Why should gold be the product that has this unique property? Most likely it is because of its history as the first form of money, and later as the basis of the gold standard that sets the value of all money. Because of this, 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 gold price does not rise when other asset classes do. It does not even have an inverse relationship because stocks and bonds are mutually exclusive.
REASONS TO OWN GOLD
1. History of Holding Its Value
Unlike paper money, coins or other assets, gold has maintained its value over the centuries. People see gold as a means to transmit and maintain their wealth from one generation to another.
Historically, gold has been an excellent protection against inflation, because its price tends to increase when the cost of living increases. Over the past 50 years, investors have seen gold prices soar and the stock market plummet during the years of high inflation.
Deflation is the period during which prices fall, economic activity slows down and the economy is overwhelmed by an excess of debt and has not been seen worldwide. 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 often referred to as "crisis commodity" because people flee to their relative safety as global tensions increase. During these times gold outperforms any other investment.
THE HISTORY OF GOLD AND CURRENCIES
All world currencies are backed up by precious metals. One of these being gold playing the major role is support the value of all the currencies of the world. The bottom line is Gold is money and currencies are just papers that can wake up valueless because governments have the overruling power to decide on the value of any country currency.
The Future Of Currencies We Are At The Tipping Point
WHY SMART INVESTORS ARE INVESTING IN GOLD?
1. The markets are now much more volatile after the Brexit and Trump elections. Defying all odds, 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 a 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 government of the United States is monitoring the provision of retirement. In 2010, Portugal confiscated assets from the retirement account to cover public deficits and debts. Ireland and France acted in the same way in 2011 as Poland did in 2013. The US government. He has observed. Since 2011, the Ministry of Finance has taken four times money from the pension funds of government employees to compensate for budget deficits. The legend of multimillionaire investor Jim Rogers believes that private accounts will continue as government attacks.
3. The top 5 US banks are now larger than before the crisis. They have heard about the five largest banks in the United States and their systemic importance since the current financial crisis threatens to break 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 aggravated the problem by forcing some of these so-called "oversized banks to fail" to absorb the breaches. Any of these sponsors would fail now, it would be absolutely catastrophic.
4. The danger of derivatives now threatens banks more than in 2007/2008. The derivatives that collapsed the banks in 2008 did not disappear as promised by the regulators. Today, the derivatives exposure of the five largest US banks is 45% higher than before the economic collapse of 2008. The inferred bubble exceeded $ 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. Keep in mind that before the crisis that broke out in August 2007, interest rates on federal funds were 5.25%. In the next crisis, the Fed will have less than half a percentage point, can cut interest rates to boost the economy.
6. US banks are not the safest place for your money. Global Finance magazine publishes an annual list of the world's 50 safest banks. Only 5 of them are based in the United States. UU The first position of a US bank order is only # 39.
7. The Fed's overall balance sheet deficit is still rising relative to the 2008 financial crisis: the US Federal Reserve still has about $ 1.8 trillion worth of mortgage-backed securities in its 2008 financial crisis, more than double the $ 1 trillion US dollar. I had before the crisis started. When mortgage-backed securities become bad again, the Federal Reserve has much less leeway to absorb the bad assets than before.
8. The FDIC recognizes that it has no reserves to cover another banking crisis. The most recent annual report of the FDIC shows that they will not have enough reserves to adequately insure the country bank deposits for at least another five years. This amazing revelation admits that they can cover only 1.01% of bank deposits in the United States, or from $ 1 to $ 100 of their 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 level of 4.7% observed when the financial crisis began to destroy the US economy, long-term unemployment remains high and participation in the labor market is significantly reduced five years after its end. the previous crisis. Unemployment could be much higher as a result of the coming crisis.
10. US companies fail at a record pace. At the beginning of 2016, Jim Clifton, CEO of Gallup, announced that the commercial failures of the United States are larger than the start-ups that began for the first time in more than three decades. The shortage of medium and small companies has a great impact on an economy that for a long time has been driven by the private sector. The larger companies are not immune to the problems either. Even heavyweights in the US economy such as Microsoft (which has reduced 18,000 jobs) and McDonald's (which shut down 700 stores during the year) are suffering this terrible trend.
Why smart investors add physical gold to their retirement accounts?
Ensuring inflation and deflation.
Limited delivery Demand up
A safe haven in times of geopolitical, economic and financial turbulence.
Diversification and portfolio protection.
Cover against the decline of the printing policy of dollars and money.