There are a lot of reasons to possess gold and silver bullion. The following are my top 5. Please remember when investing in any market to not rush into this market until you conduct your own due diligence. Additionally, you need to only allocation a proportion of your assets to 1 asset class. My own belief is a 10-15% gold/silver bullion allocation should be a given for financial insurance. One could even suggest that you can increase the percentage to the amount you trust a financial meltdown/crisis is possible. So, during a financial crisis, it could be considered a good idea to increase your allocation. As a matter of disclosure, a good share of my assets will be in precious metals until I believe the financial crisis is behind us.
Something else that I would like to mention before we look at the top 5 reasons to own gold and silver is that investing in gold should be seen as a way to preserve your wealth versus getting rich. Consider what kind of shape the overall economy has to be in for gold to be going as high as you might desire.. Many people are predicting gold going to astronomical levels and even though many of these arguments are sound in their logic, a run-away gold price, spells trouble in paradise. Ok, so onto the top 5 reasons
1. A Track record of Maintaining Its Value Unlike the fiat currencies of the world that are only as good as their Central Bank's word, gold has a history of maintaining its value throughout the ages. People have viewed gold as a technique to distribute on and preserve their wealth from one generation to another. As pointed out earlier, do not get caught up in the price so much as the preservation quailties of gold. It is very likely that gold will be around for another 100 years while our current monetary system, may not be in it's current form.
2.Out of Control Inflation or Deflation Deflation is usually a period from which prices contract, business activity slows plus the economy is burdened by excessive debt. It has not been seen globally ever since the Great Depression from the 1930s as far as today. During that time, the relative purchasing power of gold did well. We also have to consider that gold has no counter-party risk meaning it can't default. On the other hand and in an effort to keep the economy afloat, we have to guard against central bank's printing too much of it's own currency as it will devalue it's citizen's purchasing power.
3. Geopolitical Uncertainty Throughout time, gold has maintained it's value not only in times of financial distress, but additionally in times of geopolitical uncertainty. This helps explain why gold is oftentimes called the crisis commodity. Essentially, investorswill usually seek gold on account of it's relative safety when worldwide crisis are high. During these times, precious metals will frequently outperform other investments. For example, gold prices experienced a selection of their largest recent upswings during periods of tension with Iran and Iraq in 2007 and 2008. In the current geo-political climate on the earth, I think it is sensible one can anticipate more wars and conflict.
4. Liquidity and No Counter-Party Risk - It wound be normal to expect corporate bond defaults to continue to rise when the next wave of the economic crisis unfolds. Additionally, the housing market has not reached recovery yet. Real Estate is continuing to show weakness. This may have another large ripple effect throughout the financial markets. Keep in mind, as goes housing, so goes the economy. People's ability to pay their debt is becoming more of a burden and hence,defaults on many assets could very easily continue to increase. You may refer to it as counter party or liquidity risk; keep in mind that an ounce of gold or silver in your hand, means that you no longer have liquidity or default risk. Precious metals will continue to be volatile for a while, although you shouldn't have to worry about a 1 ounce gold or silver eagle defaulting.
5. Increasing Demand With coutries like China and India improving their financial stature, investment demand from personal investors for gold is rising. The improving investment climate of these emerging market economies is allowing more people to easily invest a portion of their savings in gold and/or silver. In a few of these economies, gold and silver is a part of the culture. Like in India, during the Indian wedding season in , India typically has it's highest investment demand. In China, investing in gold is seen as a form of saving.
Something else that I would like to mention before we look at the top 5 reasons to own gold and silver is that investing in gold should be seen as a way to preserve your wealth versus getting rich. Consider what kind of shape the overall economy has to be in for gold to be going as high as you might desire.. Many people are predicting gold going to astronomical levels and even though many of these arguments are sound in their logic, a run-away gold price, spells trouble in paradise. Ok, so onto the top 5 reasons
1. A Track record of Maintaining Its Value Unlike the fiat currencies of the world that are only as good as their Central Bank's word, gold has a history of maintaining its value throughout the ages. People have viewed gold as a technique to distribute on and preserve their wealth from one generation to another. As pointed out earlier, do not get caught up in the price so much as the preservation quailties of gold. It is very likely that gold will be around for another 100 years while our current monetary system, may not be in it's current form.
2.Out of Control Inflation or Deflation Deflation is usually a period from which prices contract, business activity slows plus the economy is burdened by excessive debt. It has not been seen globally ever since the Great Depression from the 1930s as far as today. During that time, the relative purchasing power of gold did well. We also have to consider that gold has no counter-party risk meaning it can't default. On the other hand and in an effort to keep the economy afloat, we have to guard against central bank's printing too much of it's own currency as it will devalue it's citizen's purchasing power.
3. Geopolitical Uncertainty Throughout time, gold has maintained it's value not only in times of financial distress, but additionally in times of geopolitical uncertainty. This helps explain why gold is oftentimes called the crisis commodity. Essentially, investorswill usually seek gold on account of it's relative safety when worldwide crisis are high. During these times, precious metals will frequently outperform other investments. For example, gold prices experienced a selection of their largest recent upswings during periods of tension with Iran and Iraq in 2007 and 2008. In the current geo-political climate on the earth, I think it is sensible one can anticipate more wars and conflict.
4. Liquidity and No Counter-Party Risk - It wound be normal to expect corporate bond defaults to continue to rise when the next wave of the economic crisis unfolds. Additionally, the housing market has not reached recovery yet. Real Estate is continuing to show weakness. This may have another large ripple effect throughout the financial markets. Keep in mind, as goes housing, so goes the economy. People's ability to pay their debt is becoming more of a burden and hence,defaults on many assets could very easily continue to increase. You may refer to it as counter party or liquidity risk; keep in mind that an ounce of gold or silver in your hand, means that you no longer have liquidity or default risk. Precious metals will continue to be volatile for a while, although you shouldn't have to worry about a 1 ounce gold or silver eagle defaulting.
5. Increasing Demand With coutries like China and India improving their financial stature, investment demand from personal investors for gold is rising. The improving investment climate of these emerging market economies is allowing more people to easily invest a portion of their savings in gold and/or silver. In a few of these economies, gold and silver is a part of the culture. Like in India, during the Indian wedding season in , India typically has it's highest investment demand. In China, investing in gold is seen as a form of saving.
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If you would like to learn how to invest in gold this is a great place to learn the essentials. Remember when you're http://investingingoldandsilver.wordpress.com/2011/05/16/4-easy-ways-of-investing-in-gold/ you're investing in one of the most volatile markets, so it is wise to develop a strategy before entering the market.. Check here for free reprint license: 5 Reasons You Still Need To Own Gold and Silver.
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