Wednesday, January 12, 2011

Buy Gold with Paper Money

decreasing value of the dollar since 1971The financial world is beginning to sit up and take notice with financial experts now saying buy gold.

Robin Griffiths, a strategist at Cazenove Capital recently stated "I think not owning gold is a form of insanity." He added that the US dollar was heading for "oblivion." Just recently the president of the Kansas City Federal Reserve, Thomas Hoenig, put his neck out to state that he considers the gold standard a "very legitimate monetary system."

Mr Griffiths predicted gold's 10-year bull run would continue and even intensify. "Although it's been a top performer for each of the last 10 years, it's still in a linear trend," he said. "Eventually it will go exponential and make more in the last little bit than the whole of the 10-year trend." He added investors should regard any short-term falls in the gold price as a buying opportunity.

It was only in November last year that World Bank President Robert Zoellick and the Indiana Republican Congressman Mike Pence both called for a serious look at using gold as the 'centrepiece of international monetary reform'.

Such statements from some of the world financially literate shows the depth of distrust there is in the global financial system and indicate that floating money is running out of political cover. The obstacles to gold replacing it are starting to narrow.

Gold has been out in the cold for forty years. But this has not affected the value of gold one iota. There is no getting around it. Gold is still the bees knees when it comes to retained value. While serial price crashes have traumatized the lives of ordinary people with the values of homes, stocks and other investment assets collapsing, gold has consistently returned an investment value despite not being an investment vehicle. Those who have continued to buy gold throughout the past 40 years are now congratulating themselves.

While Quantative 'easing', a euphemism for printing more money to reduce debts continues, the value of gold remains stable. One cannot print more gold, a possible hint as to why the gold standard was removed 40 years ago. The dollar is now worth less and less each year since the gold standard was removed and each time another bucket of paper money is printed it takes more and more of them to buy goods and services and the same amount of gold as it did the year before.

Mr Griffiths said. "The downward trend in the dollar is awesomely powerful. It's vital to get yourself out of the dollar long-term on any significant rally. Continuing to own a currency that is going to be printed virtually into oblivion - that's the official policy - is crazy."

He added: "Real assets hedge paper money being printed into oblivion, so you've got to own gold and you've got to own other commodity related investments."

The motto? Buy gold, real gold, not paper gold, before it takes too much paper money to do so!

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