Five Good Reasons to Invest in Gold

Financial markets have always been uncertain; it is the nature of the beast. But in today’s world of globalization, economic health can get more out of whack than ever before. This just might be a good time to smooth out some of that insecurity by investing in gold, also known as the money of last resort. Not only would you protect yourself against the falling dollar, but you could make a hefty profit in precious metals. Here are the best reasons for converting your money into gold:

o Troubled times in the United States’ fiscal gap.

As you read this, the US government is piling on more debt, which at the moment stands at $63 trillion. What does this mean for you? As the Federal Reserve continues to print more money, it will cut into the purchasing power of the dollar, and inflation will spin out of control. This happened to Germany following World War I, when it took a wheelbarrow of German marks to purchase one loaf of bread.

o Troubled times in the macroeconomic investment climate.

Kuwait has just announced that their currency will not be pegged to the dollar. China has sold off at least 1 billion in US Treasury Notes, as Venezuela and the United Arab Emirates replace their dollar reserves with the euro. The signal coming from other governments is a warning sign; our dependence on foreign bond buyers to finance domestic consumption is rapidly coming apart. The United States’ economy is held together with baling wire and duct tape.

o Supply and Demand.

While mining companies continue to extract gold, production cannot keep pace with demand. From 1992 to 2005 world output totaled 1.1 billion ounces. Reserves are barely half that size, and dwindling. Large mining companies must scramble to keep up production, turning to the junior mining segment for exploration and discovery. But between 1985 and 2003 new discoveries had slipped by 30 per cent. Basic economics tells us that when supply cannot meet demand, the value increases.

o Historical value.

Gold cannot be made. It is what it is. That is why the value of gold has been used for over 5,000 years. In his speech, Anthony S. Fell, a leading banker with the Royal Bank of Canada, stated the following:

“To some extent, I regret to say, all paper currencies are becoming somewhat suspect, and accordingly, it is my view that gold bullion, rather than being the barbarous relic described by John Maynard Keynes, may well become the asset of choice for many investors over the coming decade…notwithstanding the modest rise in gold prices over the past few years, that is where gold bullion is today, and it represents great opportunity.”

o Gold is the great stabilizer for all economies.

Gold inhibits governments from printing money and placing the citizenry in debt. It prevents the devaluation of currency brought about by inflation, and increases the wealth of nations. Gold provides protection from abusive usury, encourages savings, and puts and end to taxation and the exploitation of the world’s population.

Investing in precious metals is the only safe haven against a falling currency. The U.S. Dollar index has fallen 30 per cent since 2001, while gold and silver have more than doubled in value.

Since 1913, when the Federal Reserve became the issuer of American currency, the dollar has lost 98 per cent of its value.

The question arises, should you be investing in paper assets, or gold?