Have you wondered why gold has been breaking price records for the last 2 years? Or what could explain the last 11 years of upward gold pricing and the greatest gold bull market the world has ever seen?
“When a country’s public debt exceeds 90% of GDP, that is the magic number. You get to 90%, there is no way back, and that is the number that the U.S. is going by pretty much as we speak. It is also the number which the UK has gone by; all of the PIGS are going by it, in addition. They are all going past the 90% debt to GDP ratio. clearly, Japan is miles past it already. It’s up to 200%+. There does not appear, in the historical examination, to be any great likelihood of getting back from that level of debt safely. There is this strong evidence that above 90% debt to GDP, you will experience either a cataclysmic default or some form of very serious inflation.”
This quote from well-respected market researcher and analyst Paul Tustain underscores the basic logic of what is happening to the world financial system, and it is our individual and crucial responsibility to determine if the facts and reasoning of this thinking are true and accurate. If these factors are correct we must then rationally plan a course of action to anticipate and constructively include this unavoidable outcome.
So let’s take a look at the dynamics driving the price of gold and examine some smart strategies for investors looking to build or continue their holdings of this hard-asset money – gold.
1. The most important fact: The real shortagen of gold and its historical stability.
Most people don’t have any idea just how scarce gold really is. Imagine a cube measuring 20 yards on each side – that’s it, that’s all the gold in the world. This limited supply grows very slowly over time, chiefly by mining, making gold a very stable commodity.
2. Gold is a store of value, which simply method it exerts a comparatively equal amount purchasing strength over time.
In other words, gold can buy the same amount of chicken and bread today as it could 100 years ago. In the same time frame, in contrast, the US Dollar has lost 97% of its purchasing strength. Ouch!
3. Gold is the most trusted monetary asset of Central edges, countries, and large investors, and becoming more so with each passing day.
A good rule of thumb is to watch what others are doing and not what they say, and that is especially true today on the world financial stage. Despite the wide-help perception that precious metals are the latest over-price asset bubble, gold pricing is not in fact being pushed by general consumer spending. What is really driving this market is a global re-positioning by national and institutional players into gold as a protection, hedge, and refuge against the final endgame collapse of the dollar. In a nutshell, the world is buying, buying, buying.
consequently buying gold is your strategy in addition. It is as simple as that.
Think of gold as a form of money insurance. The conservative and traditional rule of thumb is to have 5% of your assets in gold to protect against total exposure to the paper asset system. Right now over 99% of private citizens are fully and completely positioned and exposed to the worst performing major asset of the last 40 years – the US dollar.
Madness? Yes it is.
The rest of the world has already moved past the argue of what to do. Follow their money so you can determine to best way to protect your money.
That is the financial sanity of the moment.