If there was ever a case for precious metals, it’s now. As the past can tell us, the dismal state of the country weighs big in support of asset diversification, but there are other reveals that place gold and silver on the radar for nearly everyone. In a December 2022 Nasdaq article, Avi Gilburt, he writes, “As we stand today, I’m watching this market [metals] quite intently, as it seems to be setting up for a potentially strong rally for 2023. Although, silver is not quite as clear … I do expect silver to outperform gold in 2023.”
Why Buy Precious Metals?
Every American may want to pursue assets that are not based on the success or failure of the dollar. Hedge Fund Master, Ray Dalio, once said, “gold is the only financial asset that isn’t someone else’s liability.” If you are not diversified with physical precious metals, why now? Let’s take a deeper dive into some of the not-so-obvious reasons to purchase gold and silver at a time like this.
- The recent performance of precious metals is quite surprising given sharp declines in the equity/bond markets. In 2022, gold literally outperformed stocks by an incredible 20.4%, and it beat bonds by nearly 16%.
- Silver was up nearly 4.5% over gold in 2022. Historically, the rise in one is followed by a rise in the other. As well, past recessionary periods show us that gold and silver are generally good investments for such a time.
- Gold is up 1.23% from one year ago, and it is yet a reasonable investment amidst a nationwide geopolitical storm.
When the nation is in peril, precious metals investments go up. Consider that: 1) As recent as October 2022, it was noted by Fortune that 98% of the CEOs in the US reported they expect a recession, 2) unemployment is rising, 3) the economy is slowing, and 4) the stock market is down (typically the S&P drops around 29% during a recession). A gold hedge against inflation is historically the best response.- Central banks around the globe are accumulating gold at a grand pace! The reasons for this run on gold, according to the International Monetary Fund (IMF) are: 1) the central banks as a rule seek safer assets during a time of serious inflation, and 2) like most investors and financiers, the central banks strive to diversify their assets (including foreign currency reserves). This is a critical time in history when everyone is following suit; get it while it lasts.
- The nation has experienced 20 consecutive months in which prices have outpaced wages. While wages are going up, unfortunately so is the cost everything. This signifies a good time to seek out inflation-proof assets.
- An unprecedented growing national debt that is growing faster than GDP (since 1981) means higher taxes for every citizen. The US government’s budget is expected to be even higher (as much as 7.4%) in 2023. Keep in mind that every new dollar printed does not increase wealth but rather reduces purchasing power of worldwide dollars. The result could be devastating—a time in which precious metals become a significant asset diversification option.
The fact that analysts believe gold and silver are undervalued is a plus to investors. When economic crises set in, this fact is good news (news that may not last). Interesting to note that unlike with other assets, when the prices of gold drops, consumers buy.
Gold, Silver and The Fed
Keep in mind that the price of gold is not necessarily subject to the monetary actions of the Federal Reserve. If you have the option to diversify your savings with a physical asset such as precious metals, you remain indifferent to the Fed’s rate hikes. You don’t need to care as much what the Fed is doing to interest rates when you choose to diversify with a tangible asset such as gold or silver. Not only that, the 2022 executive order by the government that upholds a global transition to digital currency leaves most investors with a great deal of anxiety. Precious metals offer some freedom from government confines.
Gold and Silver Allocation Model
Your investment in gold and/or silver should be selected based on a number of factors. Reach out to a seasoned privately-held company for an evaluation of your current portfolio mix and what percentage of your portfolio might include precious metals. A suggested allocation for silver and gold ranges from as low as 1% to as much as 20%. A sensible allocation for gold and/or silver within a 10-year window depending on your overall risk tolerance might look like this for each metal:
Low Risk: 5.6%
Medium Risk: 6%
High Risk: 5.8%
There is no doubt, 2023 is a great time to get started diversifying with physical precious metals—while a recession is imminent and purchasing prices are reasonable (especially for silver).
Getting Started With A Precious Metals Investment
Reagan Gold Group (RGG) can assist you in evaluating your present financial portfolio and helping you determine the right allocation in precious metals to suit your exact needs. Contact RGG today and make a commitment to alternative assets to secure your future. There is a reason that everyone is buying up precious metals. Don’t wait.
