Why Gold Why Now ?
If your looking to safeguard your financial future and secure your wealth there is nothing that can match Gold Bullion for its strength and durability.
Gold is always good to cautious savers in times of financial instability as the supply and sale of gold is both highly regulated and tightly controlled. From the supply chain down to the investment possibilities. Gold is hard to mine and even harder to destroy which makes it rare and desired. With these intrinsic values, it makes gold a perfect device for storing wealth and value.
Infact all the Gold Bullion mined over the last 4,000 years that is catalogued equates to around 160,000 tonnes and if squished together to form a cube would be around 22yds in length which wouldnt even fill the size of a standard tennis court.
Gold vs. Paper Money Inflation
Every year Gold mines turn out around 2,600 tonnes of new gold. Which equates to a modest 1.6% increase to the worlds gold supply. And critically for the price of gold. It is beyond the reach of politicians and rich bankers to medel with. Meaning they cannot increase the production to much extent for their own gains.
The supply of Euros, in contrast — the most hawkishly-managed major world currency right now — is currently expanding by 11.5% per year.
Because of the tight supply of Gold Bullion. Its purchasing power grew 9x during the 1970's. And an incredible 23x during the 1980's when inflation of Fiat money (paper money) raged heavily measured against the Dow Jones industrial average.
When the economy last had a major collapse in the 1930's due to hyper inflation and the collapse of half of Americas big banks Gold bullion brought 17X more assests than it did the year before. You see when times get bad. Or when markets spiral downwards the rich people of our world look for somthing to safeguard their own wealth. Buying up Gold supplies becomes the default mechanism of the financial system.
Looking back to our modern era we can see that there are similar trends going on in our markets today. Because of all the bad debt in existence, from subprime morgatges, bad lending practices and general over inflation of the monetary system and its components. There is a fresh crisis in the actual real value of paper money.
How it Works
For instance. If there is too much bad debt e.g. many millions of people who borrowed money to buy a house i.e: a mortgage. And they default on payments. There is no one to pay the banks back there money. If enough people cant afford to pay the bank back. The bank cant afford to lend any more money to make money on the interest owed in order to support itself.
Now scale that up to many banks in the world that cant claw back what they lent out, and you have a crisis. Banks stop lending to each other because of fear of not seeing their money again. The flow of money that the financial markets rely upon dries up.. and you have a global economic slowdown. Which we are experiencing today.
The more the worlds economies slow down. More people lose their jobs!. The more people lose their jobs, means less people can afford to pay mortgages. Which in turn means the banks lose more money making them lend less and increase the pressure on the financial system. Its like a severe case of catch 22.
Now the government recognise this and attempt to fix the problem by bailing out banks with public money as we have all seen in the news with billions of pounds been thrown around described as rescue packages. Where do they get this money ?.. They simply print it! and add the total to the public defecit. Meaning putting us all more into debt.
The problem with this is that it leads to inflation. Because were all more in debt the cost of living increases from raw materials to food, to fuel and services. Inflation means you will need more paper money to buy goods and services which means the value of currency (paper money) becomes worth less (no pun intended). If money devalues enough by inflation you have a depression which is where were on the precipice of today.
The question is what can you do about it?.
Is it Time to Buy Gold?
The unique properties of gold bullion now and throughout history is that its quite immune to a financial collapse. Gold doesnt care if the value of money rises or collapses by inflation or deflation. But that doesnt mean gold is indestructable. It just means it has its uses for storing monetary value in harsh times and is good for making money in good times.
When the economy is booming Gold bullion tends to devalue as investors seek out higher returns in stocks and bonds, hedge funds and property portfolios. This is well known. But when the financial markets go into turmoil those same investors aren't going to sit around and wait for their investments to devalue. They cash in their chips and look for somthing more solid in value. Hence Gold makes a perfect leveller.
After the last 2 decades we have enjoyed a massive economic boom. This devalued Gold 95%. As more and more investors left to make more money elsewhere. The trend in gold finally turned a corner at the start of the millenium as the British Chancellor of the Exchequer (guy who controlls the money) sold of half the uk's gold reserves at less than $300 an ounce.
This created a surge in avid investors with money to spare to get in while gold was still cheap. Since then Gold prices have trebbled to a high of over $900 an ounce this year. Now this upwards trend in gold bullion is not even half or a third of its true value. If we compare the value of gold from 1930 to the value of gold today in economic terms and against inflation and the amount of debt currently in circulattion, then gold is already under valued by around $1300. The true price of Gold bullion should be around $2200 per ounce.
The governments at large (American) actually recognise and know this. But to keep faith in their paper monetary system. Which is used to control people by enslaving them to debt. They have to keep the value of gold down. The question is with the economy heading for a major recession and more likely a depression. Can the government keep the lid on the real value of gold?. The answer is simply NO.
Once they have pumped enough money into the system and it filters down to the man in the street. Inflation will bite hard and the price of gold will soar accordingly. More and more money men will look for a safe haven for their wealth and the over supply of Dollars, Euros and Yen will keep pushing gold prices higher.
Its basic economics. The question is - Do you trust your government or do you trust past history and what it teaches us ?