Are gold and silver products better for short term or a long term investment?

Unlike interest-bearing accounts there is no guarantee that gold and silver investments will leave the investor with more cash than when the investment was made. Some gold dealers advise their clients to invest heavily with the aim of short-term profits, and other firms recommend holding periods of five or more years. Before taking any company’s advice, consider these facts:

-Investors who bought precious metals in 1981 and held those metals for 20 years (until 2001) lost over 55 percent of those monies.

-The gold spot price rose from $255 to $330 during one four-month period in 1999.

-Silver’s low point in the current cycle is $4 per ounce. Investors who bought silver before the turn of the millennium and sold it today would see a 600 percent profit.

-Gold first broke the $1000 per ounce mark in 2008. This stirred a buying frenzy by short-term investors, but many of these investors were sorely disappointed only a few months later when the gold spot price had fallen below $700.

These examples serve as reminders to investors that anything could happen to precious metal prices in the future. The day-to-day volatility of spot prices makes it extremely difficult, but not impossible, for household investors to see substantial short-term profits. Investors who buy gold and silver with long-term goals take daily spot price volatility out of the equation but risk a permanent downturn in prices in the event of a recovering economy and/or stronger US Dollar.

All investors must overcome the difference between a dealer’s buy price and sell price before profits are possible. Government intervention in the gold market, such as the US government’s ban on private ownership of gold bullion between 1933 and 1976, is another risk to consider. Some gold investments are better short-term investments and other precious metal products are known as investments more suited for long-term holds. Reputable gold and silver brokers will likely ask about an individual’s goals before recommending any specific item, and Gold Silver encourages investors to complete our free online tutorial before buying precious metals from any company. For more information about gold and silver or to request a free copy of Real Money Magazine (limit one per household) call Gold Silver today at 1-800-394-3337.

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