Why Gold or Silver Commodities ?
There are many reasons to own Gold or Silver commodities. Everyone should consider dedicating a portion of their
investment portfolio towards one (or both) of these precious metals. There are many reasons for doing so, and
here are some of them:
- During period of high inflation, the value of commodities, such as Gold or Silver, rise in conjunction with the
inflation, thus preserving your investment. Various scenarios typically result in inflation, such as stimulative economic
monetary policy, a decline in the U.S. dollar, a large trade deficit, a rapid rise in the price of oil, and the stigma
of being a debtor nation. Any of these, or a combination of them, usually leads to high periods of inflation, which
in turn, makes Gold or Silver very attractive commodities to own.
- Gold (or Silver) commodities are denominated in U.S. dollars, and the U.S. dollar is currently the world's reserve currency.
Thus, any decline in the U.S. dollar typically results in an increase in Gold (or Silver), and vice-versa. Hence, Gold
(and Silver, to a certain extent) are viewed as a hedge against a declining U.S. dollar.
- It is no secret that today's economic crisis is serious in nature, and that the world's economy can be considered to
be fragile, at best. There are a myriad of economic issues that currently exist, that could erupt into much more serious
issues, in the near future. Gold is often referred to as a Crisis Commodity, as it typically outperforms all other
investments in times of economic and world turmoil. The recent banking and financial crisis has caused many to flee to
Gold, in these turbulent times. Gold is considered a safe haven commodity, by many, under these circumstances.
- There isn't an infinite amount of Gold and Silver to be mined in the world, and with increased demand due to world
economic conditions, the price of these commodities continues to rise. Gold cannot be just "printed" similar to the
U.S. Dollar, which can be printed during stimulative monetary times.
- Diversification in one's portfolio is a key ingredient to maximizing earnings and protecting existing assets.
Gold and Silver are commodities that can be purchased, that typically run counter to stock and other financial markets.
Hence, Gold and Silver commodities are ideal diversification assets to a stock portfolio, since they are typically negatively
correlated to stocks. This means that when stocks decline signficantly due to economic or world events, the price
of Gold and Silver commodities rise in contrast. Hence, if your portfolio is balanced with such commodities, you have a
built-in safegard to your other assets.
- Gold and Silver are commodities that you can always hold onto, and will always have intrinsic value. In a worldwide
market collapse, Gold and Silver will always maintain (and will typically increase) its value.
Buy/Sell Gold and Silver > Why Gold or Silver Commodities ?