It is always a wise decision to diversify your investments in spreading the risks, but you always need to keep in mind also the speed of liquefying one commodity to another commodity. You want to do this without heavy penalties due to changing economic and geopolitical changes that take place in the world almost on a daily basis. All financial markets are tied together in one form or another including commodities.
If you have a fairly good understanding of what is happening with national debts around the world, experts are questioning when will interest rates be forced to rise due to the heavy quantitative easing from the last six years. This is happening among ever-increasing debt among nations in the world including the United States. The US Federal Reserve is also ever inflating its money supply on to the world. China for example is dumping US Treasuries (US Debt) on the world market. The expected outlook of hyperinflation is concerning to western nations and to the rest of the world because of this over-supply of currency and debt.
Currency is a store of value that is a medium of exchange for goods and services. Some of it should always be on hand. Keeping a precious metal like gold does not pay dividends like a stock but is a hedge against a deflating currency like the dollar. The more uncertainty in the financial world with the paper based or fiat currencies the more it becomes a safe haven to diversify into precious metals. There are two forms of how precious metals are bought, paper certificates and holding or storing physical. Their prices are manipulated by how much paper certificates are sold to the point that over 250 people thinks that they own the same ounce of gold and that number is increasing daily. Holding it physically will be king when physical supplies dwindle to nothing due to increasing demand in the present and into the future. The day will come when paper certificates becomes worthless paper because nothing is backing it.
The dollar, due to its increasing supply and the accumulation of debt it has created since the start of the US Federal Reserve back in 1913, has devalued against gold ever since then. What a dollar in gold back in 1913 could buy you, that purchasing power has dropped significantly to about four cents. That's about 25 times less value in your dollar bill than your great grandparent had in 1913. The dollar is a medium of exchange for all goods and services but at a price over the past century regarding central banks. If many of you can remember what you could buy in a grocery store 30 years ago with a $20.00 and what you can buy now with it you can see the difference. What can be manipulated will be but precious metals is the benchmark of what has happened over time. To add further insult to the dollar, back in 1971, as part of the now so-called “Nixon Shock”, was a cancellation of direct convertibility of the US currency into gold. Which means the dollar un-pegged its self from gold to form as a “floating” fiat currency with no backing of gold with it. This un-pegged other currencies of other nations that was pegged to the US Dollar as well. The value in fiat money is only face value in law and regulation. The age of commodity money had ended with the US Dollar back in 1971.
From the date of this writing Gold was over $1,100 an ounce not as one dollar in 1913. Fear has always played a factor raising the price of gold, and drops when the cause of fear went away in the past, but in a bankrupted world not just from a world war, regional collapse or a local disaster it may take some time to rebuild or maybe take more than a single lifetime to get back to standards that our parents enjoyed. There is no comparison in world history of the magnitude of financial trouble that will come in the near future and many are helping to kick that can as long as possible. With each day those tools that allow that to happen get weaker in the days and months ahead. Their will be no outside force or superpower that can help the world out of this massive disaster this time around. No one knows the day and hour but many are being amazed today on how much world debt that is being accumulated and built like a financial tower of Babel. I do not think we will reach heaven or see it built past our lifetimes.
