Patrick Yip: Gold and Silver — What to Buy, How Much to Own

Patrick Yip of APMEX believes now is a good time to buy gold and silver, and in a conversation with the Investing News Network he shared how much metal investors may want to own, as well as where to find the best value.

First explaining what's driving gold, Yip pointed to currency debasement as a key factor for the yellow metal. He noted that M2 — currency in circulation plus savings accounts — has increased by 35 percent in the last couple of years.

"Obviously the US economy didn't grow by 35 percent, so that's debasing the currency," he said. "You look and you say, 'Is it going to continue?' Well the US government has a couple of options. One is that they could balance the budget, which is probably not going to happen ... two, they could default on the debt, which they're probably not going to do either, because that's going cause mass riots across society. Or three, they can inflate. So they're going to inflate."

Yip sees gold and silver as a way for investors to protect themselves against those pressures, and said APMEX's analysis of 50 years of data shows that the optimal portfolio allocation for precious metals comes out to 20 percent.

In terms of how that could break down between gold and silver, he noted that silver is the more volatile metal.

"As you add silver into it, your volatility goes up and your return goes up. So it depends really on the type of investor. There is not an ideal ... if you're okay with higher volatility, higher risk and higher returns, you could allocate toward silver," he said.

Speaking about what products currently offer the best value, Yip suggested 100 ounce silver bars.

"I think that gives you kind of the best of both worlds," he said. "It's not too large where you lack the liquidity, but premiums are also low. You're talking about US$2 over the spot price for a 100 ounce silver bar. So spot's around US$25 (per ounce), you're getting US$27 silver in this US$100 ounce bar case." In contrast, American Silver Eagle premiums are now about US$10.

Watch the interview above for more from Yip on gold and silver, including where prices may go in 2023 and considerations when storing these metals. You can also click here for our Rule Symposium playlist.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.