GOLD & SILVER: AN INVESTMENT, A SPECULATION OR INSURANCE ?

He began with reasons why not to buy gold and silver: it doesn't pay anything; it is difficult and expensive to store; buying it is worrisome; its price is volatile and there are long periods of bear markets. After that admonishment, he then began to build the case for owning gold and silver: little faith in paper money; desire for diversification; interest on savings minus inflation makes for a negative return; the return on gold is zero but the appreciation of gold and silver in the last twelve years more than makes up for that. Lurking in all this is the fear that the dollar will cease to be the world's most important reserve currency. Peirce next explained the virtues of gold: it cannot be created by the government; it is easily transported; it is divisible; it does not rust or crumble; it is consistent all over the world and it has intrinsic value. We saw flashed on the screen various charts that built a case for ultimately higher gold and silver prices: contrasting charts of the US dollar's decline overlaid with gold's rise in the last decade (even including the current bear market -down 32 percent.

Peirce reviewed the significance of what transpired in 1971, the year that President Nixon stopped the convertibility of dollars into gold. Two things happened: commodities jumped in price and the annual national deficits became acceptable to both political parties - witness the jump in the national debt over the last 42 years. From there, in a show-and-tell session, Peirce allowed carefully selected members to circulate among us $20 gold coins circa 1891 and 1908 plus a very heavy bag of pre-1965 dimes, quarters and halves which he called junk silver. Everyone marveled at the heft of the coins and secretly wished they could pocket a few for their own personal "investment" in gold and silver!