When it comes to gold, I personally think it is going to $5,000 and then will eventually be north of $10,000 an ounce. As for silver, I believe it, too, is off to $100 and will have its day at $1,000 sometime down the road, sooner, rather than later.
I know some of you might think this is crazy, but if you study monetary history and see what is happening today, more epic occurrences have taken place. Right now, gold has hovered in the $1,300 range and silver has been floating around $20, not making any drastic moves here. This is exactly the time I would remind my readers to not forget about these metals. Don't wait until they are front-page news because their prices are shooting through the roof and you are forced to buy EMOTIONALLY at a much higher price.
I've spoken to dozens of bullion dealers, and they all say the same thing: their biggest purchases come when metals are surging or collapsing, but go dry when prices flatten out. I don't want my readers to buy like sheep, but be prudent and prepared as we see this precious metals bull market rage on.
It is for this reason you need to be aware of these seven points when entering the metals market, which will assist you in protecting your wealth:
- Be sure you are buying real gold and not "fool's gold." A portion of your wealth should be physical gold and silver that you can hold in your hand, and not things like ETFs, pool accounts, and certificates. In these fool's gold alternatives, you are not guaranteed to have your investment fully backed by the metal, and therefore your investment could literally disappear in a panic or default moment.
- Look out for the high premiums on numismatic and collector coins. These coins carry premiums significantly higher than the underlined spot price of the metal and are only worth what some other collector will want to pay for it at a later date. In a collapsing dollar environment, you want your wealth backed by metal, rather than be based on how much someone else coverts that coin. Also keep in mind that salespeople make extraordinary commissions on numismatics, whereas with traditional coins and bars, the spreads are much thinner.
- Purchasing in large quantities will give you the best deals. Even if you don't have a lot of money to invest, you can always partner with other buyers to get the best prices. In addition to bulk pricing, many states have a minimum purchase to phase out a sales tax on your bullion, so be sure to find that out beforehand.
- Purchase bullion bars. If you are a BIG BUYER, and someone who is going to purchase more than $1 million in metals, you aren't going to find a better deal than the commodity exchange bars, such as 400-ounce bars of gold and 1,000-ounce bars of silver. The spreads on these are razor thin, and yes, these are liquid in the event you want to sell. Even if you aren't buying in quantities like that, even the one-, ten-, and 100-ounce bars offer great liquidity and low premiums over spot and command a lower premium than government-minted coins. That's why they are often favored by serious, large-scale investors interested in owning as much precious metal as possible at the lowest price (as opposed to collecting legal tender coins).
- Government-minted coins are popular investment vehicles that tend to be more collectable, such as American Eagles and Canadian Maples. These carry legal tender status, though the metal content is more valuable than their face value. These coins are also easier to barter with, since they are in a small, distinguishable quantity that makes them highly liquid. Upfront, you will pay slightly larger premiums than you would for bars and junk metals, but in many cases, these coins maintain their premiums and can go up. In a crisis, these are very recognizable and will be sought after for bartering.
- Junk silver coins can be purchased at or below the spot price. These are those pre-1965 coins that are made up of 90% silver. Though these coins are liquid and recognizable, their silver content isn't widely understood, and will therefore be less liquid to barter with in a crisis situation when compared to another government-minted coin that is a clear 1-troy ounce.
- Purchase your metals from reputable dealers. For basic bullion products (as opposed to collectible coins), I suggest a well-established dealer that does large amounts of business at low prices. Oftentimes, dealers, brokerage houses, and banks will sell both coins and bars. When assessing a dealer, see how long they've been in business, whether they're certified with an industry or government body, and in what investment activities they specialize. In the United States, the national mint provides a list of authorized sellers that you can check.
***In the bullion bar and coin market, price is derived from the worldwide spot price, and at any given moment, there are hundreds of thousands -- if not millions -- of buyers instantly ready for you to liquidate your metal.***
Once you are established with your physical position, you can then begin to allocate money towards speculating in the resource sector, which has been absolutely on fire for 2016.
Just as an update, I will be releasing a stock suggestion over the weekend that has fantastic speculative potential and could really be a 10-bagger in this bull market environment. Again, prudence and responsibility is key here, and for those who are putting one foot in front of the other and taking actions to protect their wealth, the opportunity to not only survive, but thrive, could be spectacular.
Chief Editor, CrushTheStreet.com