Gold and Silver Are Volatile - Do Not Invest

Gold and silver are volatile and you would be risking your money if you were investing in them and thus – do not invest. Unless, you are even a slight student of the GFC. With even a slight knowledge of the causes of the financial crisis, you could turn the volume down on those assertions that the metals are volatile to a level near zero. These precious metals are safe investments, and here is why.

Rooted into the System

We are going to identify why the two precious metals are safe investments, although before moving forward, we must know this primary point – gold and silver are hedges against the GFC and their gains are reflections of global growth itself.

In a word, we are not basing gold and silver gains on market sentiment or hope-based forecasts of growth. We know that gold and silver gains are intimately rooted into developments of the global financial system and the continuation of the GFC.

We are not basing gold and silver gains on unfounded investor psychology or a hot tip and are not looking for a quick profit.

Simply know this, as the GFC worsens, gold and silver improve. Also, as the GFC worsens, gold and silver survive.

Know that it is not about a quick profit or a sudden trend, it is about the global financial crisis itself.

The Causes of the Financial Crisis

Gold and silver are safe investments because as the GFC worsens and money is being lost all over, a significant percentage of that money is simply being transferred to gold and silver.

We are looking into one main cause of the financial crisis and showing how gold and silver grow in direct relation to this cause.

The cause is – inflation.

I was speaking with a CFP recently and when I mentioned investing in gold and silver he should his head and gave off an air of nervousness, saying, “No, way too risky.”

Sure, gold and silver can be volatile and bounce around – typically – although these current economic times are not typical, right? When I mentioned the idea of investing in the precious metals mainly as a response to developments in the GFC, particularly inflation, he simply repeated his affirmation.

I suppose he was not well educated on the role of inflation in the GFC and its importance with relation to investing in gold and silver.

Considering he may not be alone in not knowing the massive importance of inflation right now, let us look into a few pressing points.

Inflation and Spending

Many of the most threatening causes of the GFC relate to spending – spending too much, spending too little – governments, businesses, and people.

A major issue around the globe is spending too much, which is why we have been consistently hearing of the various debt crises. Portugal, Greece, Spain, Ireland, Italy, the UK, the US, not to mention the Heavily Indebted Poor Countries of Africa whose liabilities columns of their balance sheets is bottomless. Yet they are not alone.

How does debt crisis relate to inflation?

Ask yourself this question – how are these debts being repaid?

How would you repay a debt? Earn money, draw from savings, borrow?

Since many of these nations have been digging ever deeper into debt or facing bailouts (immense borrowing), it seems earning money to repay the debt is presently not likely.

These nations are drained of savings, so this option is unavailable.

We are left with the option of borrowing, which has been exercised thus far and is the most likely to be continually exercised because of an inability to raise sufficient capital otherwise.

There are two forms of borrowing, and with debt crisis this dire, each form proposes safe gains for gold and silver.

Two Forms of Borrowing

First, the nation can simply borrow from a bank or another nation – this is the traditional method. If it is not earning money to repay, the nation is approaching a default on the debt.

A default drastically damages the nation’s financial credibility. National credibility is manifest in national currency, therefore, a decline in national credibility due to default brings a decline in confidence in the currency.

As the currency goes down, the metals tend to go up. Thus, as long as the US and nations around the globe are firmly fixed with debt crisis, gold and silver gains are firmly fixed as well.

The second form of borrowing is less traditional although it is certainly not new – and that is money printing.

In the United States, the federal reserve – particularly during US financial crisis – creates money and lends it to the government. This is basically the process around the globe as well.

Money printing is a form of borrowing because it causes inflation. The money printing creates a money supply greater than money demand and the money loses value accordingly. The value of the currency is borrowed and used when the money printing commences although this value must be repaid by eventually needing to restore the value of the currency.

When we add up the dire debt levels around the globe, the size of the debt crisis amounts to trillions and trillions of dollars well beyond what nations are able to pay based upon their average earning power.

Now we come back to our earlier question.

How do they repay the debt?

Earn money? No. Save money? No. Borrow and print money? Yes.

In order to save money, they must first earn money and choosing this option would demand grueling discipline and determination to build sufficient capital. It would be hard times, hard times indeed.

The easy, quick, and habitual option is simply to print money. Money printing equals inflation. Inflation growth equals gold and silver gains.

As previously mentioned, gold and silver are safe investments because as the GFC worsens, the precious metals improve.

With your knowledge of the debt crisis, do you forecast a quick and easy improvement in the financial system?

Hedging Against the Economy Itself

As previously mentioned, gold and silver are safe investments because as the GFC worsens, gold and silver improve.

We have looked into one major cause of the GFC – excess spending and debt – and how debt crisis is feeding the GFC, can feed inflation, and thus feed gold and silver gains.

When considering investing in the metals or selling your current holdings for profit, simply remember the prime reasons you are investing in the metals in the first place.

Even if the GFC had not yet begun or the global financial system was entirely placid and prosperous with no signs of decline, the two metals are always hedges against manipulation of the money and any development of financial crisis at any time.

Inflation is a theme throughout monetary history and the metals feed on inflation.

Even if there is no inflation, during any type of financial crisis there is widespread uncertainty and a trusted rock of certainty during such economic times has historically been the two precious metals.

Simply remember that the hard metals are protection during the GFC. Once again, as previously mentioned, gold and silver are safe investments because as the GFC worsens, gold and silver improve.

Do you prefer to trust your money in the hands of the fed, a corporate governed government, criminal Wall Street, and an unreasonable shift towards recovery or a solid form of financial self-sufficiency that has been a rock of safety for more generations than you can count on your fingers and toes?

Are you investing so you can pull a quick profit and then lose it as the GFC worsens, or are you investing in gold and silver because you know they are your armor and helmut to weather this gloomy economic storm?

While individuals, businesses, and whole countries are losing their savings to the system and their nest eggs to power-drunk predators – even as inflation eats your savings, price rises destroy your discretionary spending, interest rate rises consume your credit ratings and ability to borrow, the dollar declines, Wall Street criminals steal and gamble with your retirement portfolio, the government treats your entitlements like a horrendous surprise party, and entire nations are resorting to bailouts and defaults – one way to keep your money safe is investing in the precious metals.

Because the economy, says so.

Simply put, with regards to investing gold and silver, it’s extremely risky and volatile – not to invest in gold and silver during these economic times.

Source by Roth E Barrons

Gold and Silver Are Volatile - Do Not Invest