Spot prices could explode as a result of new technologies such as the catalytic converters that require precious metals, or from greater worldwide prosperity increasing demand for jewelry and inflation hedges. Meanwhile, other technological advances are making production (i.e. mining and refining) much cheaper, which lowers prices by increasing supply. All and all, I believe precious metals, though their prices are impossible to predict, remain a reasonable hedge when viewed strictly as an insurance policy. They are probably not as good an investment as securities, real estate, or collector-based tangibles such as rare coins.

During the energy crisis of late 1979 and early 1980, when gold and silver prices had reached frightening record highs, I encouraged my customers to sell. Most of them ignored my advice, so I advised them to view their precious metals as insurance they hoped never to use. They usually regretted not selling, but in fact they should be thankful that the market did not vindicate their decision. After all, who in good health who would wish to die so others could benefit from the insurance? Do you hope a tree crashes through the roof of your house so you can recapture some of the premiums you've paid your insurance company? There's a huge difference between preparing for the worst and hoping it happens.

Based on things I've read, there are those who believe that humanity would somehow be better off were gold worth $5000 an ounce. Others maintain that a protracted global conflict is just what we need to shake things up and eventually improve life on the planet. As I write these words, an image comes to mind of a well-armed family huddled together in a concrete bunker. The wife turns to the husband and says: "Well, Honey, you were right. We made so much money in the gold market we'll never have to worry about running out of ammunition."

At best, a dramatic and sudden increase in the value of precious metals would create short-lived prosperity for a few "lucky" owners. What benefit when you quadruple your money on a few bags of silver coins, if an economic collapse forces the company you work for out of business?

Now that prices are low, I strongly encourage you to acquire tangible assets in the form of gold and silver coins. But still, only as an insurance policy. Investing perhaps 10% of your net worth in such a purchase would be both prudent and responsible. My preference would be to acquire coins that offer a dual hedge, desirability to collectors and availability at a reasonable premium over the melt value of the metal they contain. If precious metals increase in value so will these types of coins. If the metals market remains stable, increased demand within the coin market may raise the value of your diversified "insurance policy". Some, but not all of the coins I would include in this insurance package are Morgan and Peace dollars in circulated and uncirculated grades, uncirculated Double Eagles, and original BU rolls of silver Roosevelt dimes, Washington quarters, and Kennedy half dollars.

We should try to protect ourselves from as many forms of potential disaster as we can. While no foolproof insurance policy exists, a little insurance is often well worth the cost.