You should invest in Gold to either diversify your portfolio as a hedge against economic, political or monetary crises, and/or, to increase your wealth by financially gaining from increasing gold prices.
Over the last few years, volatile global equity markets have led investors to seek stability in their portfolios by adding physical precious metals to their investment mix by buying gold. We have seen the price of gold rise in all currencies, and in fact, it is gold and silver alone that have protected those investors who held the physical metal in their portfolios against the massive paper losses of other investments. Since 2002 no other asset class has even come close to the return on both gold and silver in both nominal and percentage terms.
Since Nixon let the price of gold float in 1971, large selloffs in the equity markets have revealed the safe haven aspect of gold. The recent uncertainty that is present in most financial markets is what drives investors to gold and gives a reason to not allocate your wealth to merely paper currencies, stock certificates, or gold proxies.
An investor must hold a physical gold investment… the real thing. Physical gold encompasses the traits of fiat money; with the exception that gold has intrinsic value whereas fiat money does not. It is not a “promise to pay” by a third party. It can be bought in ounces or fractions of ounces, in bars or coins. Opting to buy gold may be your most important investment decision as the global economic morass continues to unfold.
The insurmountable debt of developed sovereign nations continues to make holding gold a tactical hedge and investment. The importance of holding a physical gold investment in a portfolio is made evident by volatility in sovereign debt markets, particularly in the U.S. and the Euro Zone. As the U.S. budget deficit continues to grow without pause, the value of the U.S. dollar, and for that matter, all fiat or paper currencies has been brought into question. We are seeing that sovereign nations are now opting to buy gold back in large quantities in order to diversify their predominantly US treasury holdings.
The bottom line is that neither the U.S. nor the Eurozone nations can possibly continue on the current path of creating paper assets and printed net worth without suffering the serious debasement of their currencies. This is especially true in a scenario where the GDP growth is sluggish at best and contracting in many European nations as they flirt with a second round of recessions.
As the US dollar is the world’s reserve currency, its eventual loss of value will cause the price of gold to escalate exponentially, not only in U.S. dollars but also against all world currencies.
10 Facts About Gold
- Gold has always been a symbol of wealth and a symbol of long-term savings.
- As investment when markets or economic indices are not working well in years of crisis or war.
- From the point of view of large mutual funds is an investment alternative.
- The price is not controlled by any government and has no liabilities of any kind.
- The cost of opening exploration at a new mine is 30% more over the next five years. This will definitely be an incentive for the price to rise rapidly.
- Estimated gold reserves at the current rate of extraction will not last more than 15 years.
- Internationally accepted currencies. Gold has no borders.
- It has a very high electrical conductivity and resistance that can generate excellent electrical connections.
- It is present in almost all electronic devices such as cell phones, PDAs, and GPS because it is an excellent conductor.
- It is used in electrical contacts of the airbags of automobiles, to ensure that devices will deploy.