Buying gold or silver

We have ten thousand dollars to invest. Would gold or silver be a good hedge against inflation or deflation? What would be the best venue to purchase either one? Thank you.

Terry Says:  It’s hard to answer that question out of context.  A lot depends on the diversity of your other investments, your time horizon, and your risk tolerance.  Let me just say that we are seeing that gold is just a commodity — but unlike other commodities it has two completely divergent uses.  The first is as a hedge against inflation, which seems non-existent these days.  The second is as a place to put your money when you are scared about your country/your currency.  Please read the column I posted on my website just days ago, explaining that.

Gold is a speculation, not necessarily an “investment.”  There are several ways to buy it.  You can buy gold bullion coins at any good coin dealer.  In Chicago, I buy from Harlan J. Berk on Clark Street downtown.  But you’ll need to store these coins in a vault.  Or you can buy a mutual fund that buys gold mining stocks — some of which pay dividends.  My favorites are at www.USFunds.com.   Or you can buy an ETF (exchange traded fund) listed on the NYSE that tracks the price of gold throughout the day — symbol GLD.

You’ll notice I didn’t comment on silver.  I have never speculated in silver — not since I met Bunker Hunt!  It is wildly speculative, and I much prefer to use gold as a hedge, or an investment vehicle.  But remember that gold prices can be very volatile, too.