Why Save In Gold
The most important decision and the best investment that you can make for yourself in your life is your own education.
If you learn what is going on and how the financial world works, you can protect yourself and put yourself on the right side of this wealth transfer.
The wealth transfer that will take place during this decade is the greatest wealth transfer in history. Therefore, it’s the greatest opportunity in history and may not ever happen again in your lifetime. Are you aware of this? Do you want to benefit from it?
Today, savvy investors allocate 2 to 10 percent of their portfolios‘ value to gold-related assets. Examples include gold stocks (ETFs) or physical gold, like Karatbars International’s CashGold product. Gold provides growth but is also a defensive play. Often, in times of economic uncertainty, gold value typically increases. When recessions, and other severe economic turmoil strikes, wise investors rely on their gold allocations to balance declines in other assets.
Gold’s value increases during tough times because it is accepted for trade throughout the entire world. No matter where you are, gold 'commands' the price you expect. Gold prices rise predictably. Its value increased during the recession years of 2008 and 2009 and again during the recent years of worldwide economic recovery.
Scarcity drives gold’s value consistently higher. Because gold must be mined and mines with significant quantities are very rare, there can never be a sudden increase in supply, as with other assets. Unlike the fiat currencies that the governments of today produce, no government possesses the capability to simply print as much gold as they want.
Since the gold standard ended in 1973, governments have been printing currency to service their enormous debts. Average citizens pay for government largesse through taxes and the debasement of their currencies, which results from the constant creation of new money and debt. This is one reason why many people work harder and grow poorer. Smart investors know that those who hold gold retain the value of their economic portfolios.
Cash vs. Gold Which Asset Could Prove Better?
Currency devaluations. Negative interest rates. Minimal economic growth. During such turbulent times, how can diligent wealth-holders safeguard their earnings? Learn more about the benefits and disadvantages of holding cash over gold to make the best decision for your portfolio.
Benefits to Holding Cash
In uncertain times, increasing cash reserves and reducing exposure to volatile financial markets “obviously makes sense,” says John Mauldin of Mauldin Economics. Some seasoned gold holders prefer to limit their exposure to global instability, instead opting to safeguard their wealth with reserves of cash and gold.
Many turn to cash in particular because:
As an opportunistic asset class, cash could give you flexibility when you need it most. If a “once-in-a-lifetime” opportunity comes up, you’re able to take advantage of it if you have enough cash or other liquid assets on hand.
From how it looks to how it feels, cash is familiar to you and your family. How you spend it, save it, and store it comes second nature. If you’re new to gold, you may not readily understand how to buy and store it.
While you may interact with the clerk at the bank, there are few other personal interactions that occur when you hold cash.
Disadvantages to Holding Cash
New gold buyers may not understand the potential disadvantages of holding cash over gold. From a historical and economic perspective, there are many reasons why gold could prove to be a better performing asset than only holding cash:
“Few people understand that once you deposit your money into a bank account, it is no longer your legal property,” advises Michael Lingenheld, Forbes Contributor and Managing Editor of Cup & Handle Macro Research. Governments have a history of diverting money that is held within the banking system. Most recently, the government of Cyprus diverted funds from individual bank accounts to save the government from defaulting on its debt.
These types of occurrences are a reality for struggling governments, but also for U.S. citizens. The IRS has regularly seized the bank accounts of small businesses and individuals who make deposits of $10,000 or less, and who’ve broken no laws. Though former Attorney General Eric Holder has condemned such forfeitures, it’s hard to “reverse precedent of this nature,” adds Lingenheld.
..says John Mauldin, also referenced earlier. Central banks can devalue a currency overnight simply by printing more money. The same cannot be said for gold. Since America moved away from the gold standard in 1971, the purchasing power of the dollar has declined 85 percent, calculates Peter Ferrara, former Associate Deputy Attorney General of the United States under President George H.W. Bush. His estimates further show that a dollar saved in 1971 was worth a mere 15 cents by 2012. The price of gold, on the other hand, remained relatively the same per ounce between 1833 and 1920, then jumped to more than $1,700 for nearly 100 days throughout 2012.
Gold is currently priced around $1,525 per ounce, with some analysts predicting that it could climb above $1,700 by the year’s end. Has the U.S. dollar followed suit? No. According to Ferrar’s calculations, a dollar was worth 1/20th of an ounce of gold at the time the Federal Reserve was established in 1913. By 2010, that same dollar was only worth 4 cents.
Benefits to Holding Gold
Seasoned gold buyers understand the profit potential behind the precious metal. When it comes to safeguarding their hard-earned wealth, their cash may be better off in gold, not paper money, for the following reasons:
Interest rates remain low, meaning that your money in the bank “earns virtually nothing,” reports CNN Money. When you account for inflation, that cash may have actually lost value.
The U.S. has had a completely paper-based currency for 45 years, while gold has been a medium of global exchange for more than 5,000 years. “What people look for is something that’s an insurance policy, an asset that holds its value in times of trouble,” says Avinash Persaud, a senior fellow at the Peterson Institute for International Economics. “You don’t want uncertain reserve assets.” With a track record of more than 5,000 years, gold could be the opposite of “uncertain.”
Fiat currencies derive their worth from the issuing government. Unlike paper money, gold cannot be expanded to suit the needs of struggling central banks. Due to its inherent scarcity, gold will always be supported. This precious metal has maintained its purchasing power over long periods of time, unlike all of the fiat paper currencies that have been introduced over the years, reports Forbes’, Michael Roney.
Everybody Wants, Needs, and Desires GOLD
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