Gold prices keep rising as Euro and dollar values continue to look suspect. But look at gold prices over the years. The price today is still close in purchasing power to what it was at the highs of the 1980’s. With simple compound interest, gold ought to be over twice what is today.
Most of the advertisement claims for buying gold sound good. What with inflation a certainty as a result of enormous 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.
I said apparent inflation edge. I feel there are better.
But for those interested, gold comes in different forms; plain coins, rare coins, and bullion, all of which must be safely stored in bank vaults or at home. Costs are involved. And gold earns no interest. Gold can be bought as mining company shares but that entails securities’ risks.
Gold is a good holding in dire emergencies, in rare coin form, for example. But it can be erratic as a holding.
When the dollar (or Euro) weakens, gold goes up. When the dollar (or Euro) stabilizes in relation to other currencies, gold prices may possibly 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. As I often say, there are alternatives.
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