Currency Wars Make Precious Metals Valuable Investment

Currency Wars Make Precious Metals Valuable Investment

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The G20 Summit held in Moscow on February 15 and 16 brought together the world's finance ministers and central bank governors in an attempt to quell the burgeoning fiat wars. Most of the focus was on newly elected and second-time Japanese Prime Minister Shinzo Abe; whose Administration has openly pledged deliberate debasement of the yen via massive quantitative easing (printing money) and low interest rates. The Bank of England recently rejected a £25 billion expansion of its £375 billion QE; while the People's Bank of China and U.S. Federal Reserve continue their policies of printing for better export rates and economic stimulus, respectively. There is not enough room in this article to summarize recent happenings in the eurozone.

Lost in all the paper money mutter is the sharp drop in gold and silver prices. Gold fell below $1,600 per ounce for the first time in six months in late February, while silver's $28.70 close on February 21 was its lowest in that same time period. The skittish investor is selling off their bullion, thinking the bull market of the past 10 years was a one-time phenomenon that can't possibly happen again. The fact is, all financial bubbles start and end either by low interest rates suddenly spiking high (see the dot-com bubble) or "liberal" money suddenly being restricted by central bank policies (see the housing bubble of 2003-2007). At some point, the excess printing and low interest rates set by the central banks will be due for a market correction, which will ultimately expose the true value of the currencies and those of gold and silver.

The Case for Silver

For those able to afford gold, at its six-month low $1,578.60 close on February 21, should by all means take advantage of these market conditions (though the price will likely sink even lower throughout 2013 due to global monetary policy). But silver is quite affordable for a middle-class family, and will appreciate upon the eminent market correction and increased demand.

The U.S. Mint actually ran out of American Silver Eagle coins in January, as casual investors are beginning to understand the dynamics behind the metal's value. Silver is one of the most valuable metals in industry, which is why its demand is not necessarily Wall Street driven. Silver is an essential element in making solar panels and that industry will demand 100 million in 2015 alone, according to the Silver Institute. Silver is also essential in the production of many consumer electronics, medical devices, soldering, water purification, and hundreds of other industries.

Business and Personal

Not only is silver an excellent personal investment, but can help you protect your small business from inflation and all the new 2013 taxes that have been implemented. Entrepreneurs can use their American Express business credit card or their business expense account to purchase silver or gold bars or coins. Bullion is exempt from capital gains taxes, pursuant to Title 26, Section 408(m)(B) of U.S. code. Silverdoctors.com and many others in the industry are predicting $100 per ounce silver within the next five years.

The key to any investment strategy is diversification. But gold and silver should definitely be a significant part thereof.

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