It is easy to see why investors all over the world are buying gold, silver, and other precious metals:
This perfect storm is reminiscent of what happened in the late 70's and early 80's when the metals markets last ran and has sparked a major rally in the precious metals market again. It is important to keep in mind, past performance is never indicative of future results. When adjusted for inflation we are nowhere near the highs we saw in the early 80's when gold went to $850. Today many investors don't like what they see in the world financial markets and don't believe stock prices will advance much further, nor do they think interest rates will stay this low down the road. Bonds could also be hit very hard in the near future as well, and with rates rising the real estate market is uncertain as well as fewer people will be able to afford to buy at the current record prices.
Treasury bills are the next big bubble (to burst). Investors and most asset managers have in average 20% cash and 30% invested in short-term treasuries. For a certain period this might be the right asset allocation.
Since the yields on cash and short-term treasuries are almost 0% in major currencies, Gold is getting more attractive as an investment. Now you have to ask yourself, if you rather want to be fully invested in classical assets only where the supply is exploding by the new money printed or at least add some Gold which can't be copied, printed and is nobody's liability?
People today often think that the U.S. government has the gold to back the currency in Fort Knox, not knowing that the U.S. government has only 261 million ounces of gold or less, which, even if they had the full amount is not enough to back even 1% of the money in U.S. banks!
For century's gold and silver have been a haven for investors in times of economic uncertainty. In today's economic climate, the prudent investor will consider converting at least part of his or her assets into precious metals. This may be the ideal time to invest in precious metals by establishing your First National Bullion account.
"This newly created money goes out into the economy and it dilutes down the value of the dollars that were already out there. It's like pouring water into a pot of soup, it dilutes the soup. So by throwing more and more money into the economic soup out there the money gets weaker and weaker and weaker and we have the phenomenon called inflation which is the appearance of rising prices. I emphasize the word "appearance" because in reality prices are not rising at all. What we're seeing is that the value of the dollar is going down, that's the real side of the equation. If we had real money based on gold or silver or anything tangible that couldn't just be created out of thin air, it could be based on microphones, that they couldn't just create with the stroke of a pen, you would see then that prices would remain stable over a long period of time. To illustrate that point, it's interesting to know that if we had lived in ancient Rome with a one ounce gold coin we would've been able to buy a very fine toga, a hand-crafted belt and a pair of sandals--that was the price in Rome. Today, if we have a one ounce gold coin what can we buy with it? We can go into any men's store and buy a very fine suit, a hand-crafted belt and a pair of shoes. The price of these items hasn't changed in thousands of years when expressed in terms of real money but when expressed in terms of these things we carry around in our pockets called Federal Reserve notes which is not really money at all, fiat money anyway, the prices keep going up and up and up because the value of those units keeps going down and down and down because they keep making more and more and more of them and dumping them into the economic soup."
- G. Edward Griffin, Author of The Creature from Jekyll Island
- A Second Look At The Federal Reserve