Why invest in gold

Why should gold be the product that has this unique property? This is most likely due to its history as the first form of money, and later as the basis of the gold standard that set the value of all money. Therefore, gold confers familiarity. Create a sense of security as a source of money that always has value, no matter what.

The properties of gold also explain why it is not correlated with other assets. These include stocks, bonds, and oil.

The price of gold does not rise when other asset classes do. It doesn’t even have an inverse relationship because stocks and bonds are mutually exclusive.

REASONS TO HAVE GOLD

1. History of holding its value

Unlike paper money, coins, or other assets, gold has held its value over the centuries. People see gold as a means to pass on and maintain their wealth from one generation to another.

2. Inflation
Historically, gold has been an excellent hedge against inflation, because its price tends to rise when the cost of living rises. For the past 50 years, investors have watched gold prices soar and the stock market crash during years of high inflation.

3. Deflation
Deflation is the period during which prices fall, economic activity slows and the economy is overwhelmed by excess debt and has not been seen around the world. During the Great Depression of the 1930s, the relative purchasing power of gold rose while other prices fell sharply.

4. Fears/geopolitical factors
Gold retains its value not only in times of financial uncertainty but also in times of geopolitical uncertainty. It is also often referred to as “crisis merchandise” because people are fleeing to their relative safety as global tensions rise. During these times gold outperforms any other investment.

THE HISTORY OF GOLD AND COINS

All currencies in the world are backed by precious metals. One of them is gold, which plays the main role of backing the value of all currencies in the world. The bottom line is that gold is money and coins are just paper that can wake up worthless because governments have the absolute power to decide on the value of any country’s currency.

The future of currencies We are at the tipping point

WHY DO SMART INVESTORS INVEST IN GOLD?

1. The markets are now much more volatile after the Brexit and Trump elections. Defying all odds, the United States has Donald Trump as its new president and no one can predict what the next four years will be like. As commander in chief, Trump now has the power to declare nuclear war and no one can legally stop him. Britain has left the EU and other European countries want to do the same. Wherever you are in the western world, uncertainty is in the air like never before.

2. The US government is monitoring the retirement provision. In 2010, Portugal confiscated assets from the retirement account to cover public deficits and debts. Ireland and France acted the same way in 2011 as Poland did in 2013. The US government has watched. Since 2011, the Finance Ministry has taken four times the money from government employees’ pension funds to make up for budget shortfalls. Billionaire investor legend Jim Rogers believes private accounts will continue as the government attacks.

3. The top 5 US banks are now bigger than they were before the crisis. They have heard about the five largest banks in the United States and their systemic importance as the current financial crisis threatens to bankrupt them. Lawmakers and regulators promised that they would solve this problem as soon as the crisis was contained. More than five years after the end of the crisis, the five largest banks are even more important and critical to the system than before the crisis. The government has compounded the problem by forcing some of these so-called “oversized banks out of business” to absorb the breaches. Any of these sponsors would fail now, it would be absolutely catastrophic.

4. The danger of derivatives now threatens banks more than in 2007/2008. The derivatives that brought down the banks in 2008 did not disappear as regulators promised. Today, the derivatives exposure of the five largest US banks is 45% higher than it was before the 2008 economic crash. The inferred bubble exceeded $273 billion, compared to $187 billion in 2008 .

5. US interest rates are already at an abnormal level, leaving the Federal Reserve with little room to cut interest rates. Even after an annual interest rate increase, the key interest rate remains between ¼ and ½ percent. Keep in mind that before the crisis that erupted in August 2007, the fed funds interest rate was 5.25%. In the next crisis, the Fed will have less than half a percentage point, you can cut interest rates to boost the economy.

6. American banks are not the safest place for your money. Global Finance magazine publishes an annual list of the 50 safest banks in the world. Only 5 of them are based in the United States. UU The first position of a US bank order is only #39.

7. The Fed’s overall balance sheet deficit continues to grow relative to the 2008 financial crisis: The US Federal Reserve still has about $1.8 trillion in mortgage-backed securities in its 2008 financial crisis. 2008, more than double the $1 billion US dollars. I had before the crisis began. When mortgage-backed securities go bad again, the Federal Reserve has much less time than before to soak up the bad assets.

8. The FDIC acknowledges that it has no reserves to cover another banking crisis. The FDIC’s most recent annual report shows they won’t have enough reserves to adequately insure the nation’s bank deposits for at least another five years. This startling revelation admits that they can cover only 1.01% of bank deposits in the United States, or $1 to $100 of your bank deposits.

9. Long-term unemployment is even higher than it was before the Great Recession. The unemployment rate was 4.4% in early 2007 before the start of the latest crisis. Finally, while the unemployment rate reached the level of 4.7% seen when the financial crisis began to wreck the US economy, long-term unemployment remains high and labor market participation declines significantly five years after its completion. the previous crisis. Unemployment could be much higher as a result of the looming crisis.

10. American companies are failing at a record rate. In early 2016, Gallup CEO Jim Clifton announced that America’s business failures outnumber start-ups starting for the first time in more than three decades. The dearth of small and medium-sized businesses has a huge impact on an economy that has long been driven by the private sector. Larger companies are also not immune to problems. Even heavyweights of the US economy like Microsoft (which has cut 18,000 jobs) and McDonald’s (which has closed 700 stores during the year) are suffering from this terrible trend.

Why do smart investors add physical gold to their retirement accounts?

Insure inflation and deflation.
Limited delivery Increased demand
A safe haven in times of geopolitical, economic and financial turmoil.
Diversification and portfolio protection.
Stock value.
Hedge against falling dollar and money printing policy.