You've heard it all before: don't invest in gold bullion . Over the last century, gold has averaged a neglible rate of return. It's the late night cable television 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.
Laying aside the reality that gold has increased at double-digit rates on average this decade versus each of the world's currencies and tripled in monetary value over the past six years, let's consider the metal not as an investment instrument but as an insurance policy against loss of buying power.
Think about this for a moment.
To protect your home against destruction, you purchase an insurance policy, right? Gold bullion is a form of financial insurance and should be regarded as so. Not as an investment but as insurance against the erosion of purchasing power caused by the declining dollar.
Dollar convertibility into gold ended on August 15th 1971, when President Richard Nixon forever closed the gold window. No longer tied to the gold standard, the U.S. dollar could be printed in unlimited quantities or in other words just 'float.'
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 Decline Farther
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 bad enough, our national debt is now over $11 trillion. And unfunded liabilities such as Medicare and Social Security stand at a staggering $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. Since 1971, the buying power of gold has held up and expanded. History books are full of examples of paper money whose value has been wiped out.
But not gold.
Gold has prevailed through recession and depression, deflation, inflation, hyperinflation, and war. 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.
Protect your hard earned money from inflation and the devaluation of the dollar with pure gold bullion coins such as the beautiful American Buffalo Gold Coins . For great deals and selection, visit us at: http://BullionBargains.us
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Article added to SearchWarp.com on 10/24/2009 10:07:10 AM. View other articles written byChristina Goldman(2,662)
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