I began investing in silver in 1964, when I was 17 years old. My investing career began when rich dad’s son and I noticed our “silver” coins — U.S. dimes, quarters and half dollars — no longer looked so silver.
After 1964, “silver” coins had a copper tinge around the edge.
Today, I recognize our silver coins had been debased. The copper tinge was a dead giveaway that something was wrong. We the people were being cheated, via our money. Our own government was ripping us off, via the money we worked for.
Though we did not know it at the time, I now understand that rich dad’s son and I were following Gresham’s law, a monetary principle which states, in essence, “When bad money enters the system, good money goes into hiding.”
In 1964, we did not know about Gresham’s law. We just intuitively sensed an opportunity…
Soon, we got into the habit of taking our paper U.S. dollars to our local bank and trading paper dollars for rolls of dimes, quarters and silver dollars.
While our classmates were doing their homework, we were active investors, searching for real silver coins, separating them from fake silver coins.
It was not long before we had several large bank bags, made of heavy canvas, filled with real silver coins. In 1965, we both graduated from high school. Rich dad’s son went to the University of Hawaii and I went on to school in New York.
About 10 years later, I was home in Hawaii and asked my mom, “What happened to my bags of silver?”
“You mean those bags of dirty old money?” she asked. “I spent them. I needed the money.”
I do not recall the spot value — “spot” means the international price of silver — on that day. I estimate the silver coins were worth 20% more as “real” silver than the “fake” U.S. dimes, quarters and half dollars that had been polluted with copper.
My mom could not understand why I was upset. “Why don’t you just go out and find more silver coins?” she asked.
“Because that window has closed,” I replied.
“Window? What window?”
The Window of Opportunity
One reason why so many people struggle financially is because they fail to see “windows” opening and closing.
If they do invest, they listen to their financial planner, who advises them to invest for the long term, in a “well-diversified” portfolio of stocks, bonds, mutual funds and ETFs.
Personally, I do not invest for the long term. I invest when windows open.
I invested in real estate in 2008, after the subprime real estate crash. It was a time when prices came down, as did interest rates.
The years between 2008–2015 were one of the biggest windows of opportunity for investors in real estate, gold, silver, stocks and bonds in the history of the world. Ninety percent of the U.S. population missed that window of opportunity because the crash terrified them.
Today, as I write, the silver window is wide open.
As you know, windows open and windows close. That is why I am a guest on news and business programs stating, “I am investing in silver.” I believe the silver window is open and may be the biggest bargain of 2019.
Unlike real estate, which can require a lot of money, some finance skills, lots of due diligence and property management skills to do well — silver is affordable to the masses, and management skills are minimum.
On top of that, silver is easy to buy and somewhat liquid. All you have to do is find your neighborhood coin dealer and start trading.
Although not a silver expert, I’ll share with you the reasons why I have always been bullish on the asset.
Five Forever Pros of Silver
1. Silver is a consumable precious metal
Silver is used industrially. For years, before digital photography, it was used in film for cameras and movies. Today, silver is used extensively in electronics. California now requires all new homes have solar. Silver is required for solar. Electric vehicles all use silver.
The reason this is a good fundamental reason to get into the metal today is because silver stockpiles are dwindling, so its price is driven by supply and demand.
2. It’s a precious metal
Silver has been used as real money for millennia. We humans have an ancient fascination with this metal, as we do with gold.
For years, I have visited gold and silver mining sites all over the world. That’s something that has always amazed me, regardless of whether I was in China, South America, Mexico, Africa or Canada.
I still remember standing on a mountaintop in Peru, doing my due diligence on a gold mine and looking at tiny caves dug into the side of a mountain. The caves were the mines of ancient Incas who were seeking gold, long before the Spaniards came and stole their wealth and country from them.
Standing on a 14,000-foot mountain, where I could hardly breathe, I wondered what motivated those ancients to live in such an arid and hostile environment and delve for gold. Then I realized I was there for the same reason, only centuries later.
3. The U.S. dollar has become the peso of the world
It’s becoming more and more worthless, as the U.S. is the world’s biggest debtor nation. I’m not confident that our political leaders have the guts to do what’s required to put the U.S. back on a sound economic footing.
It’s the entitlement mentality that grips the U.S., from the president on down, that needs to be changed. Too many Americans have come to expect the government to solve our personal problems.
So if you think America’s politicians and citizens are willing to make the changes necessary to strengthen the U.S. dollar, then don’t buy silver.
But if you’re like me and don’t expect us, as a nation, to take our medicine, then short the dollar — and the way you short the currency is by going long on gold and silver.
4. Equities (stocks) and commodities (gold, copper, oil and silver) are countercyclical
Looking back, equities (stocks) began their run-up in 1980 and imploded in 2000. On average, equity prices go up for 20-year periods and commodities go down. Then they reverse directions.
5. A silver exchange-traded fund (SLV) was launched on April 28, 2006
That means silver, the commodity, can be traded as a paper asset. This makes silver easier for the masses to buy. They don’t have to take delivery of the physical metal.
Millions of pensions can now hold silver as a paper asset. The ETF will have to actually buy the silver and store it for the investor. This should add to the scarcity of the metal, which should reduce supply and increase prices.
I don’t invest in gold or silver ETFs, however. I hold the real thing. In fact, it was silver bars that my wife and I used to buy our first personal home.
A Good Deal
So that’s a simple explanation of what I understand about silver — and why I’m bullish. I could also be wrong — but at under $20 an ounce, silver is a good buy.
Now, as compelling as all of these points are, these are not the real reasons I am investing in silver at this time.
The real reason is a simple one, worthy of reiterating: The silver window is open.
To me, this is 1964 again.
How long will silver remain a bargain? Only time will tell. The important lesson for today: The silver window is open. Now.
And — as with so much in life — timing is everything.
Play it smart,
Editor, Rich Dad Poor Dad Letter
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