Gold is back in vogue. After spending much of the past threedecades in the doldrums, gold is stirring and is generatinggreat interest. Investors can be persuaded to buy equities,property and bonds without much convincing. As long as itis explained these are sound investments, many investors arehappy to put their money in. Gold is different.
Most people need to be convinced as to why they should own a precious metal that has little apparentutility. In this brief introduction, we will explain why owning gold is not only a prudent and intelligentidea, but that it is imperative to protect oneself through the most extreme uncertainty we have faced forgenerations.There are many reasons why it is advisable to own gold. Three of the main ones are:
–Gold is insurance–Gold is undervalued–Gold is in demand
Gold is insurance
The time to purchase insurance is before your house
catches on re
The nancial crisis has led to an explosion in government borrowing to pay for bank bailouts and to
plug the yawning gap between tax revenues and government expenditures. Unless sustainable growthreturns soon – which is unlikely given the huge imbalances that still exist in the global economy – many
governments around the world will have debts that they will nd increasingly difcult to manage.
When a firm or a regular consumer can’t afford to service their debt, they must default. But when
a government nds itself in this x, they have another option open to them: print money. This sounds
too easy a way out? Well, it is.
The cardinal risk of money printing is the arch enemy of wealth itself: ination. If too much money starts
to chase too few goods, prices have to rise to re-attain equilibrium. The paper money in your wallet –
known as ‘at’ money – starts to lose its worth faster than you can spend it. Your purchasing power iseroded. Your wealth, decimated.
Governments everywhere are creating more money faster than they ever have before. The size of global
money growth is unprecedented. The risk of ination is palpable.
Gold is a rare and beautiful asset. It is not just another commodity: it was once money. It is neitherdestroyed nor consumed, and it has stood the test of time, outlasting political ideologies, governments,nations and empires. Gold will help people protect their purchasing power over the long run. As a storeof value over decades, centuries, or millennia, it is peerless.
02 Why Gold?