First and foremost, this blog is not intended to denigrate Vanguard. Rather, its purpose is to demonstrate that investing in hard assets, especially precious metals, is the most prudent long-term investment that one can make at this time. In the past few years, the Vanguard 500 Index (VFINX) has offered investors a steady rate of capital growth, as it mirrors the performance of the S&P 500. Additionally, VFINX offers a low expense ratio, a low minimum investment, no up-front fees, and no commission charges. If one were inclined to invest in paper assets, they should certainly take a serious look at VFINX.
With that in mind, I’m going to make a bold statement: If you’re a long-term investor (such as a person investing for retirement or a child’s college education, as opposed to someone looking to profit from short-term market movements) then you should absolutely not be investing any significant amount in paper assets! This includes CDs, savings accounts, money market accounts, stocks, bonds, mutual funds, exchange traded funds (including exchange traded precious metal funds), or any other paper asset. Due to a number of factors affecting the market right now, and which I will be discussing in later posts, I believe that paper assets are extremely overvalued at this time. I believe we are heading for a major market correction on the order of the DJIA losing several thousand points. Losses will be staggering, and this will likely trigger a financial meltdown not seen since the Great Depression.
If you are looking to make some money on precious metals in the short term, then gold and silver ETFs are an easy way to get into the market without having to find a precious metals dealer, pay a substantial premium, and figure out how and where to store any physical precious metals. They're also easy to liquidate and can be utilized to take advantage of large up and down movements in the precious metals market. However, their potential as a long-term investment is dubious, since it's rumored that gold and silver are over-leveraged (possibly on the order of 100x) in some of these funds. A wise investor who wishes to invest in precious metals for the short and long term would do well to split their investment partially into physical metals and partially into ETFs.
So what is the purpose of this blog? Well, at the very least, this blog is intended to demonstrate that investing in physical precious metals will be more profitable in both the short-term and long-term than any class of paper assets. It's intended to demonstrate that physical ownership of precious metals is not an investment strategy for weirdos, loonies or doomsayers. Rather, it's a strategy built upon realizing that gold and silver ownership is the only absolute guarantee of long-term wealth preservation and creation. My goal is to explain these things to you in a way that is easy to understand, so that you can make an informed decision as to whether or not investing in physical precious metals is appropriate for you.
On market trading days, I will provide a daily update on the performance of our two hypothetical investments. Sometimes there will be charts, or spreadsheets, or quotes from sources that I deem as credible, and sometimes there will even be math, but I promise not to bury you in numbers or mundane chatter, and I promise that I will strive to maintain this blog as a source of information that is easy to understand, even for a person with no real understanding of economics, finance, or investing. I also promise to keep the speculating to a minimum.
I will also be writing articles on current events and how they could reasonably be expected to affect the financial world, as well as articles on finance and economics-related subjects that I think readers of this blog might find interesting or useful. Also, just as a reminder, all performance data can be found on the Play by play (Stats) page. This page contains a recap of the daily performance of both investments, starting from the first day.
I hope that you will give the ideas that I present here a fair appraisal.
Thank you,
Baxter
