Right now there are a lot of reasons to possess gold and silver bullion. The following are my top 5. Please remember when investing in any market to not rush into this market until you conduct your own due diligence.
Right now there are a lot of reasons to possess gold and silver bullion. The following are my top 5. Please remember when investing in any market to not rush into this market until you conduct your own due diligence. Additionally, you need to only allocation a percent of your personal assets to 1 asset class. My own belief is a 10-15% gold/silver bullion allocation should be a given for financial insurance. One could even suggest that you can increase the percentage to the degree you feel a financial meltdown/crisis is possible. So, for the whole of a financial crisis, it could be considered a good idea to increase your allocation. As a matter of disclosure, a good proportion of my assets are in until I believe the financial crisis is behind us.
Another thing I?d like to mention before we look at the top 5 reasons to own precious metals is that investing in gold should be viewed as a means to store your wealth versus speculating for big profits. Consider what the financial markets would look like with gold at some of the highest projected prices. Many people estimate gold going to extreme levels and although many of these arguments may be valid in their logic, an out of control gold price, spells trouble for the financial markets.
1. A Track record of Maintaining Its Value Unlike the fiat currencies of the world that are only as good as their Central Bank?s word, gold has a history of maintaining its value throughout the ages. People have viewed gold as a technique to distribute on and preserve their wealth from one generation to another. As pointed out earlier, do not get caught up in the price so much as the preservation quailties of gold. It is very likely that gold will be around for another 100 years while our current monetary system, may not be in it?s current form.
2.Out of Control Inflation or Deflation Deflation is usually a period from which prices contract, business activity slows plus the economy is burdened by excessive debt. It has not been seen globally ever since the Great Depression from the 1930s as far as today. During that time, the relative purchasing power of gold did well. We also have to consider that gold has no counter-party risk meaning it can?t default. On the other hand and in an effort to keep the economy afloat, we have to guard against central bank?s printing too much of it?s own currency as it will devalue it?s citizen?s purchasing power.
3. Geopolitical Uncertainty Throughout history, gold has retained it?s value not only in times of financial crisis, but also in times of geopolitical uncertainty. This helps explain why gold is often referred to as the crisis commodity. Essentially, investors have a tendency to seek gold because of it?s relative safety when worldwide crisis are high. During these times, gold and silver will often outperform other investments. As an example, gold prices experienced some of their largest recent upswings during periods of tension with Iran and Iraq in 2007 and 2008. Given the current geo-political climate in the world, I think it is wise to expect more wars and conflict.
4. Liquidity and No Counter-Party Risk I expect corporate bond defaults may continue to rise as the next wave of the economic crisis unfolds. Moreover, the real estate market is anything but out of the woods yet. Actually, housing prices are continuing to show weakness. This will continue to have another large ripple effect throughout the economy. Remember that as goes housing, so goes the economy. People?s ability to honor their obligations is becoming more of a challange and therefore,defaults on many assets could very easily continue to rise. These debts are mainly uncollaterized, just on someone?s word. You may refer to it as counter party or liquidity risk; the bottom remains that an ounce in your pocket or safe means that you no longer have liquidity or default risk. The gold and silver price will remain volatile for a while, however you never have to worry about a 1 ounce gold or silver eagle weighing less than an ounce.
5. Increasing Demand With coutries like China and India improving their financial stature, investment demand from personal investors for gold is rising. The improving investment climate of these emerging market economies is allowing more people to easily invest a portion of their savings in gold and/or silver. In a few of these economies, gold and silver is a part of the culture. Like in India, during the Indian wedding season in , India typically has it?s highest investment demand. In China, investing in gold is seen as a form of saving.
Source: http://investingingoldandsilver.org/the-top-5-reasons-to-add-gold-and-silver-to-your-portfolio/
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