What are the four key reasons the CPM Group recommends that investors own gold and silver?
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Jeff Christian: The first one is to diversify your wealth. Most people's wealth is denominated by their domestic currency and currencies rise and fall, their values rise and fall, and their existence rises and falls. In the United States, we've been very lucky to have a relatively stable government and stable currency for 200 plus years, but in most of the other parts of the world you've seen currencies come and go, and governments come and go, and nations come and go. So, you have a lot of other investors around the world who understand the value of having part of your wealth in gold and silver. I think, that's a very important factor... is to just diversify your wealth.
The second one is that cataclysmic insurance--things do collapse, things do get bad, and it's good to have gold and silver. I have a very good friend whose grandfather worked in a gold mine in what's now Romania, used to be Hungary. He took some of his pay in gold and some of those little gold coins were used to buy protection from the Nazis, during the Nazi occupation and then some of those gold coins were used to let the kids sneak out of communist Hungary and ask for asylum in the United States. He ultimately got a job in the precious metals business and he worked with his Boss to buy his parent's freedom in gold. So, that cataclysmic insurance policy is important. You should have one, because you never know when you're going to need to run or when you need things.
The third thing is a portfolio diversifier and as we were talking earlier, statistically, you can argue that 27%-30% of your assets should be in gold. A lot of people would think that's too high, but you definitely should have exposure to gold and silver in your portfolio--it reduces the Risk/Reward ratio. So, that you have... you don't suffer in terms of returns in your overall portfolio, but you have less volatility in your portfolio with gold and silver in it.
Then the fourth one is capital gains. We've had people tell us, "We love your work, Jeff, but you market gold and silver based on greed and we market gold and silver based on fear." I actually market gold and silver on both greed and rational fear. There's irrational fear, which I had when I was a kid and I was waiting for the Nazi's to knock down the bedroom door every night, but there's rational fear. There are real reasons to have gold and silver as insurance, but there's also real reasons to have it as investments, because there's tremendous profits that can be made, and you feel a lot more comfortable if you're wealthy.