According to market experts, reliance on gold and silver bullion to hedge against inflation has been a solid move for investors in recent times. But of course, gold was used as a currency for many hundreds of years and has come to represent economic strength and a bastion in times of financial uncertainty. Gold has remained so consistent because it is a precious metal and because it is mined from the earth it is a finite resource that comes with a true and intrinsic value. Unlike abstract stock market investments, you can hold bullion in your hand. Gold and silver, because they are physical minerals with a weight and a value do not carry counter-party risks. There is no liability the way there is when one invests in stocks or mutual funds. Silver is also an industrial metal and its value outside of speculation continues to grow.
The fact is that metals like gold are correlated opposite to traditional portfolio bumps and drops. In 2008, the financial crisis brought stocks and bonds plummeting in value. Even real estate and hedge funds decreased in value. But those who held gold were able to weather the downturn much better than those without, and subsequently their gains averaged 32% annually from 2008 to 2013.
Experts such as those at Guildhall Wealth Management point out that inflation has been on the rise over the last decade in large part because the Federal Reserve is pumping out paper money into the economy in an effort to keep the market propped up during inconstant and precarious financial times. Gold and silver are not subject to dropping value during inflation. In fact, inflation makes paper money worth less, meaning the value of gold and silver will rise inversely.
In times of high inflation, which we are experiencing now, gold and silver hedge your finances. They will grow in value or maintain their value in times of economic uncertainty and promise long term growth better than any stock option. In times of geopolitical uncertainty, gold and silver are safe bets. The conflicts in Syria, Iraq, Iran, and North Korea are making the global financial situation less than stable, and because traditional currencies are dependent upon paper money (and increase inflation with every bill added to circulation), central banks are buying up gold and silver as an inflation hedge because they need a finitely measurable cornerstone of wealth to protect their nation’s finances. It would seem wise to follow the lead of the larger banks because they in greater capital. The World Bank and the IMF are scrambling for gold and silver, which is why investment options at Guildhall Wealth Management in gold and silver can be so valuable — because investing in precious metals means growing and strengthening your portfolio alongside the world’s biggest banks.
Even entire banks of governments like giant nations China and Russia are dumping the U.S. dollar and choosing to go heavy in metals. When another economic crisis occurs, they will be well positioned and protected against the inevitable spikes in inflation that occur during global unrest. In order to maintain and protect your wealth with an inflation hedge, don’t neglect the opportunity to invest in gold and silver.