Precious Metals

Gold and Silver

Fiat currencies give the GOVERNMENT power over the people.

Sound money gives the PEOPLE power over the government.

Fiat Currency = Government-issued money that is not backed by a physical commodity, such as gold or silver, but rather only backed by the stability or confidence of the government that issued it.

Fiat currencies allow governments to print and control money at will. In contrast, money backed by real tangible value, it limits manipulation and helps keep governments in check.

Wealth Insurance or a Waste of Money?

This is a highly debated topic in the finance world.

Some financial experts view physical gold and silver as “God’s money,” a timeless store of value. Peter Schiff says, “You don’t buy gold to get rich, you buy gold to stay rich.” They advocate for holding small amounts of gold and/or silver as wealth insurance, much like auto or health insurance, to help protect against economic instability.

Others, like Dave Ramsey, argue that precious metals are a poor investment. Warren Buffett states it’s like having a pet rock. Dave states, “Commodities have a poor rate of return... driven only by fear or greed,” and not a wise use of money.

There’s also the classic objection: “But I can’t eat gold or put it in my gas tank.” True—but you also can’t/shouldn’t physically eat dollars or put them in your gas tank. While emergency funds and other assets are useful, recent banking disruptions (2022–2023) remind us that access to cash isn’t always instant. In a crisis, physical metals could be sold or traded for essentials. And with the U.S. dollar’s noticeable devaluation just since 2020, it’s worth asking: Could storing part of your emergency fund in precious metals serve you well?

Ultimately, this is a decision only you can make, as it depends on your own financial goals and risk tolerance.

If you are doing your homework on this, check out these videos below:

Understanding Why Gold & Silver Preserves Your Wealth - Alaska Prepper

Comparing Gold and the Dollar

Over the last 100 years, gold has held its purchasing power, while the dollar has steadily lost value.

Per the United States Gold Bureau:

  • In the 1910s, a quality suit cost ~$25 (1.21 oz of gold). In 2020, a similar suit cost ~$2,000 (1.65 oz of gold).

  • A 1908 Model T cost ~$825 (39.91 oz of gold). In 2020, the average car was ~$33,560 (27.85 oz of gold).

  • One pound of steak in the 1910s cost $0.17 (0.0082 oz of gold). In 2020, it was $8.59 (0.007 oz of gold).

Gold’s value remains relatively stable over time, while inflation erodes the dollar. A penny once bought candy or a newspaper—now it costs more to mint than it’s worth.

Gold also tends to rise in tandem with the national deficit, often increasing at a rate 1.6 times that of debt growth.

The value of the dollar is decreasing, as evidenced by rising inflation; however, the price of gold has remained relatively steady throughout the century.

ITM Trading-Purchasing Power
Heresy Financial-Pizza Analogy
Mark Moss-Decreasing Purchasing Power

Coinflation.com - Measuring the Metal Value of Coins

So, what do you think? Do precious metals belong in your portfolio? Do you think they could help preserve your purchasing power?

IMPORTANT - Before Investing in Precious Metals

Have a solid financial foundation

That means:

  • Emergency fund in place

  • High-interest debts paid off

  • Regular investing underway

  • Have 6–12 months of shelf-stable food and supplies before buying metals. In a crisis, essentials may be more valuable than silver or gold. (The prepping community recommends this.)

Precious metals are for preserving wealth, not building it. If you're still working through debt or early financial steps, focus there first.

Check out the Make A Plan page for steps or plans to follow or get ideas to create your own path to success.

Check out the Annual Financial Checkup Course/Workbook

Have a Strategy

Storage Matters

Here’s a sample allocation strategy. Adjust based on your situation.

  • 20% - Physically held and hidden securely (if space allows)

  • 20% - Vaulted storage with a company. May even consider having some in an offshore account for geopolitical risk

  • 20% - Precious Metals IRA for tax-advantaged, long-term growth (if eligible)

  • 20% - ETF backed by physical metals

  • 20% - Paper gold (e.g., GLD) for liquidity

  • may even consider investing in mining companies.

If your net worth is under $500K, focus first on physical metals, if you have allowed storage space. As your wealth grows, diversify your storage methods.

Your Ratio Rhythm

How much gold versus silver should you hold in your portfolio? This often depends on your age, your risk tolerance, and your long-term goals.

A 50/50 split is a solid starting point. 50% in gold and 50% in silver.

If you're nearing retirement (age 60 or up), you may lean more heavily toward gold for its stability.

Silver tends to be more volatile, so if you have time to ride out market swings, a silver-heavy approach might suit your season.

Restoring Balance

Use rebalancing to lock in gains and buy during dips. (This works with precious metals just as it would with stocks, cryptos, etc.)

