January 13, 2011
Gold Investments Are Safe For Everyone
The detractors of buying gold support their belief in gold bubbles on its price in the 1980′s – $850 an ounce – which slumped then, remaining low for more than two decades. Ten years ago, for instance, was less than $300 an ounce. But things can be accounted for historically. Its price was so high back then not only due to inflation, but also due to some significant political developments that seemed to most to announce a global crisis of a sort or another: the USSR’s invasion of Afghanistan and the outbreak of the Islamic revolution in Iran. But actually the crisis has waited for other two decades to become global…
Another argument used against gold as currency this time is the way gold rates were handled by the US government in the times of the gold standard, when President Roosevelt asked the American citizens to sell their gold to the government for the official rates, which were low, and then the government increased its price by 15 dollars an ounce, which meant a 69% loss for the sellers. Actually, however, this was the means of bringing its price in line with the inflationary prices back then and aiding the country to overcome the great depression.
On the other hand, the citizens had the possibility to buy gold again, once the gold standard was abandoned by President Nixon, though for higher prices. The question is whether someone had lost. While in the first situation gold as the criterion of currency value had to has its price adjusted according to inflation, in the latter, not only that US escaped the obligation to pay their dues to foreign governments in gold, but also granted their citizens the freedom of investing in gold, its price remaining subject only to the dynamics of demand and supply.
These days we have a completely different situation. The global financial crisis needs no further proof with all the developed countries deeply in debt, major banks bankrupt, failing currencies and serious recession. Gold seems to be the only stable asset,given its rates of about 717 dollars during 2004-2009 and of over 1,000 dollars during the whole 2010.
In this context, gold rates not only cannot plummet but they even can’t decrease significantly, because gold is the only safe investment and because the supply is limited, whereas the demand is increasing, especially on the part of economies that are growing such as the Indian and the Chinese. Therefore, no one can lose by investing in an asset that is stable by its nature and whose price is likely to constantly increase, driven paradoxically by both recession and economic growth.
Consult specialists on how buying gold can be of help in periods of economic crisis.
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