Table of Contents
- How to Invest in Precious Metals
- Precious Metals Depository Storage
- Why Should You Include Gold & Silver in Your Savings & Retirement?
- The Stock Markets Best Days Have Passed
- How Can Gold & Silver Help?
- Gold & Silver Offer a Greater Upside Than Equities
- The Rise and Fall of the U.S. Dollar
- Gold/Silver Stocks, ETFs, or Physical Gold & Silver?
- Types of Precious Metals Products
- Frequently Asked Questions
- Glossary of Terms
- Choosing the Right Precious Metals Company
FACT: GOLD AND SILVER OFFER NEAR CONSISTENT HEDGING ABILITIES
Gold and silver will likely maintain their thousand-plus year status as the only form of money that keeps its absolute purchasing power over time. As demonstrated in the chart below, gold will likely outperform all major fiat currencies as it has for the last 120 years.
Looking through history, one finds that currencies have consistently been debased, oftentimes to finance exorbitant amounts of public debt. Gold is better thought of as the ultimate currency rather than a commodity.
However, other than gold, currencies are a problematic store of value in a modern, inflationary economy, even when they are not collapsing completely. As mentioned above, sudden injections of new money often inspire an illusory sense of wealth in individuals.
Currencies don’t float, they just sink at different rates.
Gold and Silver Have Been Reliable Inflation Hedges
Inflation is defined as an increase in the currency supply in an economy beyond any increase in the stock of a species, i.e. gold, in times of a gold standard. Because the last remnants of the gold standard were abandoned in 1971, all increases in the money supply since then should be considered inflationary.
The results of a long-term study show that the price of gold has historically risen during periods of high inflation. And, the greater the inflation, the more gold prices increase. During periods where inflation exceeds 3%, the return on gold per annum is 8%. That return outpaces the rise in inflation.
Gold’s two most significant climbs in modern history occurred during periods of high inflation or the fear of inflation. Gold prices climbed 721% during the high inflation period from 1976 to 1980. Gold prices rose 170% from 2008 to 2011 – a period during which most investors feared inflation would increase from the government’s Q.E. efforts.
Today, the 10-year Treasury yields a dismal .73%, compared with 2.48% just one year ago and a 10-year average of 4.48%. What do you think will happen when the 10-year Treasury yields are at or under zero? When you take that very likely scenario into account, it is reasonable to formulate a plan that would include physical gold and silver into your investment portfolio.
It is also important to note that gold has historically offered strong hedging abilities during a recession. Since the 1970s, the price of gold has risen during most recessionary periods.
Owning real gold and silver is a great way to hedge against governments making poor economic choices. Inflation is one of the results of those poor choices. Gold and silver are hedges on policymakers making mistakes that may result in the continuation of money printing that ultimately leads to further dollar devaluation and rising inflation. Every smart investor needs to learn how to utilize precious metals and learn how to use them as investment material.