Why We Should Buy Gold

This short but very revealing statement given by a man who spends a good part of his day worrying about currency values shows the importance of gold in portfolio diversification, for central banks as well as for private investors. Taking it for a fact, if you were to ask a hundred gold buyers as to why they own gold, the vast majority would give you the same immediate answer, for diversification. Most investors find diversification the same as with having peace of mind. Diversification implies getting ready for a variety of potential economic events. If the portfolio is structured correctly, it is of no matter if currencies suffer debasement, , the stock markets crash, or if bonds lose their value. The strong assets of the portfolio will pick up the slack.

Swiss money managers who are well known for their capacity to move the money and who take care of investments of the richest people in the world, as a tradition, advise a diversification of ten and twenty percent into gold for a very good reason. Far beyond the typical risks of market fluctuations associated with stock and bond investments, there is the added danger of depreciation in the currency underlying the stock or bond. Denominated in a country’s currency, pesos, Yen, Euros and dollars, these investments depend on strong government and central bank currency management policies to keep their value. It is conceivable that a municipality or corporation, as an example, could be handled perfectly, but its bonds could still erode in price because of politically expedient currency abasement on the part of federal authorities.