It is easy to see why investors all over the world are buying gold, silver, and other precious metals:
Our dollar is dropping fast.
Commodity prices are moving higher across the board.
The Iraq war and potential for a war in Iran.
The US economy is weak as depicted by very disappointing job numbers.
The US budget and trade deficits are at all time highs and moving higher.
China and India have a growing middle class that can for the first time in history buy gold and silver.
In 2005 the Dow Jones Industrial Average had the smallest annual change since 1926 and ended the year in negative territory down .6%.The S&P Index gained only 3%.The NASDAQ Composite Index was only up 1.4%. In the same period of time gold was up approximately 29%.
An ounce of gold still purchases about as much crude oil as it did 50 years ago, the same can not be said for US Dollars.
In 1971 an oz. of gold cost $35. Today its over $600. Same dollar, same gold. The dollar has lost over 90% of its value relative to gold in that time. Those who have saved in paper dollars have been going backwards. Save in something tangible, unprintable, natural, indestructible, and limited in supply.
Central banks are starting to diversify out of the dollar. As foreign governments look to avail themselves of more gold for their reserves, you should do the same.
This perfect storm is reminiscent of what happened in the late 70's and early 80's when the metals markets last ran and has sparked a major rally in the precious metals market again. However they are still extremely cheap and there is tremendous upside potential. When adjusted for inflation we are no where near the highs we saw in the early 80's when gold went to $850. Today many investors don't like what they see in the world financial markets and don't believe stock prices will advance much further, nor do they think interest rates will stay this low down the road. Bonds could also be hit very hard in the near future as well, and with rates rising the real estate market is uncertain as well as fewer people will be able to afford to buy at the current record prices.
A Tremendous Opportunity for Investors
For centuries gold and silver have been a haven for investors in times of economic uncertainty. In today's economic climate, the prudent investor will consider converting at least part of his or her assets into precious metals. Right now, with metal prices at a fraction of their all-time highs, this may be the ideal time to invest in precious metals with the security of a American Foreign Exchange Group account.
INFLATION AND GOLD IN A NUTSHELL FROM G. EDWARD GRIFFIN
"This newly created money goes out into the economy and it dilutes down the value of the dollars that were already out there. It's like pouring water into a pot of soup, it dilutes the soup. So by throwing more and more money into the economic soup out there the money gets weaker and weaker and weaker and we have the phenomenon called inflation which is the appearance of rising prices. I emphasis the word "appearance" because in reality prices are not rising at all. What we're seeing is that the value of the dollar is going down, that's the real side of the equation. If we had real money based on gold or silver or anything tangible that couldn't just be created out of thin air, it could be based on microphones, that they couldn't just create with the stroke of a pen, you would see then that prices would remain stable over a long period of time.
To illustrate that point, it's interesting to know that if we had lived in ancient Rome with a one ounce gold coin we would've been able to buy a very fine toga, a hand-crafted belt and a pair of sandals--that was the price in Rome. Today, if we have a one ounce gold coin what can we buy with it? We can go into any men's store and buy a very fine suit, a hand-crafted belt and a pair of shoes. The price of these items hasn't changed in thousands of years when expressed in terms of real money but when expressed in terms of these things we carry around in our pockets called Federal Reserve notes which is not really money at all, fiat money anyway, the prices keep going up and up and up because the value of those units keeps going down and down and down because they keep making more and more and more of them and dumping them into the economic soup." - G. Edward Griffin, Author of The Creature from Jekyll Island - A Second Look At The Federal Reserve
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not suitable for everyone. Forex trading and commodity futures
trading carry a high level of risk and the possibility exists that
you could sustain a loss of all or more of your currency trading
investment. Before you decide to trade foreign currency spot
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trading. If you would like more information about the risks of forex
trading, please contact an AmerFx broker to discuss foreign currency
trading risks in detail.
Why Precious Metals