No.1: The Gold Reason 1. Don’t ignore Inflation This sparked a massive debate over whether inflation or deflation would be the final result. Remember that since 2001, gold rose 400% under an estimated 2.5% price inflation. The Federal Reserve expects to maintain short-term rates at zero throughout 2013 and 2014. This will allow for inflation to continue.
Quantitative easing (massive print of dollars) was used to reduce the recession. The central bank has doubled the U.S. currency supply in just four months since October 2008. This is a remarkable feat in comparison to anything else in the nation’s past.
Central banks around the world have created an incredible $12 trillion worth stimulus money. This is robbing us-the people-by greatly decreasing the purchasing ability of the dollars that are already in existence-the dollars in your paychecks and bank accounts.
Most economists agree with the statement that eventually, [inflation] will prevail over deflation.
Number 2: Gold is a Reason No. 2. The Demand is Exploding. Larger investors – hedge funds and pension funds – are investing more in gold. These highly-paid investment advisers must be telling them what the rest of us aren’t hearing.
This’major trend’ can be seen in the success and popularity of exchange-traded fund (ETFs), which invest in and hold Gold. The SPDR Gold Trust (NYSE; GLD), the world’s biggest ETF, contains 1,100 tonnes of the gold metal. It is the sixth largest holding account for gold bullion. The gold ownership process has never been easier or faster for investors. (via the Internet, from their laptop)
This is not a U.S. phenomenon. The World Gold Council reports that the global demand for gold increased 15% in the second quarter of 2012, compared to the previous year (2012).
China and India = Growing Interest!
Asian countries have a large population and an affinity for gold. China encourages its citizens, as well as providing checking accounts linked to gold, to purchase more silver and gold. China is currently tied with India for the title of world’s largest gold consumer. An expanding middle class with rapidly rising disposable income is a major driver of bullishness that will continue to push up the price for gold. (The ‘population explosion’ continues to guarantee more gold-buyers
No.3: Gold Reason No. No. 3: Central Banks (new) Buyers of Gold: India’s recent purchase from the International Monetary Fund of 200 tonnes of gold was the likely reason gold rose above the $1,200 mark in December 2012. What’s more, the significant reversal in central bank behavior has seen them become net buyers instead of net sellers. It will mark the 20th anniversary of banks becoming “gold buyers” after central banks had been net sellers since 1988. MORE gold is demanded by more “buyers”.
Reason no. 4: The Pending Currency Crisis – Portugal, Italy and Greece – also known as the “PIGS”, are in very bad fiscal condition. They aren’t the only ones. Iceland is nearly bankrupt. The United Kingdom, United States and other countries are still struggling to grow their economies. The grim reality has sparked a crisis of confidence in investors and citizens regarding fiat currency. (*) Paper-Money can be described as paper and ink backed by faith and credit. If investors lose faith in the issuer, the currency’s value falls. A currency crisis could be caused by further sovereign-debt reductions by ratings agencies. If these conditions are met, gold, which is the ultimate store and currency, will rise higher as people and investors take steps to protect their declining purchasing power.
No.5: Gold Reason 5: Don’t Wait for Mania Stage: The steadily growing gold bubble that has lifted gold prices to record levels will eventually explode in three stages. The first stage is currency devaluations that will be driven in part by rising investment demand. China, India and their citizens purchasing 100 tons per year. The second stage will see gold prices experience another stratospheric rise, similar to the late 1970s. Stage Three will see the mania phase. Everyone and their grandmothers are jumping in as they see gold rising with increasing price. The truth is that investors who bought gold at $1,000 an ounce early could be rich as gold prices soar to $5,000 per ounce.