Gold as Insurance

The motive for investing in gold and silver varies widely from person to person.  For some it is simply because it is real money, for others it is a speculative play for huge capital growth, and for some it is a defensive hard asset amongst all the ‘paper’ instrument exposure.  Many think of it simply as insurance.   For many of us our house is our biggest investment.  We all insure our house against the potential ravages of fire, flood or wind when the vast majority of us have and probably will never see that eventuate, yet we do it unequivocally.  

Why then do so many not insure the balance of their wealth against forces beyond their control – the ravages of financial crisis, stockmarket crash, war or high inflation?  Throughout the ages gold and silver have outperformed in times of economic or political crisis.  Unlike your house insurance premium though, it is not a sunk cost to do so.  Indeed gold and silver provide capital appreciation on your investment (insurance premium) over time.  Those regular readers of ours and observers of what is really happening in the world can see the global debt and easy money fuelled cyclone approaching.  Those that own gold and silver do not fear it as they will likely profit from it.