One way to protect your wealth during this recession is to buy Gold.
As more investors today switching to buying gold instead as a hedge against inflation and recession.
“The price of gold has increased substantially over the past 7 years, but today might be one of the better times to allocate a portion of your portfolio towards gold. In the first stage of this gold bull market, many investors were too focused on their profitable stock and real-estate investments to allocate towards this sector. Today, it is becoming increasingly clear that gold’s tangible qualities go beyond capital appreciation.
Historically, Gold has served as a hedge against inflation, a hedge against a declining US dollar, and a hedge against times of economic and political crisis. While many naysayers argue that gold is no longer money, but simply an archaic relic, gold’s actions over that past several years clearly prove otherwise. Indeed, gold is the only currency in the world that has successfully preserved wealth for generations”.
by Emanuel Balarie,
Managing Director of Balarie Capital Management, the managed futures division of Archer Financial Services, Inc.
Why Gold? Why Now?
The Case for Investing in Gold Today
IF YOU’RE LOOKING to store wealth in something both rare and secure today, you will find nothing to match gold.
Gold always tends to reward cautious savers in times of financial stress, because it is both hard to destroy and tightly supplied.
In short, it is the very opposite of debt.
Gold doesn’t corrode or tarnish, and it’s relatively useless to industry. That’s why almost all of the entire stock of gold mined over the last 4,000 years remains unused today. It exists as either jewelry or bullion, both of which act to store wealth and value.
The world’s total store of gold now stands near 160,000 tonnes. But the metal is so dense that, if formed into a single a cube, it would have an edge barely 22 yards in length.
That wouldn’t even cover a tennis court!
Gold vs. Paper-Money Inflation
New gold is being found and mined today at the rate of some 2,600 tonnes per annum.
That’s a modest increase of 1.6% per year to the above-ground supply. And critically for the value of gold, this annual growth-rate lies beyond the power of politicians or investment banks to increase.
The supply of Euros, in contrast – the most hawkishly-managed major world currency right now – is currently expanding by 11.5% per year.
Thanks to this tight supply, gold grew its purchasing power more than nine times over during the 1970s – the last worldwide surge in inflation. In terms of business assets, it rose 23 times over by the start of 1980 as measured against the Dow Jones Industrial Average.
During the financial collapse of the 1930s – but this time amid a deflation caused by half of all banks in the United States failing – gold bought 17 times as many financial assets as it did before the Great Crash of 1929.
Now debt defaults and inflation are working together today, forcing a fresh crisis in the value of money. Gold has already risen three-fold against the New York stock market since early 2000. It’s recently turned higher in terms of residential and commercial real estate, too.
Time to Buy Gold?
Gold doesn’t care whether a financial collapse destroys the value of money (inflation) or the value of debt (deflation). Its unique characteristics – indestructibility and tight supply – mean its owners can thrive amid either.
But that doesn’t make gold a “forever” investment. Gold will always lose value during stable periods of strong economic growth.
Over the twenty years to 2000, for example, gold lost 95% of its value in terms of US real estate. So it’s no surprise that, as a proportion of world investment portfolios, gold fell from around 2% to effectively zero.
The trend in gold prices finally turned higher at the start of this decade, just as Gordon Brown – now the British prime minister – sold half the UK’s national gold reserves at less than $300 an ounce.
Since then gold has trebled and more. But this gain remains small in the context of previous gold trends. It’s also been limited by Western governments persuading their citizens that “core” inflation in the cost of living is running at just 2% per year or below.
These official CPI figures, of course, exclude the cost of housing, mortgages, taxes, fuel and saving for retirement. But this trick cannot go un-noticed forever.
New Investment in Gold
New gold investment will continue to grow if the world’s major currencies – gold’s main competition as a store of value – plunge into the inflationary spiral that many economists fear.
Until there’s a dramatic change in monetary policy, the over-supply of Dollars, Euros and Yen look set to keep pushing gold prices higher. And it took a dramatic change in central-bank policy to finally kill gold’s last inflation-led surge.
At the start of the 1980s, the Federal Reserve pushed US interest rates up to 18% and above, restoring the world’s confidence in its currency and kick-starting the “long boom” of the next 20 years.
Could America survive such strong medicine now? Would Ben Bernanke even dare risk it?
If you think the world’s central bankers are about to set interest rates far above the real rate of inflation, you should steer well clear of gold.
And this ground-breaking service really does give you unique access to live gold market prices, cutting out the middleman and slashing the costs of investing in gold “dramatically” as the Financial Times recently noted.
But if you fear for your savings and you want to start investing in gold, consider allocating to gold bullion.
Today, there are a number of different ways that the average investors can participate in the value that purchasing physical gold can offer their portfolio. One of the companies that now allows for direct access to the bullion market is BULLIONVAULT.
Click here to find out more for yourself, go to BullionVault now.
Disclaimer: This is not a recommendation or forceibly people to buy or sell Gold. The risk of loss in trading futures and options contracts can be substantial. You should therefore, carefully consider whether such trading is suitable for you.