I have been trying to convince my father to invest in precious metals over the past few days. He is skeptical about doing so and he is not very well acquainted with Austrian economics. My dad states the following “It is too risky for me right now. It may come to this for me, but not now. If someone bought gold in 1980, they would have had to wait until 2008 to get back to the same price level. Gold can be pretty volatile. I just don’t feel comfortable putting lots of money in something that can drop so quickly.” He points to the graph below and states that he is afraid that what happened in the early 1980s could happen again and that gold prices would plummet down low again.
Use the same argument I use each time I hear somebody talk about gold: gold is not an investment but a long-time insurance against monetary inflation. Central banks can “print” money at will but the amount of gold is severely limited by physical, real world factors. You do not buy gold to sell short, end of story. I could also talk about how mining operations are slowing down and how fewer and fewer coins are struck each year but you know the drill.
Another advice: do not depend on your father. Put money aside and buy your own gold coins, learn not to have to depend on other persons’ decisions. If gold’s too expensive for you get silver, it’s a good buy right now. Get “good stuff” that has a ready market in your area, just in case. For example around here Mexican pesos are the way to go while Maple Leaves are pretty much a dead end. Kruggerands are always a safe bet: if you cannot afford the 1 oz ones (the most sougt after) you can get the 1/10 oz pieces.
