Gold (Au) protects against inflation and market calamities, such as financial crash. This precious metal is also traded as a currency. Harald Seiz, a leading financial expert, believes that investors should place a percentage of their holdings in Au as a way to fully diversify portfolio assets and to protect financial buying power over time. I believe that investors should read his research and buy tangible precious metals.
Central banks around the world invest in precious metals for this reason. National treasuries and debt are expanding. Few countries have a balanced budget. Inflation is a condition in which too much paper currency chases commodities, goods, and services in a national marketplace. When a government prints paper currency and grows a large amount of debt, inflation can occur.
Inflation and Precious Metals
For instance, the inflation rate in the late 1970s and early 1980s United States grew to double digits. Hard assets like precious metals helped investors to outpace high inflation in those years.
In 1971, an ounce of Au was just USD 35. By 1979, the price rose to USD 850 as AAA-rated bond yields rose to high double digits.
When interest rates aren’t artificially depressed by governments, it’s possible for the cost of money to rise very quickly, too. Interest rates rose from mid-single to double digits in the period.
Gold vs. Inflation
This scenario could happen again.“ Harald Seiz CEO of Karatbars International.
Daily review of the news shows that countries around the world are printing paper currency at higher rates than ever before. Managing interest payments on outstanding debt is one of the reasons nations are printing more money. Ultimately, national debt affects the country’s citizens because purchasing power of money declines:
- Even if sovereign currency doesn’t lose value when used at home, it floats against other sovereign currencies of the world.
- Without Au-backed currency, it’s possible for nations to print more money as desired.
- Some nations, including China, Russia, and India, continue to buy Au.
Fragility of markets was previously seen in the Global Recession that began in earnest in 2008. Internationalization of the financial markets is a reality today. The world’s largest financial institutions are interconnected. One bank’s insolvency risk affects almost all banks, broker-dealers, and corporations.
Harald Seiz CEO of Karatbars International reports that even strong nations bear the risk of accelerating inflation. Although some national reports show almost full recovery from the Global Recession, deeper analysis shows that governments like the U.S. anticipate the resurgence of inflation. For example, Janet Yellen of the U.S. Federal Reserve reports she anticipates inflation. Karatbars are the solution for many people who want to own fine gold as a hedge against inflationary activity.
Precious Metals and Financial Crash
The Global Recession was the worst international financial crash in about 80 years. Bank regulators witnessed how quickly and deeply a financial crash could happen. Although precious metals fluctuate in value on the world markets, history shows they retain value. If a national or global financial crash occurs in the future, precious metals won’t collapse. More governments, businesses, and people will pour greater amounts of paper currency into these stable hard assets as basic commodity prices rise even faster.
Harald Seiz knows it’s unnecessary to make risky forex bets to protect purchasing power with precious metals. Regularly purchase of Karatbars and ownership of actual, physical precious metal is a convenient way to own the world’s master currency.