History has proven time and time again that when economies weaken, gold prices skyrocket as a direct result of safe-haven demand. Since the turn of the millennium, the United States economy has weakened so much that many investors and market analysts believe it is a dead fish in the water. Most dollar-backed investments like stocks, bonds and cash accounts have suffered major losses due to a contracting economy that is only getting worse by the day. In the year 2000, the gold spot price was sitting around 0 per ounce, and now in the year 2011 it is past ,700 per ounce and climbing. The latest gold market projections are forecasting that the precious metal could easily reach ,100 per ounce in 2012, and here's why:
US debt is soaring The United States has the highest debt in the world, owing more than trillion dollars. On August 2, 2011, the United States Government raised the debt ceiling, allowing it to continue borrowing with no mercy. It doesn't take an economical genius to understand that borrowing more money will only result in serious problems down the road. According to several market projections, US debt could double in the next decade. What will happen when the US can't borrow any more money? We will most likely see an absolute economic collapse. Fortunately, gold has proven its ability to thrive in the face of economic disaster, thus ,100 per ounce by 2012 is quite reasonable.
Inflation is running rampant In order to prevent an economic collapse throughout the latest financial crisis, the United States Government passed several stimulus and quantitative easing measures totaling over trillion. This was all done with overprinted US Dollars with nothing to back them up. As a result of this overprinting, inflation is now running rampant in our economy with no end in sight. Consumer price indexes are reaching dangerous levels and many expert analysts and top economists believe we could see inflation double, triple and even quadruple in the coming years. Historically, gold is one of the most powerful anti-inflationary investments because it typically trades inversely with paper currencies, thus ,100 per ounce by 2012 could be just the beginning of major price spikes.
New World Reserve Currency Global governments have lost trust in the United States Dollar. Little by little, these global governments are abandoning dollar-backed assets in exchange for tons and tons of gold because the precious metal is the only real money nowadays. Since gold's price is adjusted by supply and demand, higher demand by global governments could easily push the metal's value up to ,100 per ounce by 2012.
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Showing posts with label Gold. Show all posts
Showing posts with label Gold. Show all posts
Friday, August 3, 2012
Saturday, May 12, 2012
Advantages And Disadvantages Of Trading Precious Metal - Silver And Gold
Probably you have heard about online trading these two precious metals - gold and silver. The role played by these two precious metals especially gold in the financial market cannot be understated. Besides, they have various significant industry uses. One outstanding feature of these metals is that they are characterised by substantial speculative price gyrations in the financial market.
People are using both gold and silver to trade online for potential gain because of their role in price speculations. Just like the online currency trading, this is done without owning the physical gold or silver. The main advantage is that many people can participate in the trading system. Gold, in particular is considered by most investors to offer substantial protection against the currency fluctuations specifically during economic downturn such as depreciation.
Merits of trading precious metals
1. Protection Against Depreciation
These two precious metals offer significant level of protection against depreciation. In particular, gold acts a strong store of purchasing power. This is what helps it provide protection against depreciation. Currently there is no direct link between gold and major world currency as it was the case long ago. These two precious metals are also highly liquid because they are widely traded across the world. In particular, gold do perform well during the time when the central bank has used certain monetary policies to weaken its currency. In such cases, the amount of currency in circulation can significantly increase but the amount of gold will not be affected.
2. No Liability
Precious metals such as gold and silver are not in any way a liability to an individual, bank, business entity or government. It is possible for government to default is debts while a company or bank becomes bankrupt. In the contrast, precious metal won't be affected in a similar way. The portfolio invested in precious metal like gold and silver will maintain its worth. It is possible for any other types of asset to loss its value to zero but this cannot happen with these precious metals.
3. International Liquidity
The precious metal such as gold and silver offers the best liquidity value internationally. It will be easy for you to sell gold or silver to any part of the world because of its high liquidity. This is because there will be someone willing to buy your precious metal irrespective of your location. Most people are willing to buy precious metal because they don't depreciate in value.
Demerits Of Trading Precious Metals
1. Low Profitability
As compared to currency trading, both gold and silver has low rate of return. This can be explained by the fact that they experience slight price change over time. To make high profits, you must trade these metals for a longer duration.
2. Appreciation Cycles
The only time when both gold and silver appreciate to highest value is during the time when the paper currency has depreciated in value.
3. Price Corrections
Just like any other traded commodities, both gold and silver are subjected to price correction. This is very disadvantageous because the price correction can work against you if you don't your metal for long time.
Conclusion
The two precious metals gold and silver has significant roles in the financial market. The current development in the industry allows people to trade these metals without physically owning them. These precious metals have proved to be very profitable when traded online for the past few decades. Trading gold or silver online is similar to Forex trading. In fact, it is offered mostly by online Forex brokerage companies. Other than the widely known currency, you can choose gold or silver trading and similarly makes loads of profits.
People are using both gold and silver to trade online for potential gain because of their role in price speculations. Just like the online currency trading, this is done without owning the physical gold or silver. The main advantage is that many people can participate in the trading system. Gold, in particular is considered by most investors to offer substantial protection against the currency fluctuations specifically during economic downturn such as depreciation.
Merits of trading precious metals
1. Protection Against Depreciation
These two precious metals offer significant level of protection against depreciation. In particular, gold acts a strong store of purchasing power. This is what helps it provide protection against depreciation. Currently there is no direct link between gold and major world currency as it was the case long ago. These two precious metals are also highly liquid because they are widely traded across the world. In particular, gold do perform well during the time when the central bank has used certain monetary policies to weaken its currency. In such cases, the amount of currency in circulation can significantly increase but the amount of gold will not be affected.
2. No Liability
Precious metals such as gold and silver are not in any way a liability to an individual, bank, business entity or government. It is possible for government to default is debts while a company or bank becomes bankrupt. In the contrast, precious metal won't be affected in a similar way. The portfolio invested in precious metal like gold and silver will maintain its worth. It is possible for any other types of asset to loss its value to zero but this cannot happen with these precious metals.
3. International Liquidity
The precious metal such as gold and silver offers the best liquidity value internationally. It will be easy for you to sell gold or silver to any part of the world because of its high liquidity. This is because there will be someone willing to buy your precious metal irrespective of your location. Most people are willing to buy precious metal because they don't depreciate in value.
Demerits Of Trading Precious Metals
1. Low Profitability
As compared to currency trading, both gold and silver has low rate of return. This can be explained by the fact that they experience slight price change over time. To make high profits, you must trade these metals for a longer duration.
2. Appreciation Cycles
The only time when both gold and silver appreciate to highest value is during the time when the paper currency has depreciated in value.
3. Price Corrections
Just like any other traded commodities, both gold and silver are subjected to price correction. This is very disadvantageous because the price correction can work against you if you don't your metal for long time.
Conclusion
The two precious metals gold and silver has significant roles in the financial market. The current development in the industry allows people to trade these metals without physically owning them. These precious metals have proved to be very profitable when traded online for the past few decades. Trading gold or silver online is similar to Forex trading. In fact, it is offered mostly by online Forex brokerage companies. Other than the widely known currency, you can choose gold or silver trading and similarly makes loads of profits.
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