Like most things on our wonderful planet our economies are cyclical, they wax and wane like the moon with uncertainties around monetary growth. We now have deficit spending happening around the globe as governments and the banks desperately try staving off inflation and with all the money printing at present, it just makes things more shaky.
But this position can't be maintained indefinitely. You only have to look at Zimbabwe, it had a 5 year period with wildly fluctuating hyperinflation and in June 2008 the rate of growth was 11.2 million percent. Making 100 trillion dollar bills totally worthless.
Running parallel to this, some of our (the worlds) biggest institutions are under investigation, Deutche bank, Barclays, Lloyds Banking Group and Goldman Sachs. Not surprising then our appetite for the traditional paper assets bonds & stock markets are also on the wane!
So where is the smart money going? It would appear people are voting with their feet. The American Mint had to close as it couldn't keep ahead of demand for Silver Eagles production in January 2013. Minting some 3,937,000 million in the first 7 days! and topping that with a staggering record annual sale of 42,401,000 ounces. What's even more remarkable is that's just the tip of the iceberg when you consider every other type of gold/silver/Palladium bullion coin there is available.
I think buying gold and silver creates a wealth insurance protection against the wild swings of economic activity having no counterpart risk. Yes, in the short term the price of bullion goes up and down. However, over the longer term it has historically been a good investment and a hedge against inflation.
What do you think? All comments welcome..! :)
Above chart graphic – Source: http://therealasset.co.uk/charts-and-graph/gold-price-charts/#!prettyPhoto