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I’ve heard a lot of talk lately about people investing in metals (gold/silver) to hedge against inflation. However, I have relatively little knowledge on the subject, so I have a few questions about it. I tried looking at older topics, but they didn’t seem basic enough for me.
1) How does investing in metals protect against inflation?
For example, let’s say that I purchased $100 worth of gold today and the annual inflation rate was 3%. Does that mean if I sold it in a year, it would be worth $103? I would think that the price of gold is more so based on the stock market, which isn’t necessarily dependent on inflation.
2) When is it appropriate to invest in metals as opposed to other income-producing assets?
Real estate is not my area of expertise and would rather invest my money into my business, if anything. However, marketing to new clients has not shown to generate a positive ROI for me. My thought was that if inflation is going to skyrocket any day now, why not invest in metals?
The problem is that I could only do so at the expense of my cash reserves. People are often telling me that savers are losers and how I need to invest my money if I’m ever going to become wealthy, yet they also tell me that I need to have a solid amount of cash reserves to survive the dips in the market, which sound contradictory to me. How quickly could I sell if I really needed the money? I think I need more information on how this works.
3) How can I learn more about buying and selling metals?
Do I read books on the subject or talk to a broker? How do I actually buy the metals? Do I buy stocks, jewelry, certificates? There seem to be a number of ways to invest in metals, but I don’t know where to start, if I should at all.
My main financial goal right now is to pay off my business loan which is not tax deductible, and consuming 25% of my gross income per month, even after modifying the loan. However, my cash reserves are such that it will take me years to pay off the loan, and I’d rather avoid tapping my home equity. Not to mention, that would be rather hard to do right now, anyway.
Business seems to have stabilized now and I’ve made a profit in 4 consecutive months now, so I’m not as concerned with maintaining my cash reserves. It seems that now it might be best for me to invest in metals to hedge against possible hyper-inflation. However, what if I have another really really bad winter? Could I sell the metals fast enough to pay the bills?
I’m not talking about investing for the future, such as when the supply of silver runs out in 20 years. I just want to consider my options, or if I should just hold onto my reserves. My default plan is to save my reserves so that I can ride out this economy. However, if hyper-inflation kicks in, that might not be such a good plan.
Thanks for the info.
1) How does investing in metals protect against inflation?
For example, let’s say that I purchased $100 worth of gold today and the annual inflation rate was 3%. Does that mean if I sold it in a year, it would be worth $103? I would think that the price of gold is more so based on the stock market, which isn’t necessarily dependent on inflation.
2) When is it appropriate to invest in metals as opposed to other income-producing assets?
Real estate is not my area of expertise and would rather invest my money into my business, if anything. However, marketing to new clients has not shown to generate a positive ROI for me. My thought was that if inflation is going to skyrocket any day now, why not invest in metals?
The problem is that I could only do so at the expense of my cash reserves. People are often telling me that savers are losers and how I need to invest my money if I’m ever going to become wealthy, yet they also tell me that I need to have a solid amount of cash reserves to survive the dips in the market, which sound contradictory to me. How quickly could I sell if I really needed the money? I think I need more information on how this works.
3) How can I learn more about buying and selling metals?
Do I read books on the subject or talk to a broker? How do I actually buy the metals? Do I buy stocks, jewelry, certificates? There seem to be a number of ways to invest in metals, but I don’t know where to start, if I should at all.
My main financial goal right now is to pay off my business loan which is not tax deductible, and consuming 25% of my gross income per month, even after modifying the loan. However, my cash reserves are such that it will take me years to pay off the loan, and I’d rather avoid tapping my home equity. Not to mention, that would be rather hard to do right now, anyway.
Business seems to have stabilized now and I’ve made a profit in 4 consecutive months now, so I’m not as concerned with maintaining my cash reserves. It seems that now it might be best for me to invest in metals to hedge against possible hyper-inflation. However, what if I have another really really bad winter? Could I sell the metals fast enough to pay the bills?
I’m not talking about investing for the future, such as when the supply of silver runs out in 20 years. I just want to consider my options, or if I should just hold onto my reserves. My default plan is to save my reserves so that I can ride out this economy. However, if hyper-inflation kicks in, that might not be such a good plan.
Thanks for the info.
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