On the subject of money, in his Decline of the West, Oswald Spengler wrote, “Thinking in money has subjects and objects: those who by force of their personality generate and guide money, and those who are maintained by money. Money of the Faustian brand is the force distilled from economy-dynamics of the Faustian brand, and it appertains to the destiny of the individual whether he is inwardly constituted to represent a part of this force, or whether, on the contrary, he is nothing in relation to it but mass.”
In other words, according to Spengler, the ability to generate and guide money is more to be desired than simply being maintained by money. In today’s world, generating and guiding money would more properly be called “investing,” which is defined as “putting money into business, real estate, stocks, bonds, etc., for the purpose of obtaining an income or profit.” Making a profit is the goal of investing. Which means that ‘how’ to invest is the tricky part. And in ‘what?’
J. D. Seagraves has an answer. He has written the guidebook of all guidebooks to investing in silver. The book is called Real Wealth: The Simple Guide to Silver Investing. And it grew out of Seagraves’ preoccupation with finding the answer to a very simple question: “What are the best ways to invest in silver that produce the biggest results?”
In chapter one, Seagraves provides a brief overview of silver certificates. He points out that in the period between the Civil War and World War I a large part of the political arena involved monetary policy, specifically “debates pitting goldbugs” against “bimetallic or silver enthusiasts.” The outcome of this debate was U.S. silver certificates, which were issued between the years of 1878 and 1957.
Silver certificates still exist. They are issued by “various private banks and investment companies.” Seagraves states that silver certificates provide an easy method of investing in silver without having to take physical possession of it. Yet he cautions that silver certificates “are only as good as the issuer.” Which leads him to conclude that silver coins or silver bullion are preferable to silver certificates.
The Hunt brothers’ attempt to corner the world market on silver is the topic of chapter 2. It’s a humdinger of a story and well worth the price of the book. In January of 1980, the Hunts owned $4.5 billion in silver. And according to Seagraves, if they had just known when to get out of the market, the Hunts would have walked away richer than King Midas. The reason Seagraves relates the story is to demonstrate that the manipulation of silver could happen again. In fact, he thinks the silver market may be on the verge of blasting off at the present juncture.
The next chapter of Real Wealth examines the possibility of the government once more confiscating gold, as occurred in 1933. According to Seagraves, the confiscation of gold was the result of “protectionism and higher taxes.” If similar circumstances recurred, he thinks another bout of confiscation could be implemented.
Silver mutual funds are discussed in the subsequent chapter. Seagraves asserts that Vanguard Precious Metals and Mining and Permanent Portfolio represent winners in the area of precious-metals mutual funds. He discusses the differences between the two funds, pointing out that ‘better’ is a relative term, depending upon what kind of investment one is looking for. Regarding Exchange-Traded Funds (ETF), Seagraves states that ETFs provide modest investors with access to gold and silver investing. Still, he warns that ETF ratios are not always as advertised.
From there, Seagraves moves on to discuss the advantages and disadvantages of putting bullion into IRAs. His conclusion is that “investors would certainly be wise to set aside a slice of their IRAs for gold and silver.” Seagraves believes the advantages outweigh any disadvantages.
Diversification as a method of hedging forms the subject matter of chapter 7. Seagraves briefly analyzes the theory behind diversification, and does so in a very lucid manner. He reports that Ibbotson performed ‘risk’ testing on three distinct types of portfolios. All the portfolios utilized diversification. Yet each had more or less risk tolerance than its partners. One portfolio was conservative, the second was moderate, and the third was aggressive.
The results? Portfolios that included hard assets – precious metals – had a higher rate of return, along with less risk. Thus, Seagraves suggests investors allocate “between 7.1% and 15.7%” of their portfolios into precious metals.
One of the most pertinent chapters of Real Wealth is entitled ‘The 7 Deadly Sins of Silver Investors.’ And according to Seagraves, experienced investors as well as beginning investors need to resist the temptation to go-astray. The 7 deadly sins are: overindulgence, haste, sloth, irrational exuberance, ignorance, pride, and dogmatism. All are easy traps to fall into. Which means investors would do well not to skip this section of the book. Remember, “pride goeth before the fall.”
The 7 deadly sins are succeeded by the ‘Six Types of Silver Investor,’ which portrays the characteristics of silver investor archetypes. Seagraves identifies them as: the trader, the hedger, the collector, the Bobby McFerrin (don’t worry, be happy), the stockpiler, and the doomsdayer. According to Seagraves, the “ultimate silver investor” should incorporate a little bit from each of the six. In other words, it’s better to be a many-headed hydra than a myopic cyclops.
Seagraves consummates his excellent treatise on investing in silver by offering advice not normally found in so-called “investing guides.” He provides concrete recommendations on: the 10 best silver coins for investment, the 5 best places to purchase American Silver Eagles, the 5 best places to buy silver rounds, the top five places to find junk silver, and gives suggestions on how to store silver coins, bullion, and other precious metals.
Seagraves style of writing is easy-to-read. He avoids technical jargon and, in the rare occasions that he employs it, he defines it. The two most impressive features about Real Wealth are its scope and its courage. Seagraves covers every aspect of silver investing, and still manages to keep it simple. And he’s not afraid to tell readers precisely what he thinks. In other words, he has an opinion and he states it without apology.