In years past, I was always suspicious when the price of Gold went up. Decades of proof showed that it wouldn't be long before that price dropped again leaving investors holding a very expensive bag. However, over the past 10 years of so - the price of Gold not only increased up to record levels, but it maintained that price and even went higher most of the time.
So, what's going on with the price of Gold and is there a chance this time that long term investors might end up in better shape than before? I think there is a good case for the long term future for rising Gold prices. All world government are printing money as fast as they can to try and avoid a worldwide depression.
If you study history, every time governments focus solely on their short term needs - before long that ugly inflation monster raises its ugly head and tanks ecomonies for years. The US Federal Reserve is all in when it comes to keeping interest rates low so Americans can borrow money instead of save it. This is not a sound monetary policy for the long run and if they don't time this thing right, inflation will be the newest problem facing most Americans in the future.
The price of Gold has traditionally been based on how much inflation there is in a given economy. Right now, inflation is not a problem - but don't for a minute think in won't reemerge in a fast and disastrous way after all of this money printing. It is inflation that causes a nations currency to become less valuable and it will happen again in the future.
I believe the US government and other economies around the world are playing with fire right now just to stop a worldwide depression. As we all know, politicians do not care about the long term future of their people. Sadly, most of them only care about how they can win the next election. That type of attitude should continue to keep Gold prices high for the foreseeable future.
I know it is scary investing in something a volatile as pure Gold, but I do not think it is a bad thing to at least have some of your investment income in a form that has been around for Millenia.
Follow This Blog On Twitter