Financial markets have always been uncertain; It is the nature of the beast. But in today’s world of globalization, economic health can spiral out of control more than ever. This could be a good time to smooth out some of that insecurity by investing in gold, also known as the money of last resort. Not only would you hedge against the falling dollar, but you could make a big profit in precious metals. Here are the best reasons to turn your money into gold:
o Troubled times in the tax gap in the United States.
As you read this, the US government is racking up more debt, which now stands at $63 trillion. What does this mean for you? As the Federal Reserve continues to print more money, it will reduce the purchasing power of the dollar and inflation will spiral out of control. This happened to Germany after World War I, when it took a wheelbarrow of German marks to buy a loaf of bread.
o Troubled times in the macroeconomic investment climate.
Kuwait has just announced that its currency will not be pegged to the dollar. China has sold at least a billion in US Treasury notes as Venezuela and the United Arab Emirates replace their dollar reserves with the euro. The signal that comes from other governments is an alert signal; our reliance on foreign bond buyers to finance domestic consumption is rapidly crumbling. The US economy is held together with baling wire and duct tape.
or Supply and Demand.
While mining companies continue to extract gold, production cannot keep up with demand. From 1992 to 2005, world production totaled 1.1 billion ounces. The reserves are barely half that size and they are declining. Large mining companies must struggle to maintain production and turn to the junior mining segment for exploration and discovery. But between 1985 and 2003 new discoveries fell by 30 percent. Basic economics tells us that when supply cannot meet demand, value increases.
o Historical value.
You can’t make gold. It is what it is. That is why the value of gold has been used for more than 5,000 years. In his speech, Anthony S. Fell, a prominent banker at the Royal Bank of Canada, stated the following:
“To some degree, I am sorry to say, all paper currencies are becoming somewhat suspect and consequently it is my opinion that gold bullion, rather than being the barbaric relic described by John Maynard Keynes, may well become the The asset of choice for many — investors over the next decade… despite the modest rise in gold prices in recent years, that’s where gold bullion is today, and it represents a great opportunity.”
o Gold is the great stabilizer of all economies.
Gold inhibits governments from printing money and putting citizens into debt. Avoid currency devaluation caused by inflation and increase the wealth of nations. Gold provides protection against abusive usury, encourages savings and puts an end to taxes and the exploitation of the world’s population.
Investing in precious metals is the only safe haven against a falling currency. The US dollar index has fallen 30 percent since 2001, while gold and silver have more than doubled in value.
Since 1913, when the Federal Reserve became the issuer of the US currency, the dollar has lost 98 percent of its value.
The question arises, should you invest in paper or gold assets?