What is it about gold and silver bullion that makes it so desirable to some and completely ignored by others? Chances are good if you are reading this you have considered owning or currently own some gold and silver bullion. I think the reason so many disregard its safe haven qualities is simple, they believe there are better alternatives. American investors today have been conditioned to believe that gold and silver has become obsolete.
If history tells us anything about owning gold and silver bullion it is that it can never be worth zero, it owes no debt, and can never go bankrupt. Not only is it extremely liquid, but it is a very private way to invest. Many investors feel the price is too high or volatile. These same critics are comfortable investing all their wealth in the dollar and Wall Street. The thought of having gold or silver safely tucked away at home is unthinkable.
Many investors ask us about the benefits of having a physical position in gold and silver bullion when the government is reporting such low rates of inflation. They are also confused as to why if inflation is so low, that the prices are near all-time highs? Why does the price of gold seem so high compared to silver?
Let me start by saying there are other factors to consider when determining the gold/silver to inflation connection. While inflation is just one of the many ways investors can lose money in today’s economy, our economy has become too unpredictable. Therefore, holding some physical metals just makes sense. Those who have invested in precious metals sleep much better knowing not all of their wealth is in paper.
Although higher gold and silver prices have always served as somewhat of a barometer for inflation, consider for a moment gold and silver’s versatility. Heavy demand in manufacturing has made the global silver supply scarcer than ever. Gold meanwhile has served as a trusted safety net. Not only just for the average investor, but also for governments looking to avoid the wrath of a global economy that threatens to wipe them out.
Understanding the gold to silver ratio is more complex. The academics are screaming of blatant manipulation of silver by a few large Wall Street banks and have even pointed a finger at the CFTC. Gold has enjoyed its status as a safe haven among distressed Central Banks, at a time that has seen unprecedented economic turmoil. Investors around the globe are accumulating gold like never before and feel the dollar is ripe for a fall.
A recent article that took up the entire front page of our local Sunday business section, interviews the founder and CIO of a respected capital management firm. He explains how he, “wished he had a buck for every commercial he heard that touts gold”. He says he, “most certainly wouldn’t own bullion and, there are absolutely better places to invest”. He goes on to say how some mutual funds that buy bullion and mining shares are a better choice. Sound familiar?
Our government and corporate America, have a firm grasp on investors through various outlets such as the internet, television, radio, and newspapers. We are systematically being conditioned to believe the only way for investors to get their wealth from point “A” to point “B”, is through investment vehicles that at the end of the day are controlled and backed by the dollar or some other form of paper. I guarantee that you will never hear your banker, broker, or CFP say it is time to start buying Krugerrands! They instead will tell us not to panic; that our economy is on the right track and a “recovery”, albeit slow is on its way.
Speaking of economic recovery, Washington’s biggest fear today on the eve of our nations Independence Day, is that the recovery is fizzling. Unemployment claims are up, home sales are plunging without government incentives and manufacturing growth is slowing. Meanwhile as Congress takes a weeklong vacation, another 2 million are set to lose unemployment benefits on top of the 1.3 million already without benefits. We are dangerously close to falling back into a recession.
Recessions usually contribute to a massive stop in spending. Economic growth comes to a halt and corporations slash jobs to save money. The living standards of people who are dependent on wages and salaries are greatly affected by recession and create a negative impact on a family’s stability and well being. Our economy is at a critical point, if a double-dip recession is in our future there may be little time to act.
When placing a portion of your wealth into gold and silver bullion, consider it as an insurance policy for your wealth. Gold and silver bullion is meant to be held long term and only liquidated if there is a financial emergency. There are better options available for those looking to day trade or make a fast buck with a rise in the metal’s price. Those who disagree with this logic don’t own gold or silver bullion, and more than likely work on Wall Street!
Source by Scott Hage
Why Americans Fear Gold and Silver Bullion
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