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I'm sorry, but it seems like Answers is full of clueless "wannabes" that need to stop sniffing their dirty socks to get a high.
To answer your question, precious metals are a hedge against inflation (as are all precious metals). For example, in 2002, the average price of gasoline was about $1.28 per gallon and silver was trading at around $4.50 per ounce, which means, that you could have gotten about 3.5 gallons of gas for 1 oz. of silver. Today, gasoline is about $3.23 per gallon and silver this year has averaged about $17.55 per ounce, which means, you could get get 5.4 gallons of gas for 1 oz. of silver. As you can see, as the dollar is losing value, silver has kept it's purchasing power in terms of gasoline. Another example; in 2002 the average home price was $226,500 which means it would have taken 50,334 ounces of silver to buy a home. Today, the average home price is $301,900, so it would take only 17,203 oz. of silver to buy a house. Again, silver prices have been outpacing the rate of inflation.
During the Weimar Republic Hyperinflation, the people that made it through were the ones that accumulated precious metals like gold and silver.
In addition, if you had bought silver in 2002, you would have seen a return of 290% return on your investment. In equities, you would have seen a return of only 72% - silver returned 4 times more than equities.
The investment cycle right now is favoring commodities. So, the primary reason for buying silver is wealth preservation. Throughout history, fiat currency's have come and gone, yet precious metals have been around for thousands of years.
It's just not something to buy because it's pretty. Like I said, throughout history, during times of inflation, people that had precious metals preserved their wealth and purchasing power.
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- Thank you! This helped so much!!!