I realize all of the arguments one could make in favor of silver. Still, I can't see gold going to $800; I can see silver going to $15 though; so does it really belong in the 'insurance' category?
Yes. You can imagine silver going to $15 and so can I. Silver is more volatile, so if both metals correct more than half of their prices then silver will probably correct more. This is highly improbable in my view, but yes, it is something that could happen. What's even more unlikely is that silver would move to $15 and stayed there for months. The chance of that is very low and can be viewed as a kind of cost of owning silver in the first place. However, the whole idea of insurance per se is to pay a little now (the cost of insurance) in order to make sure that some serious event will not hurt you in the future. Insurance is meant to be a cost. If it wasn't, it would generate no revenue for the insurance companies and in this case, they would not exist in the first place.
In the case of standard insurance, you pay a fixed amount in cash. In the case of silver, you don't really pay anything for insurance. You take a small risk (small based on the fundamental situation) that you will lose on your silver investment and that is your cost. However, unlike standard insurance, you are not simply paying the insurance fee without any profit. Silver has huge upside potential and is very likely to provide substantial gains in the coming years.
What does silver insure you from? From the monetary crisis in which the value of fiat currencies will likely collapse. This is an event that we, unfortunately, view as quite probable in the coming decade. In this case, silver and gold will, in all likelihood, soar as people recall that these two metals have effectively been money throughout history.
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