Gold has been and will continue to be seen as a source of security in an economy where the currency value is declining. Investors are strengthening their positions in gold because of the fall of the Dollar. The United States national debt has reached an astounding $15 trillion and counting. Gold historically is a hedge against inflation and is considered a “crisis” commodity. There are little to no reasons why the dollar should be climbing right now.
Given that gold is counter-cyclical to paper assets, gold is often purchased to counter the effects of inflation and currency fluctuations. Gold cannot be undermined by inflation. Gold’s price appreciation makes up for lost interest, especially during a bull market.
Uncontrollable federal spending and increasing trade deficits will cause the dollar to lose value which in turn increases the price of gold. There are over $4 trillion of US debt owned by foreigners. This could cause a major decline in the value of the dollar and a soaring gold price. Analysts worry that a serious dollar sell off could create panic in the markets and lead to a global financial meltdown. There is also the threat of war and terrorism to cause the dollar to decline. Gold is a safe haven from these factors.
Top Reasons to Invest in Precious Metals
- Hedge Against Inflation
- Portfolio Diversification
- Geopolitical Uncertainty
- Metals Intrinsic Value
- Declining US Dollar
Supply & Demand
There are many industrial and high tech uses for precious metals. Precious metals are used in manufacturing and electronic components. Precious metals are also used to make coins, jewelry, and other luxury items. When there is an increase in the use of these metals, the supply dries up. Declining production in mines that produce precious metals also reduces supplies. When precious metals supply declines, prices rise.
Precious metals are often seen as a safe haven for investment money during difficult economic times. Therefore, when the economy is struggling precious metal prices rise. Factors that make this happen include concerns about currencies value, political instability, interest rate fluctuation, and oil prices. There are consistent price spikes in precious metals whenever there is bad news in one of these areas. Consistently bad economic news drives long term precious metal price gains. Prosperity and good economic news cause precious metal value to fall.
The demand for gold is at an all time high. It is different from paper currencies in that gold has a solid purchasing power and will always maintain its intrinsic value. This makes it attractive to all investors?not just the wealthy, but also middle class families, first time investors and retirees. In today’s unstable global economy, in both inflationary and deflationary periods, gold remains less volatile than other commodities. It is real money, especially gold bullion, and even if your stocks go to zero your physical gold never will. Gold is the insurance that your portfolio needs.
Gold is a standard of real stability. Throughout historical fluctuations, the power to purchase this asset remains the same. Gold’s power as an international commodity amongst trade has established it as the most reliable form of currency on a global scale. With the deterioration of printed paper, gold has retained its’ value for centuries, maintaining and succeeding its’ purchasing power. Juxtaposed with inflation, society continues to utilize gold, accumulating profit, security, status and wealth.