Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest).
1. Gold’s Enduring Value
Gold has historically been the best precious metal investment, and its enduring value is proof enough of its worth as an investment. Gold is the only form of money that has not been destroyed through 5,000 years of History.
2. Gold Is The Ultimate Insurance
With confidence in the banking system and worldwide economy at an all-time low, gold bullion is the ultimate insurance.
Gold offers a long term safe haven for those looking to protect and preserve the value of their wealth as it will always hold a significant value no matter what. Gold investment should be viewed primarily as a low risk security asset for yourself and your family’s future.
Even in the most extreme and unlikely scenario if the banking system faced collapse and paper money lost all its value, gold bullion, in particular small units of gold such as gold coins could be used to buy and trade yourself out of trouble.
Gold is also safeguard against inflation. When the dollar’s value is low (which it has been for nearly a decade), investors trade in cash for gold to protect their dollar’s intrinsic value.
To clarify this with an example, imagine gold is worth $10 per ounce when you buy it. If the US dollar’s value falls 10%, you’ll need $11 to buy that same ounce of gold, since the dollar has less purchasing power.
Money printing will destroy the currencies. All currencies are down 97 to 99 percent against gold in the last hundred years, they are down 80 percent against gold in the last 12 years, so there is not far to go to be down 100 percent and that will happen, and so will the money printing destroy the value of paper money, and that is what will create hyperinflation.
Gold (and silver) will continue to reflect this destruction of paper money.
Recent research from the World Gold Council shows how gold has held its value over the long term when compared with other commodities. The relative price of gold and oil has remained almost constant over the past 50 years.
Gold is a physical asset that cannot be devalued in the way money can be the government simply deciding to print more through Quantitative Easing.
3. Demand for Gold
Another factor to consider is demand. Both consumers and Central Banks in many of the world’s most powerful economies buying unparalleled amounts of gold.
Governments and central banks are now net buyers of gold, meaning they are buying and hoarding more gold bullion than they are selling.
Note that only one percent of world financial assets are in gold today, so nobody owns gold actually. And that will change…
Supply is inelastic and slow to meet new demand. It takes an average of 10 years to bring a new mine online. Continued increase in demand from investors may lead to higher prices future.