Steps:

  1. Set a target allocation for the asset (e.g., 5–10% of your portfolio)

  2. Monitor regularly—Sell if it exceeds your target allocation percentage. (Note: This may trigger a taxable event.)

  3. Buy more when prices drop—If the price drops below your allocated percentage, then buy more to restore balance.

This ensures you're capitalizing on market movements by selling at a higher rate and purchasing at a lower rate.

Moon Bags

A Moon Bag can help protect your initial investment while letting gains grow. (This works with precious metals just as it would with stocks, cryptos, etc.)

Steps:

  1. When your investment doubles, pull out your original capital.

  2. If it doubles again, take partial profits (e.g., half of the position).

  3. Let the rest ride—you're now investing with “house money.”

  4. If it dips and you still believe in it, consider buying more at a discount.

This approach helps you stay rational and reduce emotional risk.

Gold-Silver Ratio (GSR)

When it comes to purchasing any asset, it’s always best to leave emotion out of it; however, that can be extremely challenging to do. The gold-silver ratio is a timeless tool that can help us discern value, timing, and opportunity.

The gold-silver ratio = the number of ounces of silver required to purchase one ounce of gold.

Example: If gold is $2,000/oz and silver is $25/oz, the gold-to-silver ratio would be 80, as it would take 80 ounces of silver to purchase 1 ounce of gold. (2,000/25=80)

Interpretation - When is the best time to buy gold or silver?

  • High Ratio (70+): Silver is considered to be relatively cheaper. This is often a good time to accumulate silver, especially if you believe the ratio will revert to its historical average.

  • (Note: I personally like silver better, which is why I have my chart at 70+ for a high ratio. Others, however, prefer 80+ as their high-ratio threshold and will begin accumulating both metals when the ratio dips into the 70s. Ultimately, this is a matter of what aligns best with your financial plan.)

    When the ratio returns to the historical average or below, many will then trade their silver for gold.

  • Historical Average (50-70): Neither metal is considered to be overvalued or undervalued. During this time, purchase metals you like best and have room to store.

  • Low Ratio (–50): Gold may be the better value. Some investors use this opportunity to convert their silver into gold; however, I heard it’s advised to wait until the gold-silver ratio (GSR) is at least 20 points lower than when you originally acquired your silver. Be sure you shop around and do your research before selling or trading any metals.

When deciding whether to purchase gold or silver, several factors should be considered, including storage, security, and practicality. However, the gold-silver ratio stands out as a valuable tool to enrich your decision-making. This ratio can help serve as a compass, guiding you toward better timing, balance, and stewardship in your investments.

This can also be done with other assets as well. For example, The Dow to Gold ratio shows how stocks compare to gold in value. It tells us how many ounces of gold are needed to buy the Dow Jones Industrial Average, which includes 30 major U.S. companies. High ratio = Stocks are strong compared to gold. Low ratio = Gold is outperforming stocks, often during market downturns. Historically, big market shifts have matched changes in this ratio. It's a useful tool for understanding economic trends!

Watch this video from ClearValue Tax for more information on the Gold-Silver Ratio

Difference Between Spot and Premium Prices

Understanding the difference between spot and premium is essential when investing in precious metals.

  • Spot Price is the live market rate for raw gold or silver, set by global exchanges like the COMEX. It fluctuates constantly but remains consistent across platforms.

  • Premium is the added cost above spot that covers the minting, handling, distribution, and dealer markup. It varies by seller, so shopping around is wise.

Collectible coins may sell for far more than their metal value due to their rarity and high demand. But if you're buying metals for financial security, bullion or junk silver offers more metal for your money.

Considering Silver?

Here’s a quick breakdown of the four main types: coins, bars, rounds, and junk silver—to help you choose what fits your goals.

Reminder: Silver is a finite commodity and is used in many everyday modern technologies.

NOTE: If you are new to purchasing precious metals, you’ll want to avoid High Premiums and Gold and Silver Collectibles. These should be reserved for later, after you have built a solid foundation with low-premium, widely recognized bullion. Collectibles often carry inflated prices due to rarity or design, but they don’t always hold their value in a resale or emergency scenario.

Sovereign Coins/Silver Coins:

Government-issued bullion coins that are backed by a nation’s mint. This gives them credibility, recognizability, and often a touch of historical or artistic significance. They’re like the “blue-chip stocks” of the precious metals world. These may be more expensive than the others because you’re paying for the mint.

Advantages:

  • Offers a collectibility factor due to limited annual runs.

  • Easily stack in tubes or store in mint “monster boxes”.

  • Carry a face value in their nation of origin and are typically IRA-eligible.

Disadvantages:

  • More expensive on a per-ounce basis than comparable silver bars or rounds.

  • Only available in 1 oz and 5 oz weights.

  • Occasionally, they enter “allocation” due to mint delays, making them difficult to obtain.

