The coming great inflation and the gold price.

Spread the love
Reading Time: 3 minutes

Making the right investment is more essential today than it has ever been. With the increased distrust between the average person and the financial industry, people are having to take an increased responsibility in their own financial situations. Many people think that investments are much more difficult to find without the expert advice of the financial district.

However, most of the time, people never needed the advice of any “financial expert.” In fact, it was the advice of these so-called professionals causing the breakdown of so many retirement plans and nest eggs.

All that is necessary to find a great investment is to look at the conditions of the world economy and see what is flourishing. For instance, even during the worst parts of the recession, the gold price per gram was on the upswing with little more than a hiccup. In fact, gold performed better the worse that the recession got. There is some historical precedent for this, but the special circumstances of the Great Recession actually added opportunity for many investors.

The gold price has almost always gone up during recessions.

Gold is a historical hedge against falling security prices. The Great Recession saw even more volatility in securities, so people naturally flocked to the finite, natural resource with a definite value.

  • Gold correlated with inflation but has a delayed effect.
  • Gold rose in 6 of the last 8 recessions; silver, platinum and palladium do not do well in recessions
  • Kitco didn’t state the fact we ARE in a recession. 2 quarters of negative growth is the definition.

Ever since the monetary system in the United States was separated from the gold standard, Fiat money ruled the securities market. This launched a five-decade slow spiral downward into overpriced stock bubbles that eventually burst a number of times, most notably during the tech burst in the 2000s and the real estate debacle of 2008.

People flocked to gold because of the certainty of the supply and the guarantee of the price. Gold is needed across the world for so many things that it will always have real value. No other investment outside of the precious metals market has this sort of staying power.

The Great Recession added the volatility of the world market. Emerging markets like China, India and Brazil continue to upset the balance of economic power along the hemispheres. Without this stability, Western first world powers cannot ensure that they will not be outgunned by businesses in the Eastern economic bloc. The United States recently found out how difficult they would have it when the Chinese effectively boxed them out of the solar power market by subsidizing their solar businesses 10:1 over United States government subsidies.

Throughout all of this, the only constant was precious metals. Gold, as the most highly trafficked of any of these precious metals, is the go-to investment when it comes to economic uncertainty.

However, many investors mistakenly think that just because gold has gone up so much that there is no more gain to be squeezed out of the precious metals market. This is a naive investing mistake that has been keeping many investors from protecting their expendable income and their retirement funds from inflation.

How to invest during a recession.

The proper way to invest in precious metals is to see if the conditions that persisted through the big gains of gold still persist.

As we speak, the world is still just as volatile, stock prices are still just as disconnected from company performance, and though there is a great deal of economic recovery happening throughout the world, most citizens are not feeling the direct effect. Unemployment rates remain high. This means that there are not as many people exchanging funds in the general economy. This decreases the real profits of businesses (as opposed to the accounting profits, which can be manipulated). As long as these businesses don’t grow, the real economy (as opposed to the accounting economy, which can be manipulate) will not give investors any real gains.

In these conditions, gold price will continue to increase. This trend has been shown to continue even as the dollar gains some ground on the Yen and other currencies. This is because investors are simply taking advantage of overreaches on the downside of the currency market. However, in the long term, currency will still be the volatile, money losing investment that it has been over the past decade.

Leave a Reply

Your email address will not be published. Required fields are marked *





  1. I’m working with a budget of less than 4K and looking for a 1926-D double eagle. I’ve heard that it’s…

  2. SD Bullion has been my go-to online bullion dealer, and my overall experience has been positive with a few noteworthy…

© 2024. Made with Twentig.