mmissinglink said:
Physical precious metals are a form of investment contrary to the misinformed claims of those who believe it can't be.
An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.
http://www.investopedia.com/terms/i/investment.asp
Physical precious metals are purchased as investments by people because they are an investment.
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Silver generates nothing, creates no wealth, it's just metal, a dead metal clump, stays like that, gets bought, gets sold, just like anything that perishes slow enough to allow storage.
Therefore, the term "saving" applies. That is the economic sense: a product used as an inbetween step to others, known as "medium of exchange". It's.... money.
It's not an investment in any way. Nothing even changes to a product (unlike for ex silver that gets processed to a computer component).
An investor puts... money... into a product, or a human, that can, or fails to, get out more production and thus money.
"Finance", well bah, is just a term that can be used for anything. On its own it says nothing, it's managing a whole of whatever products that can be used as medium of exchange and/or storage of value.
If the price of a stored dead product changes over time, then that has nothing to do with creation of anything, just with outspeeding others in buying / selling it (aka frontrunning).
In contrary to an investment, silvers 'provide income', is NOT a macro economical extra or lost value (the so called "bigger cake" or "smaller cake").
It's just a shift of existing value, just like when a thief passes....
And then there is such thing as "speculation". Is buying / selling silver speculation?
Well, that's also a simple one: it's speculation when a risk exists before the act of speculating AND when that risk (the risk itself, not the chosen product) is beyond human control.
For ex, imagine that there is a chance / risk that the silver mines in your trading region of the world get flooded with water, beyond human control.
Johnny, has discovered / recognized this risk (by studying natural processes), and thus thinks that the silver price will explode (yeeeehaa huraaaaa!).
So, Johnny buys some stock silver, while it's still cheap. But Johnny can still be wrong about the flood or not and lose instead of gain.
This Johnny, is a speculator.
On the other hand, imagine there is a government in that region of Johnny, that holds most silver stock, and wants to sell it for more, and decides to force the price higher, by triggering that flood on purpose (ex sabotage). There it ceases to be "speculation": the flooding risk didn't exist before, it was created post the act (buying silver stocks), on purpose, human control.
And imagine Johnny wasn't a geologist / didn't study natural processes, just got a tip from government that let him know what they were upto. Right there, Johnny would also cease to be a speculator.
Based on what I've read from you, you should be able to recognize and understand the why, the principles behind the terminology.
Terminology, is a way to communicate. Terminology is a means to a goal. The means isn't important, the goal is.
What is here the problem: same terms are used for multiple goals. Therefore, I see it as crucial that terms are used in the context of their application.
The application for silver for me was/is: preserving purchasing power. I want to be able to buy back the value I produced. Nothing more, nothing less. I didn't "invest" at all.
If it turns out that I paid too much, and thus failed the goal, then that is because I allowed others to frontrun me, and (and that's my choice) have to bite the bullet, make error > suffer consequence.
That also illustrates the "human control" part in aboves flooding analogy: it ceases to be observing natural processes beyond human control, it's all about observing what other people do, much like pocket thieves on a market place. They aren't there for the traded products, but for other peoples money for nothing. This has nothing to do with economy / investment ...
. Once I finally get my ebay account set up I should be able to flip these pretty easily. They look much better than some that sold for $50+ on ebay.
