The Value of Gold

Nobody knows off which side of the high-wire – deflationary crash or hyperinflation – the economy is bound to fall into. None of the two propositions is very uplifting to the general investor. But to the gold investor, the inflation-deflation debate is purely academic.

In the early 1930s, the purchasing power of gold went up due to the fact that the prices of services and goods dropped across the board. And in 1933, when president Franklin Roosevelt shut down the banks, called in gold bullion, and raised the Untied States benchmark price from 20.67 dollars to thirty five dollars per ounce, the purchasing power of gold rose considerably. The same thing happened in the 1970s, the price of gold rose, outpacing a virulent double-digit inflation rate, this way, once again preserving the purchasing power of the owner of gold. Sophisticated investors almost always ask the question of how gold performs in either inflationary or deflationary scenarios. Gold will preserve and protect your assets in either instance. Gold is the time-honored, historically proven hedge against all descriptions of economic catastrophes.

Both inflationists and deflationists recommend gold as the portfolio item to hedge against catastrophe. In an inflationary debacle, gold survives the destruction of the currency and retains its value after all other currency-based assets are wiped out. In a deflationary crash, gold becomes one of the only assets remaining after all others are destroyed by default. Hedge your portfolio with gold and leave deflation-inflation argument to the economists.