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The advice to use diversification is probably the oldest investment advice (right after “don’t loan money to your relatives”). Diversification in precious metals can mean several things. It could mean spacing out your money among different metals (some precious metals and some base metals). It could mean spreading your money among different classes of investment vehicles (a mix of gold and silver mining stocks along with a precious metals mutual fund). For speculators, it may mean deploying strategies that could benefit in up or down markets (such as using an option combination like the long straddle; see Chapter 13).

You can even diversify when you’re speculating on a single vehicle. In 2019, most of my clients with commodities accounts were overwhelmingly in silver futures options. It is indeed a high-risk approach, but it paid off very well. Silver that year ended up 45 percent, and most of the silver futures options were up in triple digit percentages (sweet!). But where possible, the options strategies involved a diversified mix of strike prices, time frames, and some hedging. All hedging means is that you do something in the account that could do well if the market goes against you. Hedging is covered in greater detail in Chapter 14.

Since this book covers the world of precious metals, I can cover diversification in this area, but it’s important to understand that this singular area should be only a single slice of your total financial picture. You need to address other areas of your situation such as

 Money in savings

 Reducing and managing liabilities (such as debt and taxes)

 Money in conventional investments such as stocks and bonds

 Real estate and other tangible assets

 Insurance and other risk management tools and strategies

 Pension matters and retirement security

It’s not a complete list, but it’s important to point out that whatever you do in precious metals, it doesn’t happen in a vacuum. Hopefully you’ve looked at your entire financial picture and the economic/political landscape and you’ve discovered that the best way to protect and grow your wealth in these times is by diversifying into precious metals!

Diversification can be accomplished in two ways:

 You can add precious metals into your portfolio to gain benefits that may not be there with other, more traditional investments

 You can be diversified inside the precious metals portion of your portfolio by having both physical metal (such as gold and/or silver bullion coins; see Chapter 9) and paper investments (such as mining stocks and precious metals exchange-traded funds [ETFs], covered in Chapters 7 and 8, respectively).