Silver Bars:

These can be either reputable (certified) or generic (non-certified). Unlike coins, these bars focus on metal content over design, offering a cost-effective way to accumulate wealth in physical form.

  • Reputable bars are produced by trusted mints or refiners. These generally come with serial numbers, assay certificates, tamper-evident packaging, and LBMA or Comex approval.

  • Generic Bars may still contain the .999+ fine silver; however, they may lack a serial number or come from unknown mints.

Advantages:

  • Uniform shapes that maximize storage space.

  • Compared to coins, bars often carry smaller markups, making them ideal for bulk accumulation.

Disadvantages:

  • Lower liquidity in small trades.

Generic Silver Rounds:

Privately minted bullion pieces made of .999 fine silver, typically in 1 oz denominations. Unlike government-issued coins, these carry no legal tender value and are valued solely for their metal content. These rounds often feature simple or themed designs and are priced closer to spot, making them a cost-effective choice for stacking, teaching, or gifting.

Advantages:

  • Offers the lowest premiums on physical silver bullion.

  • Easily stored.

Disadvantages:

  • Carries no legal tender value.

  • Offer little to no collectibility.

  • Typically, it is only widely available in 1-troy-ounce weights.

Junk Silver (a.k.a. Constitutional Silver):

USA currency (pre-1965) coins containing 90%, 40%, or 35% silver.

Advantages:

  • Extremely divisible with pieces as small as a nickel or dime.

  • Inconspicuous, as the general public doesn’t realize these coins contain valuable silver.

  • Can occasionally be found in circulating currency.

Disadvantages:

  • Can be extremely expensive and hard to find in retail markets nowadays.

  • Can be harder to resell as many prospective buyers prefer shiny new silver bullion.

Junk (a.k.a. Constitutional) Silver

Junk silver refers to pre-1965 U.S. coins that contain 90%, 40%, or 35% silver. Though not collectible, they’re valued for their silver content and were once part of everyday circulation until the 1965 Coinage Act removed silver from most coinage.

Common Types

  • 90% Silver Dimes: Mercury, Liberty Head, Roosevelt

  • 90% Silver Quarters: Washington, Liberty Head, Standing Liberty

  • 90% Silver Half Dollars: Liberty Head, Walking Liberty, Kennedy, Franklin

  • 90% Silver Dollars: Peace and Morgan

  • 40% Silver Half Dollars: Kennedy (1965–1970, also 1976)

  • 35% Silver War Nickels: Minted 1942–1945

Why Investors Like Junk Silver (SD Bullion)

  • Recognizable & Trusted: No need for appraisal or assay—buyers know what they’re getting.

  • Legal Tender: Still official U.S. currency, though traded for silver content, not face value.

  • Barter-Friendly: Small denominations (e.g., dimes with ~2.25g silver) make them ideal for trade in emergencies.

  • Durable Hedge: Silver has held its value over time and is used in modern tech, making it a finite and practical asset.

Sample Values (at $25/oz spot)

  • Dime: ~2.22g silver ≈ $1.79

  • Quarter: ~5.55g silver ≈ $4.46

  • Four Quarters: ≈ $17.84 in silver value

Bonus Tip

Copper Pennies

Pennies minted before 1982 contain 95% copper and are worth more than face value due to their metal content. Many savers set these aside as a low-cost hedge and potential barter tool.

Choosing the Right Weight for Your Metals

Metals aren’t easily divisible, so it’s wise to match your stack to its intended purpose.

  • Emergency-ready stacking? Opt for smaller weights—such as 1 oz coins or bars, and avoid going beyond 10 oz. These are easier to trade, transport, and use in a pinch.

  • Long-term holding? Larger weights may offer better value per ounce and simplify storage. Think of them as anchors in your legacy (long-term asset) portfolio.

Books About Precious Metals

Good as Gold by Chris Weber

This book asks why there has never been a proper audit of the official US gold supplies, held at Fort Knox and elsewhere. It is a call for transparency in an area where there has been none since gold was confiscated from Americans in 1933.

The Bible and Gold: The Importance of Biblical Finances by Alin Armstrong

This book focuses on aligning financial decisions with scriptural principles, emphasizing the role of gold and wealth in biblical history and modern faith-based financial planning

The Great Gold & Silver Rush of the 21st Century by Michael Maloney

This book explores how global economic shifts, monetary policy, and investor behavior are converging to create an unprecedented opportunity (and risk) in precious metals and cryptocurrencies.

Food for Thought…

With the devaluing of our currency, will gold become unaffordable?

And with the dramatic increase in technologies, will silver become harder to obtain?

Additional note, when it comes to technology, copper is often referred to as the highway, and silver is often likened to the glue.

Tip for 2023

They say the premiums on sovereign coins are getting out of control, so it may be better to buy reputable bars and generic rounds, as you may be able to get more for your money.