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Gold Investing
We have tried to offer the type of practical advice we would give to any client who asks for it. The answers given are the ones we would usually give to any client who asks for if we had time to cover the various aspects of gold ownership in great detail. Buyers inevitably want to know what is happening with the gold price now and in the future. But the truth is that we don’t know what is going to happen with gold in the short run, no one knows for certain. We have an idea of what is going to happen over an extended period of time based on historical analysis, the fundamentals, and so on. But in the short run, almost anything can happen. And it usually does.
Markets are a humbling experience. Even the best analysts are usually wrong more times than they are right. To purchase and accumulate over the medium- to long-term is the best advice with gold. Sit back and watch the show after you have purchased what you feel you need.
History has shown that inflation ensues whenever the gold backing for paper money is removed. This is no less true in the United States than it has been in many other nations throughout present-day history, including some of the recent inflation debacles in South America and East Asia. Whenever government management of the currency plays a critical role in its value, the value is eventually undermined, diminished, and finally destroyed.
Gold showed extraordinary stability when it was the centerpiece of the earth’s monetary system. Due to this, the dollar and inflation were stable too. The dramatic surge in the price of gold came after the gold backing was removed from the dollar in 1971 and the government had the liberty to conduct monetary and fiscal policy without the discipline of the standard of gold. Inflation rates leaped aggressively, and the prices did so too.
To say that the twentieth century was divided into two easily discernible eras is not overly simplistic to say, the two eras were: the era of gold backed money and the era of the fiat dollar. For the people who comprehend those two economic eras, the idea of gold ownership in this present era comes to be a decision which is completely rational based on what history has taught us. Every once in a while, gold market analysts and financial historians discuss about the ongoing war against gold waged by the world’s central banks, especially by the United States, as part and parcel of this era. To our misfortune, this has not only been a battle against gold; inadvertently, it has become a battle against the dollar too. It is a battle that, over the long run, the dollar is losing and gold is getting its victory.
A very small amount of citizens of the United States know that in 1945, the United States gold reserve had an amount of twenty-two thousand tons; at over fifty percent of the world’s aboveground stock, this was the biggest hoard on the face of the earth. Presently, the gold reserve of the United States Treasury stands at a little over eight thousand tons, or better said, eight percent of the world’s total stock almost all that gold was used to conserve the role of the dollar as the centerpiece of the international monetary system during the 1960s and the 1970s. There was a time when seventy percent of the gold reserves of the world were held by governments and their central banks, the single biggest portion was being held by the United States Treasury. But in this present time, more than seventy percent of the gold is being held by private individuals around the world. Although this may sound ironic, or is ironic, these people hold it as security against the potential breakdown of the dollar-based international financial system it was sold to defend. At this time too, due to the fact that they sense danger, many of the world’s central banks are in a dollar reduction mode. To set the picture clear, the dollar is slowly fading away and gold is in ascendancy once again.
Even though all of this bodes well for the price of gold in the near future, it does not bode well for the dollar and the United States. The United States has to get its financial house in order. But if it doesn’t, the challenges to the United States economy and to the dollar will persevere wit even more potentially punitive and unfortunate results. A diversification into gold by investors of the United States makes a whole lot of sense as a financial antidote. The whole purpose of this writing is with the intent to serve as a means to that end. It embodies the notion that this is a commonsense matter to prepare for the worst and hope for the best. You are now well instructed and are prepared to become proactive in adding gold to your investment portfolio having gotten this far. If you can say that this writing has opened the door to gold ownership, in the end its purpose will have served well.
