Gold and Silver:
Accumulation and Liquidity
By Dr. Jeffrey Lewis
As history has shown again and again, hard
currencies like gold and silver are perhaps the only truly safe long term
Part of the safety of these assets arises from
the fact that they are traditionally accumulated and hoarded by individuals,
especially in financially challenging times and periods of high inflation. Even
more importantly, precious metals like gold and silver are liquid assets that
can be readily sold for currency or exchanged in a barter situation.
Those two qualities alone make the precious
metals very unique investment assets. This is something that the anti-gold
antagonists seemingly fail to understand. Alternatively, perhaps they understand
it so well that they are actually scared of gold.
Even More Reasons to Invest in Gold and
Although most individual investors want gold
and silver for those two key reasons of accumulation and liquidity, many other
investors want it for other valid reasons as well. Such additional reasons might
Concerns - National and corporate debt problems are becoming more and more
obvious to the masses, thanks in large part to the Greek sovereign debt
crisis. Heavily consuming countries with substantial budget and trade deficits
like the United States currently have a huge amount of debt to service and
roll over each year.
At some point the
debt bubble will succumb to its huge size, but which country’s debt bubble will
pop first: Japan, Europe or the United States? Place your bets now. As an
example, Japan recently released an update about the total amount of its public
debt, which was at the ¥983 trillion level on September 30th, 2012.
Speculation about this debt number soon reaching into the heady quadrillion Yen
zone seems very well justified.
Oil Prices - Denial of the existence of a peak oil situation is trendy,
but high oil prices are not going away, and they will only strangle economic
growth and boost inflationary pressures for years to come. Seeing $150 per
barrel oil prices could seriously deepen a global depression.
Taxes and Regulations - How can the United States and Europe expect to
grow their economies amid a stifling environment of high taxation and a
multitude of regulations? It is no secret that the average small business
attempting to operate in these regions is being severely squeezed, and this
situation is very likely to get worse before it improves.
Concerns – Worries about the virtually ubiquitous use of intrinsically
worthless paper currencies are widespread, as well as the potential impact of
the ongoing decline of the U.S. Dollar as the world’s international reserve
currency. This trend might take a few years to unfold in a meaningful way, but
it is clearly happening, and it will not help either the U.S. economy or the
global economy recover
Bond Market’s Coming Decline – The bond market’s ultimate decline seems
inexorable. Although it may take time for a bond panic to evolve, warning
signals of higher U.S. interest rates to come could trigger a serious run out
of U.S. Treasuries. Not only would this scenario very likely result in a
currency crisis for the Dollar, but it could also lead the county into a deep
All of the above factors help fuel individual
investment demand for precious metals like silver and gold.
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