Why Invest In Gold? There Are Several Reasons…
Before I started to invest in gold, I used to just save my money in the bank, like most people. Traditionally, it’s been a reliable, safe haven for money. Interest rates were never that high, but at least they outpaced inflation.
All that changed following the 2008 financial crash. Nowadays, interest rates of 1% or less are the norm on deposit accounts and in some parts of the world, like Europe, even that paltry amount of interest is taxed.
That low interest rate means that savings don’t keep pace with inflation. Every year, the purchasing power of your savings is reduced by a percent or more. Aside from the obvious security risks of stuffing your money in your mattress, having cash on hand is actually a better proposition than leaving your money in the bank because of the possibility of money confiscation from your account.
There are moves afoot to ban cash around the world with calls to remove all €500 (Euro) notes and US$100 dollar bills from circulation in the immediate future. The long term plan seems to be to remove all cash within the next several years.
Why Would Banks Want To Ban Cash?
1. So All Financial Transactions Can Be Tracked
You may not think twice about paying for groceries or gas with your credit or debit card, but every time you buy something, that transaction is recorded. This allows institutions to build up profiles of you. This is data about you and your spending habits that you do not own or control. That data can be sold on to third parties like marketing companies without your knowledge or permission and you receive no financial recompense for it.
You may think “If you’ve nothing to hide, you’ve nothing to fear“. That’s simply naive. In the 1930s, people in the Netherlands filled out their census forms in good faith. When Hitler and his cronies rolled into the country, that census information was mined to identify the Jewish population who were then rounded up and sent to the camps.
Information given in good faith was hijacked by a group for nefarious purposes.
Why should it be any different today? The information you freely give without a second’s thought might one day be used to segregate you from the rest of the population or target you in some unforeseen way. It’s something to keep in mind.
2. If All Money Is Digital, A Fee Can Be Levied On Every Transaction
We all know that banks charge fees on transactions. But if you pay for something in cash, the bank can’t get a fee for that transaction. Since they want that fee, replacing cash with digital currency will get them that fee.
3. Banks Can Confiscate Your Wealth If All You Have Is Digital Money
Back in 2013, an unprecedented event happened in Cyprus. The banks had accumulated too much debt through reckless investing and gambling and needed to write some of it down. The government were out of money so couldn’t bail the banks out.
So what the government sanctioned was a confiscation of some of the money in bank customers’ accounts. On top of that, they imposed capital controls which restricted people to taking out no more than €60 per day from their accounts. You can read more about that event here.
4. Negative Interest Rate Policies (NIRP)
Again, for the first time in history, a new financial paradigm is visited upon account holders. A negative interest rate is essentially a fee the bank charges for holding your money rather than paying you a fee (interest) to house your money with them. They still get to use your money as they want though. But they charge you for the privilege!
Protecting Your Money
As I mentioned above, one way to protect your money is to not have it in a bank. Keep it somewhere safe and secure from theft but where you still have easy access to it. A friend’s grandfather was able to skirt the deprivations of the Great Depression by withdrawing and then burying his money in his back garden at the time.
Stocks are a volatile investment. We’ve seen plenty of crashes and mini-crashes in the stock market in the last year alone. Many companies have been borrowing money, at near zero cost, in order to do share buybacks of their own stock which, in turn, boosts the apparent value/worth of those stocks. But it’s a house of cards that seems ready to collapse if the economists and commentators whose videos appear on this site are to be believed.
For a while I invested in Bitcoin. I like the idea of it – a decentralised currency, controlled by no central agency, all of whose transactions are recorded in a public ledger (prevents or cuts down on financial criminality). It also makes sending money to other people a near-zero cost transaction (unlike using Western Union, for example, who charge about 10% in fees).
The idea with Bitcoin is that there’s millions of computers (PCs) around the world, each doing some calculation to verify the Bitcoin transactions. As things have turned out, there are now a handful of very powerful Bitcoin mining operations where the majority of these calculations are done. They are owned by private individuals or companies rather than banks or governments. But it does mean that there’s now a strong likelihood that the price of Bitcoin can, or is being manipulated by these groups.
So that pretty much leaves precious metals as an alternative store of wealth.
Gold and Silver have, for at least 5,000 years, been the commodity that humans have returned to again and again, after every other type of currency we’ve invented has failed.
What’s happened in the past is that gold and silver coinage has been physically clipped (reducing its value) or mixed with other, less valuable metal (like copper). Debts built up and then when things got to a tipping point, there was usually a government sanctioned debt jubilee, where all debts were wiped clean and the monetary system was reset.
That won’t happen today. Why? Well, you’ve no doubt heard that the banks are too big to fail. So governments print money (Quantitative Easing) and move money from the lower 99% of society to the top 1%.
Quantitative Easing reduces the value of the cash in your pocket and money in your bank (and retirement funds).
It’s important to understand that these historical debt jubilees wrote off money owed by debtors (you and me in this context) and not the debts of creditors (banks in this context). In recent years, it’s the creditors that have been bailed out, with their debts being privatized (foisted on the taxpayer).
Gold and Silver are a store of wealth and historically they have retained that wealth while currencies have become debased (through clipping, mixing with base metals or through excessive printing of currency).
So that’s the reason to at least put some of your funds into Gold and Silver.
The price of these precious metals will fluctuate over time but in the long run, Gold and Silver bought to day will buy more currency tomorrow. Your wealth will be preserved.
Gold and Silver markets are being manipulated to keep the price of buying these precious metals artificially low. The idea is that if precious metal prices remain static, whatever else is going on in the financial system, that it will put people off buying because they’ll think that metals won’t keep pace with currencies like the Dollar and Euro.
The bottom line is that there’s only a given amount of Gold and Silver in the world. New stock may be found by mining, but it’s a fraction of the known amount above ground. It’s estimated that all the Gold dug out of the ground, from pre-history to now, would fit in a cube 70ftx70ftx70ft.
How to invest in gold and silver is something I’ll talk about in a future post.
Why Invest In Silver?
And now, for the first time in history, Silver is more rare than Gold because it’s being used up in industrial processes. Yet the price of Silver has remained fairly static for the last few years while Gold rose by 20% early in 2016.
Because the Silver price is being manipulated. All the rates are. The banks don’t want people to buy precious metals. It takes money out of their greedy hands and protects you against drops in the values of currencies.
What Does Russia, China & India Know That We Don’t?
Russia, China and India are hoovering up huge quantities of Gold and have been for the last few years. China also mines a lot of Gold but none of it ever leaves the country. These countries are also part of the BRICS block of nations. Are they anticipating or planning a return to a Gold-backed currency that would displace the Dollar as the world’s reserve currency? China holds a huge amount of the USA’s debt. What if they call it in?
Buying precious metals is a hedge against the collapse of the financial system and the currencies within it. Too many economists and financial commentators are predicting a second, bigger crash this year (2016) and not taking notice of that seems foolhardy.
It’s why I decided to invest in gold and silver.
Disclaimer: I’m not a financial advisor. In this article I’ve laid out the reasons I made the choice to invest in Gold and Silver. It is not a recommendation for you to do the same. You must weigh your own situation and decide for yourself if this is something you’re interested in doing. The videos on this site should be used as an aid to educate yourself on where things may be headed this year (and in following years) and what you can do to protect yourself, at least to some degree.