Historically, gold has been a proven method of preserving value when a national currency was losing value. If your investments are valued in a depreciating currency, allocating a portion to gold assets is similar to a financial insurance policy. In the past year, the climb in the price of gold above $800 per ounce is due to many factors, one being that the dollar is losing value.
Reasons to say YES to Gold
Reasons to say YES to Gold
- The dollar is weak and getting weaker due to national economic policies which don't appear to have an end.
- Gold price appreciation makes up for lost interest, especially in a bull market.
- The last four years are the beginning of a major bull move similar to the 70's when gold moved from $38 to over $800.
- Central banks in several countries have stated their intent to increase their gold holdings instead of selling.
- All gold funds are in a long term uptrend with bullion, most recently setting new all-time highs.
- The trend of commodity prices to increase is relative to gold price increases.
- Worldwide gold production is not matching consumption. The price will go up with demand.
- Most gold consumption is done in India and China and their demand is increasing with their increase in national wealth.
- Several gold funds reached all-time highs in 2007 and are still trending upward.
- The short position held by hedged gold funds is being methodically reduced.
- U.S. government economic policies over the past decade have systematically projected the U.S. economy down a road with uncontrollable federal spending and an uncontrollably increasing trade deficits. Both will cause the dollar to lose in international value and will increase the price of alternative investments, such as gold.
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