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Learn about the events, people, and politics
that shape the metals marketplace every day.
The Trouble with Traditional Investments
Today’s economic landscape creates a unique problem for investors looking to continue growing their wealth while hedging against turmoil in the financial sector. Crumbling markets, currency debasement, and worldwide economic volatility have destroyed an estimated $50 trillion of global wealth, and have created an unprecedented demand for alternatives to traditional assets.
Prices on stock and bond markets, currency and commodity exchanges, and even housing markets change dramatically during the trading day. Former US Department of Commerce economist Ben Stein recently wrote that “the markets are so unpredictable and complex that the future is simply unknowable in any short period.” At such times, a diversified investment portfolio may help protect an investor from the full effect of potentially disastrous market movements.
Many experts believe that stock markets, and the mutual funds that invest in them, are overvalued and at risk for correction – similar to the corrections seen in 1929, 1987 and 2000. The prudent investor should consider balancing market risk with physical assets that retain their value and are influenced by real demand.
The Prospect of Inflation
In an attempt to avoid a deflationary implosion, the U.S. government has been forced to inflate the U.S. economy through the application of unprecedented monetary policy and an exponential increase in deficit spending. Precious metals can offer inflation protection, profit opportunity, and true financial security, as evidenced by skyrocketing metals prices in the late 1970’s when inflation reached double-digit rates.
Despite the recent promises of politicians, the colossal national debt of the United States has continued to grow and now stands at over $11 trillion. Interest payments on this debt now drain the national budget of billions of dollars each month. These debt and deficit problems are beyond any historical precedent, going all the way back to the horrific national debt incurred at the time of the Civil War.
Precious Metals in the Marketplace
Historically, precious metals have assumed a performance-based leadership role, as they are one of the only financial asset classes that are not simultaneously someone else’s liability. Additionally, metals are subject to real demand, as they are used in the production and consumption of many consumer and industrial goods and services. Thus, metals like gold and silver retain their value over time, regardless of economic conditions or currency valuation.
What is not commonly known is that for the first time in centuries, global currencies are not backed by any precious metals standard. Previous experiments with such systems of currencies have all ended in disaster. For nearly 5,000 years, gold and silver have always been true “money.”
Metals markets are currently experiencing tremendous growth in demand. Many economists and financial experts continue to predict increasing metal prices into the next decade. These predictions are based on key factors being present in today’s society that drive prices up, making now the perfect time to invest in precious metals.
