When looking at the gold value today, there is an obvious price influx from several years ago. However the value in gold is not going up necessarily because gold is just that valuable in and of itself, gold price is driving upward because more and more consumers are becoming aware of the financial crisis and how gold and all precious metals can be a great hedge against financial disaster.
Government spending through the ongoing war, bank bailouts and tax cuts the money has to come from somewhere which is why the Federal Reserve has been printing more. Yet, we run on a “fait” system since the “Nixon Shock” back in the 70′s where President Richard Nixon made the ultimate decision to break away from the gold standard and switch to a credit based system. Since the 70′s alone, there is an obvious increase in gold value. Gold continues to go up as investors start to realize the devalue of our money.
If or when an investor decides to invest in gold, it is very prudent to consider where to store your purchased gold and the bank is not the best answer. Considering banks are only required by the Federal Reserve to hold enough gold in their vaults to back up a fraction of its customers money, money itself is still protected by the bank incase of financial crisis/bail out. Consumers dollars are still entitled if a crisis were to hit as the gold in the vaults would be liquidated to cover said crisis.
That said, if the banks use gold to back up our money, why shouldn’t we? Except when you store your gold in a bank, that gold is now on the bank’s balance sheet and will be added to the liquidation if such a crisis happens. However, the stored value of the gold will not go to the owner, but to the bank who is storing the gold. Therefore it is very wise to make sure the gold you are investing in be stored in an independent bank or a vault with you as the sole owner. There are trusted gold dealers that offer this option. Investing in gold is a very good investment choice, but it can also lead to great loss if the proper precautions are not taken. Gold is a high commodity these days with only so much of it around, so protect what is yours and make sure profit potential is met in the future.
Tags: balance sheet, gold value
