-- Posted 14 December, 2005 | |
-- Greg Kyle
About a year ago I told my neighbor that I planned to sell my house and rent for about 5 years. I told him how I expected larger gains in silver, and the precious metals industry in general. Like most everybody hearing of my plans, he tried to convince me that real estate was a great investment and that I should keep the property and rent it out. He said I would be missing out on equity gains if I sold. I reminded him to take into account inflation when calculating equity gains in housing. I then directed him to my website, silveriswealth.com.
We discussed precious metals, not housing, the next time we met.
"Hey, gold just reached a seventeen year high," my neighbor enthusiastically said, poking his head through my door.
"Really? Where did you hear that?" I asked strolling to the door.
"It was just on CNN.”
"That's great. However, I never said anything about gold, only silver. Did you read my website [http://www.silveriswealth.com] yet?” I asked.
"No, but I like gold better than silver," he replied.
"Then did you buy any gold yet?"
And that is how the majority of my conversations about precious metals end.
I have another close friend who had listened to me talk about silver for years. I knew he had fully grasped the 'silver story' when his father saw me in the airport and started telling me in great detail everything his son had learned from me. Wow! Do you think my friend has purchased even one ounce of silver? Absolutely not. So why listen, absorb, teach his father, and then fail to buy even a 1 oz. silver round at a coin dealer? He probably does not believe in the fundamentals, or thinks he ‘just missed’ the big gains, or the inertia of actually visiting a coin dealer with his checkbook is too much to overcome. Perhaps he thinks it is easier to 'save' in a bank with shockingly low interest rates and watch the value of his savings decline due to inflation?
Typically, when I talk about silver, it is the first they’ve heard about it as an investment. I’ve spoken to so many people about it that the most common responses are blank stares and then excuses. Their excuses usually change back into blank stares. So how do intelligent, educated people justify not investing in silver and the precious metals industry? Read their most common excuses and my response to each one:
Excuse: "I have no money to buy any precious metals with."
My Response: A 1 oz. silver round would cost about USD $8.80 at the local coin dealer. They may want to dig between their couch cushions for some spare change.
Excuse: "I need to keep all my cash liquid."
My Response: Most people keep all their savings in a bank, right? So they are susceptible to the potential BANKruptcy of their financial institution. If enough people demand to withdraw their deposits and their bank collapses, they will have nothing. And given that you can sell your silver to a coin dealer, isn’t that liquidity as well?
Excuse: "I don't have a place to store it."
My Response: I always recommend storage off premises. When they protest that they can’t watch over it, I remind them that banks ‘store’ their savings elsewhere. And then each month, banks mail an account statement as ‘proof’ that their deposits are secure.
Excuse: "I bought gold and silver back in the day and got burned."
My Response: If they bought gold around the peak of USD $800 / oz. and silver at $50 / oz., they watched the value of their holdings drop drastically. Admittedly this was a huge mistake. So why does silver and gold not appear to be a bargain now? It appears that buying at USD $8.65 should seem quite attractive.
Excuse: "My financial planner told me that precious metals are a dead-end investment."
My Response: Research does not consist of asking one person one question. And remember that it is a financial planner's job to sell stocks and bonds to receive a commission. I have also heard stories of brokerage firms actively discouraging the purchase of precious metals.
Excuse: "I just bought a house."
My Response: If no money is left to invest, they likely bought 'too much' house. Perhaps they should sell and rent or buy a smaller house. At the very least, they should not buy that huge flat panel TV (a liability) for their living room. They should buy some silver (an asset) instead.
Excuse: "What if the U.S. Government confiscates precious metals?"
My Response: Given the relative failure of the Gold Reserve Act of 1933, I doubt something similar would be tried again. Besides, the limited quantities of all other precious metals (silver, platinum, palladium, rhodium) would not be worth any governmental effort to confiscate them. Remember that banks and local governments can confiscate your house if you miss a few monthly payments. So the using the ‘confiscation excuse’ should prevent them from buying a house!
Excuse: "You've been telling me about precious metals for two years now."
My Response: If they were to view recent charts of the gains instead of protesting, I might be enjoying genius status amongst my friends by now.
So what do all the excuses mean? It means that most people will likely give in to the mania at the top of the market and buy silver at peak prices, when talking heads on TV are reporting about it each night. I remember the mania of the late 1970s and 1980 partly because my own mother was enticed by the media to join the fray. She never did buy at peak prices, thankfully.
I also partly blame the excuses for not exploring the ‘silver story’ on the huge losses suffered when the dot.com bubble burst. I, along with many others, lost capital during those trying times. I also understand that human nature can cause people to avoid exploring a topic they have never heard of, or find difficult to initially understand. What is easier to understand than going down to your local coin dealer and buying some silver coins? Unfortunately, for countless years, mainstream media exposure has primarily focused on stocks, bonds and real estate. So perhaps there is a comfort level or an illusion that they understand those markets?
With those same media outlets failing to report on the recent gains in silver prices, silver apparently remains uninteresting. This apathy will likely continue until prices increase enough for the media and the masses to take notice. So turn off the TV and read articles like this, each newsletter, website and book you can find on the subject. Consider buying some silver with those potentially worthless fiat dollars. Just don't buy too much yet. I'd like silver to stay cheap for as long as possible so I can buy more.
December 13, 2005
Silver Is Wealth, Inc.
-- Posted 14 December, 2005 | |