Why gold? Gold is indestructible, in limited supply and throughout the ages has been the font of perceived value investors run to in times of war, civil commotion and economic turmoil. Governments cannot manufacture gold in the way they they can print currencies. Currencies devalue as their quantity increases but gold only gets stronger – viewed as the last bastion against the marauding forces of economic profligacy and stupidity, which I where we are now. There are many reasons to consider allocating a portion of your portfolio to gold, but here are just a few.
Reason 1 for investing in Gold and Silver is to protect your wealth – what you may have left after the recent market rout. The economic disruption may have barely started. The anticipated hyper-inflationary spiral which is likely to be brought about because of the massive increase in the supply of money, is expected to kick-in this year or next. Even some of the most conservative gold experts are becoming more tuned-in to the looming threat of economic crisis, a plummeting dollar, and a rising gold price. Right now optimism reigns for shares but the bear bounce currently underway could turn in a moment, and as the markets proceed to head down again.
Reason 2 for investing in Gold and Silver now is the delayed response of the ‘investing public’.
When the mass of individual investors are hit by falling equities, they’re likely to get the feeling of ‘deja vu – all over again’. Once the short-lived euphoria is over, they will realize their property values have not even begun to recover, and pensions are no longer guaranteed. That’s when the gold rush begins. Get there first! Do not miss the golden boat.
Reason 3 for investing in Gold and Silver is its portability (particularly gold) and the feeling of having your assets entirely under your own control. Safety and security in portable bullion (coins or gold bars, or even jewelery), or even the convenience in storing gold offshore with gold bullion storage facilities such as the Perth Mint can help an investor to feel more secure. If you want to feel confident your ‘gold hoard’ is safe, free from potential confiscation (a subject for another time), and quickly accessible, you can legally store it in a bank in Switzerland if you wish.
Reason 4 for investing in Gold and Silver is the ability to hold gold and silver equities, which if well chosen can add extreme gearing to your investment portfolio. Precious metal equities have risen since the lows of last October, but may have far to go. This is when junior equity holders can benefit by hundreds and sometimes, thousands of percent while the gold rush is underway.
Reason 5 for investing in Gold and Silver is the Chinese and the Indians are rushing in to gold – both bullion and equities. China and India are the two largest gold buying nations. The Chinese and Indian investors are now free to invest in equities and buy gold bullion. Their numbers are formidable and once the Chinese get investing and speculating in a big way, this move could influence the price of gold and send it flying into its third phase.
Reason 6 for investing in gold and silver has to be the Germans are selling gold through ‘snack’ vending machines at a 30% premium. The intention is to install these machines at airports and railway stations to indulge the ultimate impulse buyer with a 1 gm or 10 gm sliver of gold. This could be the start of the irrational gold rush.
And finally reason 7 for buying Gold and Silver now is the rush to buy physical gold has eased and the shortage of coins has lessened providing a window of opportunity for lower premiums. But, this is probably only temporary. GoldMoney, a gold sales and storage company has almost doubled its customers holdings in the last year, and the World Gold Council records an increase of 33% in gold sales to retail investors around the world in just the first 3 months of this year. The good news is as the pressure has eased right now and premiums have been reduced.