Investing and saving is all about using capital that you could spend today, but instead placing it in assets that will be of even more value in the future.
While most people have stocks and bonds in their investment portfolio, many people lack more traditional savings instruments like gold, silver, and other precious metals.
Gold and silver have been used as money and a store of value for thousands of years, across nearly every geographic locations and nearly every culture. Precious metals also are viewed as a safe haven asset in times of financial and political instability.
No matter what gold has always retain it’s value because it is a limited resource, it’s a physical object you can actually hold, and it is not controlled by any third party like a government. Gold and silver have unique properties that fiat currencies do not, and for these reasons every savvy investor should make sure to allocate a portion of their saving to these precious metals.
You can learn more about how investors are protecting and growing their investment portfolios in this review of the Birch Gold Group.
Benefits of Gold and Silver Investments:
Gold and Silver are viewed as non-correlated asset. What this means is that the value of these precious metals behave differently to things like stocks, bonds, and even newer investing vehicles like crypto currencies.
So how does this safeguard your portfolio? Well, when the dollar or the stock market goes into a nose dive, gold and silver tend not to. These precious metals tend to hold their value in times of trouble. But it also works both ways, when stocks are ripping higher the metals tend to stay flat in value, and sometimes even decline in price.
You can think of your allocation of your portfolio to precious metals as a type of lifesaver to prevent your portfolio from tanking during the next inevitable financial storm.
Your money, your savings, and your investments are your business and no one else’s unless you choose to tell them. Or at least that is the way it is supposed to be. But with most financial assets like stocks, bonds, and real estate, you must disclose all your personal information to prove your ownership of these assets.
This is a problem that you simply do not have with precious metals. You can hold significant amounts of gold and silver, in your possession, and not tell anyone. You do not have to depend on a bank or some other financial institution to be open during business hours to allow you access to your gold. If you have your gold, all you have to do is secure it some place that you can access, and that’s it.
You can possess enough gold to buy a house, in your basement, and no one would have any idea.
What is the value of something that there is an infinite supply of? What is the value of something that has been in demand for 5,000 years that there is a limited supply of? That is the question investors must consider.
With a simple keyboard stroke the head of the Federal Reserve can create as many dollars as they want, instantly, out of thin air. When something has an unlimited supply, the demand for that thing will continue to drop until it eventually stops at zero.
It is true that the supply of gold can increase, because as the price of gold goes higher, gold mines that were uneconomical to produce at $1,200 an ounce gold, go into full production at $2,500 an ounce gold price. But even if all the gold mines in the world start producing as much as they can, it still does not add that much to the world wide supply of gold.
You cannot within a year increase the supply of gold by $1 trillon dollars. It is easy to do that, and a lot more, with the U.S. dollar.
Because of this limited supply of gold, the price in dollars for an ounce of gold goes up. As more and more dollars are printed, you have more and more dollars chancing the same supply in gold, and the price of gold has to rise to meet the demand.
And gold has been in this exact scenario as a protection against inflation as long as governments have minted money.
You can also read a good article on smart ways to protect against inflation by reading this article: https://www.morningstar.com/articles/1061786/how-to-protect-your-portfolio-from-inflation
An Increase in Demand
The price of gold is not only rising because of inflation, it is rising because of demand that is related to inflation. As the amount of dollars increases exponentially people become wary of the currency. They don’t want their savings inflate away. They become suspicious of government paper currency, so they go back to what has traditionally been money, and that is precious metals and particularly gold.
The more that the governments of the world become untrustworthy in the eyes of the people, the greater the demand for gold. This lack of trust also alerts a whole generation of younger investors to want gold.
Most younger investors have lived during a period of economic expansion and low inflation. As the economy slows down and inflation is running wild, the younger generation that has never bought gold, they are used to stocks and crypto currencies, will want to add gold and precious metals to their portfolios for the first time ever. This is a huge demographic tail wind for the gold market.
For an intelligent investor it has always been a smart choice to have a part of your portfolio in gold, silver and other precious metals. Gold can fall out of favor for long periods of time during economic bull markets, but the cycle always flips back to golds direction.
The current times with massive money printing, government overreach, and the highest inflation numbers in nearly forty years, all add up to favor the price of gold and precious metals.
Hopefully you will start to add some to your investment portfolio today.