Most Honest Money

Gold Is Honest Money

Gold itself is honest money. It's just that we are so brainwashed by paper money that we think that paper money is money. It is not... they are just paper backed by nothing.

Sound money is an asset. Something physical that you can exchange for something else. When you receive it, you know you’re receiving a tangible good. So it isn’t scraps of paper. In the absence of it being convertible to something physical, paper is merely an unbacked promise on the part of the government. Promises can be broken.


The Real Silver Deficit

1. Silver is not rarer than Gold.

2. The gold to silver rarity ratio is about 1 to 5, not 5 to 1.

3. There is nothing factual about the statement that silver is rarer than gold, unless you qualify it with the condition that you are only referring to market accessible silver in the form of bullion. But this is an unfair comparison, because you are including all gold in jewelry form while excluding all silver.


Silver Versus Gold

One of the most reliable relationships in the financial world since the early 1970s can be expressed as follows: silver outperforms gold when confidence in financial assets is rising and under-performs gold when confidence in financial assets is falling.

Gold's proven ability to out-perform silver when confidence is in a downward trend has a logical basis in that gold's price is almost totally driven by changes in investment demand whereas industrial demand is a very important factor in the silver market. When confidence is falling, there will be a flight toward money that should logically benefit the more monetary metal relative to the more industrial one.

Silver will out-perform gold over the long-term precious metals bull market, mainly because the US is not the global growth engine it once was and the long-term outlook for non-US economic growth remains bullish. However, silver is much riskier than gold because there are more things that could go wrong with a silver investment than with a gold investment. Gold-related exposure should have a significantly greater weighting than silver-related exposure in an investment portfolio.


Portfolio Diversification With Precious Metals

Ibbotson Associates did a comprehensive study regarding the effects of portfolio diversification with Gold, Silver and Platinum bullion.

“The three metals were chosen because gold and silver are often viewed as a safe harbor in times of crisis. Conversely, during economic expansion demand for silver and platinum is thought to increase.”

Precious metals performed best when they were needed the most by providing positive returns during the years that traditional asset classes had negative returns. Ibbotson determined that investors can potentially improve the risk-to-reward ratio in conservative, moderate and aggressive portfolios by including precious metals bullion with allocations of 7.1%, 12.5% and 15.7% respectively.