Why Solid Assets like Precious Metals are the Best Way to Protect Yourself in a Volatile Environment
Markets world-wide get more depressing daily. Since the beginning of the year, all major indexes are down, and it looks like a long-term bear run is taking place. In the past, the US has come to the rescue with the all mighty printing press, but it seems like they have printed themselves into a corner.
So what’s the alternative? If stocks, bonds, and other forms of printed assets are not enough, what do you need to invest on in order to secure your investments? The answer is simple — precious metals, but in particular, gold! We’ve all been taught it’s good to diversify our assets, but what sets gold apart from paper investments?
Why Gold Stands Alone
Gold has been one of the pillars of an economic growth for thousands of years used by countries and governments through time as a hard asset. Gold has proven to be a valuable resource and a profitable asset because of a number of reasons. These reasons include the following:
1. Gold is a Finite Resource
There’s only so much gold in this world, and that’s why it’s precious. Paper assets, on the other hand, can be printed repeatedly. The value of paper always declines as we look over the history of market. There will always be a cycle, and nowadays, the value of paper money is beginning to depreciate.
Gold, on the other hand, will have little to no change in its value. Even if the value of currency depreciates and plummets down, the value of the gold will be high. This is also true for other precious metals like silver and platinum.
2.Gold is an Honest Currency
Gold is recognized throughout the world as a precious commodity and for a good reason. Gold has a limited supply, and even though you can add more gold to the market, it’s in limited supplies and takes real labor and time to extract out of the ground. Whether you trade gold in the US, Europe, or China, gold will still retain its value as the oldest type of currency.
Because gold is in limited supply and mined, it’s seen as an honest currency, unlike its paper alternative. In paper currencies like the US Dollar, Euro, or Yuan, their holdings can be easily doubled and added to the market providing liquidity, but causing weakness in the currency because of unsteady prices and price inflation in goods and services.
3. Gold Acts like Insurance
With the current bear trend in world markets it’s difficult to rely on paper assets like stocks, bonds, and even currencies since its value is variable and can be manipulated. Just how stock options can act as insurance on your stock purchases, Gold acts as insurance for your paper assets.
It’s always a good idea to be diversified in order to protect your portfolio. When shocking economic data comes out from the Fed or when a disaster happens, people have always run to gold as a safe haven. Gold has always increased over the long run, and although it has had corrections in the price from time to time, the overall value of gold is increasing to that of its paper counterpart asset.
When Should You Invest in Gold?
Currently gold, according to many experts, is at a level where it would be considered a good buy. Right now, we know that gold has retraced from the old highs down to lower levels, but most people also know that the US has a spending problem and its getting so bad that its turning into an addiction.
Right now, the US has around 19 Trillion in National debt, and that doesn’t even include the derivative debt shared by the US and Europe which is 553 Trillion dollars. I’m sorry to say this, but if you take the national debt and the derivative debt, we as a country are bankrupt.
How long will it take the rest of the world to realize this reality?
How long before the debt bubble pops and your stocks, bonds, and currency turn into the finest toilet paper the world has ever seen. No one knows when this will happen, but wouldn’t you sleep better knowing you have a hedge for when this disaster strikes?
After reading today’s article it should be a no brainer why you should add gold and other strategic metals to your portfolio. Not only do precious metals retain their value, but they hedge you against unforeseen disasters that lie ahead in the future caused by reckless government spending.
Don’t be one of these people with their head buried under the sand when the next crisis hits, be wise and diversify part of your assets in a proven hedge so you can rest easy knowing your money will be safe.