Why Should You Invest in Gold?
The following is a guest post about investing in gold.
Why should you invest in gold? The answer is simple. Because fiat currency (AKA paper money) helps build up a country’s debt, and physical gold is the only form of payment to counter this.
A lot of people buy gold as a reaction to the trouble surrounding their country. For example, when inflation reaches an all-time high, fiat money becomes useless. Can you imagine paying $100 for a can of tuna? In times of inflation, people look at gold as an insurance that they can use to pay for products and services.
Gold isn’t used as a medium for payment today because the economy is very complex, and there just isn’t enough of the precious yellow metal to finance the needs of the world. However, investors shouldn’t look down on gold’s prowess in times of uncertainty. Here are a few reasons why you should consider buying gold today:
Why Should You Invest in Gold? – Energy’s Diminishing Returns
Countries all over the world have been able to increase their debt ceilings up until the past few years because economic growth allowed for it. However, growth is not unlimited due to the restricted amount of resources that the planet has.
The catalyst for the world’s economic growth is oil, and apart from it becoming scarcer by the minute, its prices are also increasing. The high price of oil is causing economic growth to decline. When growth stops, the fiat money debt that countries incur can only be paid by gold.
Why Should You Invest in Gold? – Diversification gives you safety
An investor who diversifies his or her portfolio with gold is a clever one. Experts have long suggested that at least 5% of an investor’s portfolio should be made up of gold. In an article by Forbes, one of the reasons why people lose money in the long run is because their portfolios are poorly diversified. Diversification is the only way to safeguard wealth and gold can help do just that. After all, when stocks are down, gold prices are up.
Speaking of gold diversification, Germany, the world’s 2nd largest gold holder recently renewed their stance on gold diversification. They announced this year that they are recalling 30-50 tons of their gold investments from abroad. Germany is now holding around 1,530 tons of gold in the U.S., and 441 tons in England. Germany should always serve as an example to investors since it’s one of the countries that manage its finances very well. Investors who wish to diversify their portfolios with gold just like Germany may visit investing site Bullion Vault to see today’s gold price as well as learn about the different methods of investing in the precious metals market.
Why Should You Invest in Gold? – Prices are very low now
In September 2011, gold’s prices were at $1,800 per ounce. Now, it’s fluctuating at around $1,300 per ounce. Experts say that gold’s prices will drop to lower than the $1,000 per ounce next year, but who knows? Events like the Russian occupation are unpredictable and gold prices skyrocket in events such as this. In addition, gold today is priced around its average cost and margin cost of production. So, there’s no better time to buy gold than today.
Gold is the only true currency with real value. It doesn’t matter if its prices go up or down since it will always have value that you can use to preserve your wealth. Fiat money, on the other hand, is prone to inflation through wild money printing.
I totally agree with many of the points discussed. While I love dividend investing and stocks in general I do own some physical gold as a small safety net. I realize that gold and silver are assets that produce nothing (one of the reasons I don’t like it) but it does offer some diversification and offer a little peace of mind if things really get out of control. Thanks for sharing.
DivHut recently posted…Dividend Income Update â June 2014
DivHut,
I agree – it is simply an insurance plan if TSHTF in a big way. Nothing more…