask them this question as well; What do I have in my portfolio that counteracts the fall of the U.S. dollar? They will have a confused look on their face and say, well, stocks will counter inflation, so you are covered.

In reality, if the stock market goes up 10% and the dollar falls 10%, have you gained any real wealth? This is the flaw I discuss in detail in my book, “Buy Gold and Silver Safely.”

The problem with financial advice today, is the advisor will put your money in U.S. stocks, U.S. corporate bonds and U.S. government bonds, but do nothing to counter the fact that all of these assets are priced in U.S. dollars.

Outside of a little foreign stock exposure, the only thing they will recommend are some Treasury Inflation-Protected Securities (TIPS), but TIPS have returned very little the few years because they are tied to the CPI (government manipulated figures) where inflation has been tame. Those of you on social security know exactly what I mean as your increase in benefits have been zero the last year and will be zero again this year.

I also go into detail in my book on the flaws of the Prudent Man Rule and Modern Portfolio Theory and the “risk free” asset. I can shoot holes all through what financial advisors call diversification today. Just look at how the advice they gave worked in 2008 and 2009 to see how well it worked.

The bottom line is, most financial advisors don’t have a clue when it comes to buying physical gold and silver and hedging your portfolio with these precious metals will help counteract any future economic turmoil, whether it be from the monetary side or military side. The economic side has no hope with a congress that can’t live within its means without a constitutional amendment to curtail them.

The Base of Every Portfolio Needs To Be Anchored With An Investment In Gold and Silver Bullion

All paper assets are an illusion of wealth. This includes the gold ETF; GLD and others like it. If things really did deteriorate in the economy and with the monetary system, what will you do with your paper assets? Can you take it down to the corner store and buy food with it? No. You have to sell it for U.S. dollars that will be further used to purchase goods.

But what happens if U.S. dollars are depreciating at a rapid pace? These U.S. dollars will have to be converted to the real wealth represented by gold and silver. The question is, will you be able to acquire gold and silver, and if so, at what premium and what price?

Wouldn’t the prudent thing to do now be to insure your portfolio with gold and silver while the premiums to do so are low?

I Recommend Everyone Have 10% of Their Portfolio In Physical Gold and Silver Before Buying Precious Metal Stocks or ETFs

Putting 10% of your assets into physical gold and silver allows you to secure the peace of mind that no matter what occurs in the economy and with our banking and monetary system, you have real wealth. This real wealth can be used for barter to purchase the necessities needed at that time.

This 10% in physical gold and silver needs to be secured BEFORE you buy the proxies of gold and silver represented by the ETFs, mutual funds and other paper assets. It is better to have the real wealth in place before the mirage of wealth that has to be liquidated at some point is considered. Remember, any paper asset you have has to be liquidated into U.S. dollars that may or may not be falling like a rock. This includes U.S. Treasuries.

U.S. Treasuries would have to be liquidated into U.S. dollars to be used for purchasing goods. One cannot take a treasury note down to their local appliance store and buy a refrigerator.

There are only a few people who understand this concept. The rest just hope everything will turn out ok and do as their financial advisor recommends and buy the paper proxies to gold and silver.

You’ll never see anyone on CNBC Fast Money recommend to buy physical gold and silver. CNBC and other financial media outlets all have a vested interest to recommend those assets touted by the advertisers that pay their bills.

Physical Gold and Silver Are Insurance That Gives You a Return

But who will pay your bills when any collapse comes? How will you get at your money invested in treasuries or with your broker in these proxies to gold and silver? What are you doing to protect your portfolio from the fall of the U.S. dollar?

Shouldn’t these questions be answered now?

You insure your car against the “potential” of an accident.

You insure your home against the “potential” of a fire or flood.

You insure your life against the “potential” of early demise.

How is your portfolio any different? The odds are you won’t collect on two of the three above (life insurance maybe in your late 70’s or early 80’s). But you pay the premiums each year for this protection anyway. This is because you want peace of mind.

What peace of mind do you have in your portfolio without the insurance that only gold and silver can give you?
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About Doug Eberhardt

Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534

Disclosure:

Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.

All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.

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