What is the biggest risk or danger that you may encounter when you buy and hold physical precious metals?
First of all, what are these metals? Well, they are sound money that have been so for thousands of years and will always be. They are rare elements found in the Earth that humans have been exploring and digging, and refining and turning into real money. Gold and silver act as a store of wealth that can easily be transported and transferred to another. Unlike fiat dollars, there is a finite amount of gold and silver which cannot be inflated at the push of a button from a central bank in order to produce more.
When you buy physical gold and silver what you are doing is trading in fiat dollars for real money. Technically you're not buying anything but rather trading in worthless fiat dollars into a proven store of value and wealth in real, sound money.
Before I get into the risk of owning physical precious metals, I think that it's imoportant to look at why wouldn't you.
FIAT DOLLARS AND THE BEAST CALLED INFLATION
If you only hold onto fiat dollars, there is massive risk and certainty that you will lose purchasing power. For example, many governments have an annual inflation target of 2% which means that every year the purchasing power of the dollar decreases by 2% all by design. Of course we all know that over the past few years we the people have lost even in purchasing power as true inflation has been well over 10% in Canada. Assuming governments could even hit their 2% inflation target, this means that over a 100 year period the dollar value would go to zero. Since 1913 when the U.S. dollar was no longer backed by gold, the value of the "greenback" has declined by 97%. This is all due to inflation when more dollars are printed and added into circulation which decreases its value and purchasing power.
Consider this about a $20 gold coin, standard circulation currency, in the early 1900s...
A gentlemen could buy a nice hat, tailored suit, and quality shoes for $20 - that gold coin. Today with that same $20 gold coin, a gentleman could still buy a nice hat, tailored suit, and quality shoes. Can you say the same about a $20 bill?
Will the U.S. and Canadian dollars go to zero in 2024, next year or next decade? I have no idea but what I do know is that physical gold and silver have proven to be excellent hedges against inflation and hold thier value over time. The only things which won't go to zero are gold and silver, especilly as they are heavily used in society and industry (e.g. electronics, medical devices, solar panels, batteries, etc.).
In my opinion, to store your wealth in fiat dollars is a huge risk.
COUNTER-PARTY RISK
Counterparty risk is the possibility that the other party in a financial transaction may fail to fulfill their obligations, potentially causing a loss. This risk is inherent in many types of assets, such as fiat currencies, stocks, or bonds, which rely on banks, governments, or corporations to maintain their value and repay obligations. Physical precious metals like gold, silver, and platinum, however, are free from counterparty risk. When you hold these metals directly, you own a tangible asset that doesn't depend on any third party to uphold its worth. This independence makes precious metals a unique store of value, especially attractive for those seeking financial security and protection. Gold and silver are liquid under all market conditions.
"If you don't hold it, you don't own it."
OK, so if physical precious metals are so good in that they are a hedge against inflation, have uses in society, are not subject to any counter-party risk, and have value under all market conditions then what is the risk of holding them?
The only risk you have with physical precious metals is from theft or if you misplace them. You need to take the right precautions to protect and secure your metals from theft, fire, flood. Securely storing them inside a TL-rated safe at home is a good option. 'TL' means tool-resistent and usually comes with a number such as TL-15 meaning it would take about 15 minutes for a thief to break open your safe. There are other storage options such as safety deposit box (which I do not prefer), and vaulted storage off-site. Lastly. never tell others that you own precious metals. While they may be trusted themselves, you just never know whom they may tell. Tell you spouse, and that's it. Better yet, together with your spouse can be a fun way to add precious metals and build real financial wealth, privacy and freedom.
✨ IF I COULD WAVE MY MAGICAL 24-KARAT GOLD WAND 🪄, WHAT'S YOUR BIGGEST BURNING 🔥 QUESTION ABOUT PRECIOUS METALS THAT I COULD ANSWER?
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Great advice and perspective.