Last week I wrote about my gold and silver investments in my 401K. After I posted a link on Facebook a friend from high school wrote: “At the risk of sounding alarmist… Your entire retirement is invested in precious metals?”
Other people may be wondering the same thing. Here’s my response.
Yes. No doubt there’s some risk there, but there’s also the potential for huge rewards. If I’m wrong I’ve got a couple of decades until retirement to make a correction. If I’m right I’m going to win big. Two years ago I made my first investments in gold at $750 an ounce. It’s almost doubled since.
I didn’t get to 100% precious metals overnight. It’s been a gradual change.
I used to own stocks in my 401K. I also had stock in my private portfolio from an Internet company I worked for that IPOed in 1999. I no longer buy stocks. I’ve you’ve had money in the market the past 10 years you’ve seen some big corrections, from the dot-com bust to the 2008 crash. Stocks are hardly safe.
I also believe the market is heavily manipulated, so that the little guy is not getting a fair deal. Currently the stock market is also wildly overvalued in terms of P/E. Stocks are way up this year, but are actually down relative to gold.
I wouldn’t mind diversifying, but nothing else promises anywhere near the return or the inflation protection. Oil has some promise and looks to be on the upswing. I bought some a few years ago, but I was too early. Now’s probably a good time to buy.
FWIW, my company had a contest last year to encourage people to invest in their 401K accounts. There were prizes for the person who had the best return for the the current year, the previous year, and some longer time period like three or five years. I won two of the three categories, including the longest time period. The person who won the other was up only because he had been down so much the previous year due to the stock market crash. My winning secret? I had almost no stocks during that time. I don’t believe in ‘em anymore.
The one addendum to this is that my entire retirement is invested in precious metals right now. There’ll be a time for selling and reinvestment long before I retire. More generally, no matter you’re invested in the days of buy and hold seem to be over, even on retirement-planning timescales.