Friday, December 17, 2010

Investment Strategy of Yukon Cornelius

I've recently been introduced to the concept of investing in precious metals (primarily gold and silver).  I've heard about it in the past, but never considered it seriously.  The two opposing arguments I've heard are

  1. Gold has historically been close to $300-$400 and is now at close to $1400.  There's no way that the cost to produce the gold has gone up, so the disparity here represents a bubble that cannot continue to expand.  So, if you were to invest in gold, now is not the time.
  2. Why is the price of gold so high?  With the government having printed so much money (and very likely to continue this practice), no other countries (e.g., China) want to own American dollars, and may even change the monetary standard ($) for buying oil, we are heading toward hyper-inflation which means that even though the price of gold is so high now, it's nothing in comparison to what it will be if our monetary system collapses.
When introduced to something new like this, I tend to gravitate to the side opposite of what my initial views were.  In this instance, I didn't put much stock in investing in precious metals at first, and so when I was shown some of the main arguments for it, I jumped ship and was a proponent for it.  Since then I've asked a lot of questions and have been able to make a more sound judgement as to what I think I need to do.  Any further arguments for or against this?

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