Yes, is my short and simple answer, but the road ahead is neither short nor simple. As a self employed commodities trader, my day to day research allows me to effectively choose those markets which I feel will increase in price over a certain period of time and with the least amount of risk to my cash flow. My most favoured and safest investment in the last five years has been Gold!
The reason why we all should invest in gold (coins and bars
not jewellery) is because gold acts as insurance to preserve your
savings against rising inflation (price of goods) and the decreasing
value of the Dollar, Pound and Euro. As these currencies will continue
to decline in value in the coming months, they will take with them your
purchasing power; hence why everyday goods are becoming increasingly
more expensive.
Those of you who studied Economics during college or university may remember this simple fact: All goods are valued against the world’s leading currency the Dollar,
and the Dollar itself is measured against gold. So when the value of
the dollar decreases, the price of gold increases. Here is a fact you
may not know: Gold has increased over 550% in past 10 years! Back in
June 2001, Gold traded at around $270 (£168), today it is bouncing
around the $1500 (£940) mark. Had you invested $10,000 (£6,025) in gold
back then, today it would be worth $55,000 (£34,000).
So clearly the dollar and other related currencies have been in decline for a very long time. But why? Many years ago, as a young primary school student in Leeds, I remember asking my teacher in front of the whole class why the government could not just print more money and make everyone rich? (naïve little me). Fast forward to 2007 and the Credit Crunch happened; what did the US, UK and European governments do? They printed more money (out of thin air) and gave it to the banks. Bad move!
This was suicidal in many ways but mainly because paper currencies must only be created against something of real value and not just printed on paper and handed out to third parties. Think of it this way: If there are 10 people living in your country and there are 2 big houses and 8 small ones, the value of the two big houses will clearly be much higher than the other 8; Not just because of the cost of the materials used to build them, but also for the higher demand and premium attached to them. If however the number of large homes in your country suddenly increased to 20, there would be a surplus of large homes and the demand would immediately drop. This would leave the value of all homes in the country hovering just above zero. This situation is representative to what these governments have created by ‘bailing out the banks’. They have printed more money than there is value and as a consequence, our buying power is dropping like you would not believe. We are becoming poorer.
History has a strange sense of irony and yet we never seem to learn from our mistakes. A few years back, the Zimbabwean government printed money in a very similar fashion to how the US, UK and EU have been doing recently. Needles to say, it all ended terribly for them. It started costing people wheel barrows full of Zimbabwean Dollars to buy just a loaf of bread. A very similar situation is currently developing in many western nations including ours. Hyperinflation!
There is no currency on the face of the planet which has not crashed at one time or another, the only exception being the Euro, which unfortunately is the most likely next; followed by all other developed western currencies and economies because of their heavy reliance on the very same financial credit system which banks can exploit to their full advantage. Who will bail you out? Not the same group who failed to protect you in the first place!
