I wanted to point out even though it may be obvious, with the recent drop in Treasury yields at all maturities, gold is a much better investment choice. Many conservative investors are more concerned with the return OF their principal rather than the return ON their principal, so I thought I’d compare two “safe” investments to show why you should consider a precious metals investment…specifically gold…instead of the typical “safe” US Treasury Bonds.

Investing in Gold Vs. Treasury Bonds

Let’s look at the yields Treasuries are paying in the chart below I swiped from the US Treasury website. The first thing you’ll notice is even the longer term bonds are only paying about 3.00%!

3 percent! To tie up my money for 30 years and all I get in return is a lousy 3 % rate of return?

I don’t think so….

And remember even though US Bonds are “safe” they still have to keep up with inflation or I’m actually getting a negative return. Does anyone believe the US will not experience at least a few bouts of serious inflation over the next 30 years?

I sure as heck do…

January 2009
mm/dd/yy 1mo 3mo 6mo 1yr 2 yr 3yr 5yr 7yr 10yr 20yr 30yr
01/02/09 0.04 0.08 0.28 0.40 0.88 1.14 1.72 2.07 2.46 3.22 2.83
01/05/09 0.05 0.14 0.32 0.43 0.78 1.08 1.67 2.07 2.49 3.37 3.00
01/06/09 0.05 0.14 0.31 0.45 0.80 1.10 1.68 2.07 2.51 3.41 3.04
01/07/09 0.03 0.11 0.29 0.44 0.82 1.15 1.66 2.02 2.52 3.41 3.05
01/08/09 0.04 0.09 0.28 0.44 0.83 1.16 1.60 1.95 2.47 3.40 3.04
01/09/09 0.03 0.07 0.28 0.43 0.75 1.11 1.51 1.88 2.43 3.39 3.04
01/12/09 0.04 0.12 0.29 0.43 0.74 1.09 1.45 1.81 2.34 3.30 2.99
01/13/09 0.02 0.11 0.29 0.43 0.76 1.07 1.44 1.80 2.33 3.30 3.00

You couldn’t pay me to invest in the US Treasury market right now. Talk about a bubble…when that pops I’ll be sitting very happy in precious metals. You should be too…

Revisit your “safe” investments that really are not so safe or are not really investments. A money market, CD, or Treasury bond can’t at this point really be considered an investment when negative returns are more likely than not. Add the insolvency risk in the banks, insurance companies, and yes…even the US government…buying precious metals looks better and better.

Remember at this point I only recommend investing in the physical precious metal…not the futures, mining stocks, or even coins…just bullion. If you want to be sure to store your wealth where inflation or default risk can’t swipe it from you in these turbulent times…precious metals bullion is the answer.

Happy Investing!

Filed under: Why Precious Metals

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