Nothing wrong with putting a percentage into metals, but to go in so heavily is really a play on the end of the world. If the world doesn’t end the strategy could result in large losses. Better to balance it out with prosperity assets, the ones that will perform in better times.

We got in with some $$ my sister left us in 2003. So we got in when gold was about $422/oz and silver was under $5/oz (before even Buffet got into silver – though that was just dumb luck). This has been by far my best investment. Needless to say my mom is quite happy she let me talk her into it. I think I’m in the will. :)

I used to keep it in in one of those crappy FireSentry safes in my closet for many years. That is until I realized that the value had gone up to over $50k and someone could just walk off with the entire safe. That thought made me nauseous!

So I got a quality Cannon safe and had it professionally installed. I sleep good now. And you’re welcome to come over to see it anytime. Drop me a line if you’re going to be in the Phoenix area and I’ll give you the fifty-cent tour. I’ll show you everything but the combination. ;)

It’s pretty sweet. It’s got power and eithernet connections so I can put a Network Atached Storage server in it to REALLY securely back up my computers (you know, behind an ACTUAL firewall).

It’s best to determine what gold is to you. Gold isn’t magic. It isn’t a panacea that will protect you if everything goes to hell in a hand basket. If the world goes all “Mad Max” on us you’ll need much more than gold to protect you (like machine guns & ammo, etc.). If you believe in the gospel according to Glen Beck, you better stock up on your freeze-dried food and camping gear.

But the comments I am reading indicate that most of us are using gold for a more reasonable purpose; I.E. a temporary store of value. The reality is that barring a truly cataclysmic event we aren’t going to be living in a “Mad Max” world no matter what happens to the value of the dollar.

That being true doesn’t mean governments can’t royally crap up their currency. Contrary to what Ramsey might say, gold and silver have intrinsic value. Their value isn’t based solely on the fact that people think that they are worth something. They are semi-permanent, scarce, and have many uses in jewelry and manufacturing. This lends some measure of stability to their value. Yes the prices can fluctuate (excessively at times), but they are always worth something. So it is impossible for a government screw-up to completely de-value them. Putting a portion of your net worth into gold and silver may prove to be a good idea.

But unless your crystal ball is right all the time, I think that it is inadvisable to put all your eggs into one basket. (since if the crystal ball is off, that basket might be the afore-mentioned hand basket headed south) A more reasonable position to take is to hedge your investments by putting a portion of them into gold and silver so that if the markets or currency crash you still have something of value. And if you think about it if everything else were to crash, that gold and silver will likely increase in value many times. No, an ounce of gold wouldn’t be used to buy a loaf of bread. It would probably be worth more on the order of a good used car.

Personally, my overall bet is that the market is a better place to put my retirement. My 401K, and IRA’s are all invested into mutual funds that own stocks. But about 11% of my net worth resides in my safe (a nice big heavy one bolted to the slab foundation of my house) in the form of about 32lbs of gold and silver.

And it wouldn’t take a complete financial meltdown to make hedging your portfolio with precious metals worth it. Consider the double-digit inflation of the 70’s. With the money the government is spending on the on-going wars (among other things) it seems likely to me that inflation will rise at least to some extent. Using gold and silver to store some of your net worth would benefit you in this situation.

As for the statement that “gold has not been used in a failed economy since the fall of the Roman Empire”: that confuses me. That pre-supposes that gold is only used as a medium of exchange after an economy has already collapsed. And that is not the case. The fact is that precious metals have been used as the basic medium of exchange in every major economy since the Greeks started minting coins around 600BC. Far from being a dusty relic, the gold standard was a core part of most economies as recently as 1971 when Nixon took the US off the gold standard.

Personally, I would welcome a return to the gold standard as it would limit the ability of central banks to screw with us.

A good portfolio should have assets that do well in almost every environment — deflation, inflation, prosperity, etc. Having stocks, bonds, cash, and gold in the portfolio just seems like common sense to me.

It’s worked so far. :)