Why should gold be the product that has this unique property? Most likely it is due to its history as the first form of money and then as the basis of the gold standard that establishes the value of all money. That is why 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 does not correlate 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 OWN GOLD
1. History of holding your value
Unlike paper money, coins, or other assets, gold has held its value over the centuries. People see gold as a means of transmitting and maintaining their wealth from one generation to the next.
2. Inflation
Historically, gold has been an excellent hedge against inflation, because its price tends to rise when the cost of living increases. For the past 50 years, investors have seen 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 globally. During the Great Depression of the 1930s, the relative purchasing power of gold increased while other prices fell sharply.
4. Geopolitical fears / factors
Gold retains its value not only in times of financial uncertainty but also in times of geopolitical uncertainty. It is also known 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 the currencies of the world are backed by precious metals. One of them, being gold, the main role is to support the value of all the currencies of the world. The conclusion is that gold is money and currencies are just papers that can wake up worthless because governments have the power to decide on the value of the currency of any country.
The future of currencies We are at the inflection point
WHY ARE SMART INVESTORS INVESTING IN GOLD?
1. Markets are now much more volatile after the Brexit and Trump elections. Defying all predictions, the United States chose Donald Trump as its new president and no one can predict what the next four years will be. 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 United States government is monitoring the retirement provision. In 2010, Portugal confiscated assets from the retirement account to cover deficits and public debts. Ireland and France acted in the same way in 2011 as Poland in 2013. The United States government. He has observed. Since 2011, the Finance Ministry has raised four times the money from the pension funds of government employees to make up for budget deficits. Billionaire investor legend Jim Rogers believes private accounts will continue as government attacks.
3. The top five US banks are bigger now than before the crisis. They have heard about America’s five largest banks and their systemic importance since 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 “large banks to fail” to absorb the infractions. Any of these sponsors would fail now, it would be absolutely catastrophic.
4. The danger of derivatives threatens banks now more than in 2007/2008. The derivatives that collapsed the banks in 2008 did not disappear as the regulators promised. Today, the derivatives exposure of America’s five largest banks is 45% higher than before the 2008 economic crash. The inferred bubble topped $ 273 billion, compared to $ 187 billion in 2008.
5. US interest rates are already at an abnormal level, leaving the Fed with little room to cut interest rates. Even after an annual increase in the interest rate, the key interest rate remains between ¼ and ½ percent. Note that before the crisis that broke out in August 2007, federal funds interest rates were 5.25%. In the next crisis, the Fed will have less than half a percentage point, it 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. The first position of a US bank order is only # 39.
7. The general deficit on the Fed’s balance sheet continues to rise relative to the 2008 financial crisis: The US Federal Reserve still has about $ 1.8 trillion worth of mortgage-backed securities in its financial crisis of 2008, more than double a trillion US dollars. I had it before the crisis started. When mortgage-backed securities deteriorate again, the Federal Reserve has much less scope to absorb bad assets than before.
8. The FDIC recognizes that it has no reserves to cover another banking crisis. The most recent annual report from the FDIC shows that they will not have enough reserves to adequately insure the country’s bank deposits for at least another five years. This astonishing 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 before the Great Recession. The unemployment rate was 4.4% in early 2007 before the start of the last crisis. Finally, while the unemployment rate reached the 4.7% level observed when the financial crisis began to destroy the US economy, long-term unemployment remains high and labor market participation is significantly reduced five years after its completion. the previous crisis. Unemployment could be much higher as a result of the looming crisis.
10. American businesses fail at a record rate. In early 2016, Jim Clifton, Gallup’s CEO, announced that America’s business failures are bigger than startups that started for the first time in more than three decades. The shortage of small and medium-sized businesses has a major impact on an economy that has long been driven by the private sector. Larger companies are not immune from trouble, either. Even the heavyweights of the US economy like Microsoft (which has cut 18,000 jobs) and McDonald’s (which 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 Increasing demand
A safe haven in times of geopolitical, economic and financial turmoil.
Diversification and protection of portfolios.
Stock value.
Coverage against the decline of the dollar and money printing policy.