Why Buy Gold
The Importance of Holding a Physical Gold Investment
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 from 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 have 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 against all world currencies.
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 even comes 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 fraction of ounces, in bars or Gold Maple Leaf Canadian coins. It can even be bought by the kilo for those investors who require much larger holdings.
Opting to buy gold may be your most important investment decision as the global economic morass continues to unfold. Contact us today to learn more.