Investing in Gold: Inflation - A two sided coin for gold and silver

With the feds locked in battle over what to do with our surmounting budget crisis, one word that seems to be creeping into vogue again is inflation. For gold and silver, it appears that new and greater prices will most likely soon be achieved. So what does that mean for the precious metals arena?

On the top side of the coin, if a person has gold and silver and a wish to sell, they will be obtaining record prices for their material. With gold prices higher than $1,500 it has already nearly doubled the old high of around $800 in 1980. Whether one has gold coins or just old gold jewelry, if they want to sell now it is bringing more than ever in our history.

Silver is pretty much following the same path, except that in 1980 it was pushed artificially high because of the Hunt brothers. Even with silver in the $35 range, the public is generally receiving more now than it did even when silver hit $50 back then. The main reason is that in 1980 everything was changing so fast no one believed it could last, and it did not. Fast forward to today and the picture is very different. We recently experienced a parabolic rise where silver nearly hit $50, but other than that silver has been on a steady climb. Now with a stable base at $30, silver has shown that its potential is at least as great as gold's.

On the bottom side of the coin, if you are looking to purchase gold or silver, the price tag looks like it will just keep getting bigger. For investors and speculators, higher prices can seem foreboding, but for those still buying, the future could prove rosier. As inflation kicks in, the dollars we use will have less buying power. By having gold or silver a person has the opportunity to retain the value of what they posses. Sure one can look back and say, "if I would have only..," but if one looks forward they may see that buying now may also be wise.

Many of these words are the same that have been said for the last couple of years. The main difference is that the ring of them seems to just be getting louder as inflation becomes an openly used word again. In the last decade, we have been experiencing inflation without anyone really talking about it. The prices at the pump and at the stores have been quietly creeping higher all without the talk of inflation. With inflation beginning to be embraced by our leaders again, we may soon see an explosion in prices.

Gold and silver have always been considered a hedge against paper currency. Precious metals never earn interest or pay a dividend, but they always have value around the world in any currency known to man. They are the ultimate vehicle against an inflating currency and are an important part of every economy.

• Allen Rowe is the owner of Northern Nevada Coin in Carson City.