Most of the advertisement claims for buying gold sound good. What with inflation a certainty as a result of budget deficits, gold is an apparent inflation hedge. You can be sure the political pressures on the Federal Reserve will make it hard for the Fed not to monetize the huge debt that will augment future inflation.
But look at gold prices over the years. The price today is close to what it was at the highs of the 1980’s. With simple compound interest, gold ought to be about twice what is today.
Also, gold comes in different forms; plain coins, rare coins, and bullion, all of which must be safely stored in bank vaults or at home.
Gold is a good holding in dire emergencies. Excellent in rare coin form, for example, for refugees fleeing Europe in the 1930s. But it can be erratic and it pays no interest if just sitting around.
When the dollar weakens, gold goes up. When the dollar stabilizes, as it does periodically in relation to other currencies, gold prices fall. Some times sharply. And often gold moves with market anxieties, or supply/demand, more than mere inflation.
So be careful holding gold, as with any other investment you may have. Never treat it as a panacea to offset brutal inflation. There are alternatives.
No comments:
Post a Comment