A Store of Value

A Store of Value


Gold & Silver

Gold and silver are a store of value in a world of fiat currencies. 

The currencies of all countries are fiat which means that they rely on the confidence of their populations for their acceptance. No currency is backed by anything tangible.

Because of this, the central banks of all countries can print as much as they want of their currency. This causes inflation in the short term and hyperinflation eventually. In times of crisis all central banks have taken to printing currency to solve economic and political problems resulting in the devaluation of their currencies.

Under such circumstances currencies are not a store of value. 

Stocks, ETFs, Bonds, etc are other assets that people choose to own to protect their wealth. However, these are prone to counterparty risk and to manipulation. 

A stock can become worthless if the company goes bankrupt. A bond issuer may default on repaying the bond. These are examples of counterparty risk. When a central bank is buying bonds or even stocks - such as the Bank of Japan has been doing for years - there no longer exists a free market. This is an example of manipulation.

Gold and silver can be owned either physically as coins or bars, or in funds. The gold and silver funds are prone to counterparty risk. Almost nobody can demand physical metal when they withdraw their share of the fund. They will only be paid in currency, not metal. 

The price of gold and silver quoted daily does not reflect the true price of the metals. It only reflects the price of so-called “paper” gold and silver on the futures markets. It is a manipulated price.

Physical gold and silver do not suffer from counterparty risk or manipulation if you have them in your own possession.