Your financial advisor has warned you against buying gold bullion coins. It’s a a terrible investment, you’ve been told. Gold has a real rate of return of practically zero over the past one hundred years. It’s midnight cable tv’s investment “snuggie.”
I’m sure you’ve heard these statements before by popular investment gurus, who either don’t understand or ignore the true value of investing in precious metals.
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Putting aside the fact that gold has appreciated at double-digit rates on average this decade against all of the world’s currencies and tripled in price over the past six years, let’s look at the metal not as an investment vehicle but as an insurance policy against loss of purchasing power.
Think about this for a moment.
You purchase an insurance policy for your home, not as an investment, but as protection against destruction. Gold bullion should be regarded in the same manner – not as an investment per se, but as a form of financial insurance. Insurance against destruction of paper currency.
On August 15th 1971, President Richard Nixon slammed the proverbial gold window shut, ending dollar convertibility into gold. Unchained from the gold standard, the dollar could now just ‘float’ (be printed in unlimited amounts).
Today, after 38 years of being endorsed by utterly nothing except the full trust and credit of our United States government, our beloved dollar is valued at a fraction of what it used to be. If you equate the purchasing exponent of that one dollar bill in 1971 against today, you’d be able to purchase just EIGHTEEN CENTS, after adjusting for inflation.
Why The Dollar Will Lose Even More Value
In response to the financial crisis of the past year, the government turned on its printing presses to warp speed. As a result, the United States monetary base exploded from $800 billion in August of 2008 to $1.7 trillion. To put that into perspective that means there are now more than two dollars for every dollar that existed a year ago. Never in the course of history has the money supply expanded like this.
In their attempt to get the economy going again and stablize the financial system, the government’s out of control spending spree has caused our federal budget deficit to reach a new record level of $1.42 trillion dollars.
If that wasn’t deplorable in itself, our national debt is at present over $11 trillion dollars. And unfunded liabilities like programs such as Medicare and Social Security stand at an astonishing $58 trillion.
In order to pay for all of this, the government is either going to have to cut spending (ain’t going to happen), raise taxes (get ready) or crank up the printing presses some more and try to print their way out of this mess. And that deficit is projected to rise to $9.1 trillion over the next decade.
A Nation just can’t partake in the unchecked money printing in this way without the dollar diving in value! And the further the dollar is debased, the higher inflation will rise. This is the reason it is so, crucial that you possess gold. As an insurance policy to protect the buying power of the savings you worked so hard to put away.
The purchasing power of gold has not only endured and but increased since 1971, Examples of paper money whose value has been distroyed are played out over and over again in our history books. But that’s not the case with gold. Through wars, inflation, hyperinflation, recession and depression, gold has endured.
The value of gold has never been ZERO. Never.That is because gold bullion is the supreme store of value and protection of wealth. It might end up being the most important insurance policy you’ve ever purchased.
