'Guide to Investing in Gold and Silver' Book Review

Learn about the history of money from legendary Michael Maloney

5th of February 2017

I finished reading Michael Maloney's book "Guide to Investing in Gold and Silver" a couple of months ago. To begin with, I have to disclose that I have been a subscriber of his Youtube channel for several years now. From watching his videos, Maloney comes across as a charismatic, grounded, and likeable salesman. He presents himself as a person who is looking after the interests of the middle class from the "insidious process" [1] (reference from "Gold and Economic Freedom" written by Alan Greenspan in 1966) that is inflation. However, from my experience, persons who have a silver-tongue (pardon the pun) for marketing often present rhetoric, spin or sophistry as opposed to facts. Although, I can happily say that Maloney's book proves he is a man of substance with a easy to read, well-researched book into investing in precious metals. This is why this book, as promoted on the cover of the 2015 revised version I read, is "#1 best selling precious metals book of this century". Today I am glad to finally share with you the insights from reading this book.

The Difference Between Money and Currency

The biggest take away I believe Maloney wants to give to his readers is the distinction between "money" and "currency". The uninformed public would naively assume they are one of the same thing; however, this assumption would be wrong. As Maloney informs us, to be "money" it need to have the following properties [3]:

  • Medium of exchange
  • A unit of account
  • Portable
  • Durable
  • Divisible
  • Fungible (Interchangeable - each unit is the same)
  • Store of value
Maloney informs us that "currency" is all these things except a store of value, as inflation steals its purchasing power over time and hence is not a store of value. Like Robert Kiyosaki, Maloney advocates financial education and improving your "financial IQ".

I believe that the best investment you can make, in your lifetime ... is your own financial education.
Michael Maloney [2]
Money vs Currency - Hidden Secrets Of Money Episode 1 - Mike Maloney [3]

History Repeats

The value of currency is based on the public's faith (or confidence) that it will continue to be a medium of exchange into the future.

For the past 2400 years a pattern has repeated in which governments debase and dilute their money supply ...
Michael Maloney [4]

Maloney believes, with historical evidence, that this process continues until a tipping point is reached where the public's confidence is lost and hence the currency no longer serves as a medium of exchange. During this process a wealth transfer occurs from people who hold a rapidly depreciating currency to those who own "money", which would appreciate as more people use it as a medium of exchange. This is where America, along with all countries, are close to being at, Maloney argues. Central banks around the World are printing their currency to fight deflationary forces caused by excessive debt (debt deflation) and technological advancements. People who prepare for these "wealth cycles" can earn returns in excess to a long-term buy-and-hold strategy in a single asset class.

Guide to Investing in Gold and Silver

The book is broken into four parts and seventeen chapters [4].

  • Part 1 - Yesterday
    1. The Battle of the Ages
    2. The Wealth of Nations
    3. Old Glory
    4. Greed, War, and the Dollar's Demise
    5. From Deep in the Woods the Golden Bull Came Charging
    6. Booms and Crashes
  • Part 2 - Today
    1. What's the Value?
    2. The Dark Cloud
    3. The Perfect Economic Storm
    4. Coming in from the Cold ... to Gold!
    5. The Silver Lining
  • Part 3 - Tomorrow
    1. The Pendulum
    2. Golden Castles
  • Part 4 - How to invest in precious metals
    1. Beware the Pitfalls
    2. Who Are You, and What's Your Plan?
    3. Let's Get Physical
    4. Everything Is Illuminated in the Light of the Past
  • Concluding thoughts

    Overall, I think this book is a great starting point for investors interested in learning more about precious metals investing. The book is written in a easy to read and entertaining manner to appeal to a wide target audience. I believe the book gives Maloney the chance to give an in-depth explanation of the history of money. From years of watching his Youtube channel, I felt like the book gave Maloney more credibility and substance, as I could see he was more than a salesman and had done his research. At the end of the day, Maloney is a historian who has connected the dots between past, present and future economic events. My only criticism, as with other precious metal advocates, is that long-term bulls often get their fingers burnt during downturns, which invariably happen in every market, including precious metals. This lesson was learn when the silver price rose to nearly USD50 per troy ounce only to fall to below USD20 per troy ounce years later. The moral of the story is that that precious metals are volatile and diversification mitigates risk. If you believe markets are showing irrational exuberance, then reducing your exposure may be wise, and conversely buying during dips may allow you to accumulate at a lower average price. That is what this website is about, helping investors decide when prices are relatively cheap and when they are relatively expensive. At the end of the day, as Voltaire (1694-1778) once said, "paper money eventually returns to its intrinsic value – zero" and that is something Maloney and I can both agree on.

    Reference

    [1] A.Greenspan, Gold and Economic Freedom. 1966. Available on-line.

    [2] M.Maloney, Mike Maloney Facebook Page. 2017. Available on-line.

    [3] M.Maloney, Youtube channel. 2017. Available on-line.

    [4] M.Maloney, Guide to Investing in Gold and Silver - Protect Your Financial Future (2015 Revised Edition). Scottsdale, RDA Press, 2015, pp. table of contents, xix.