06 Mar

Wealth Preservation

Wealth”, what is it? It certainly means something different to each person. Without question, the need to preserve it will rank high on everyone’s list. So, should I just protect it or should I grow it?
What are the lurking dangers to YOUR wealth:

  • Inflation?
  • Deflation?
  • Investment losses?
  • Stock Market plunge?
  • Meager returns?
  • Retirement?

Well, in a word, it’s “Risk”.

There is no perfect investment. What works today may not work tomorrow. In today’s low interest rate environment our investment choices are very limited. If you are looking for higher yields, chances are you will be forced into more “Risky” venues. Along with higher risk comes the need for more in depth due diligence and analysis. And then can you rely on the market information used in your analysis? Frustrated, some people just shut down and are unable to make a decision. It’s just not easy.

At times like these, when the signals are hard to read, some people opt for a “Risk Averse” strategy. Holding counter investments which protect against downside risk, but also limit upside gain. The truth is, no one really knows what will happen. Even the professionals are struggling to understand the mixed signals and are often wrong.

So here’s the kicker. There is an option that most people don’t consider and seems very foreign to us in America, it is Precious Metals.

Gold Bullion

Gold Bullion

Why, because we in the US have become accustomed to a very benign monetary regime with little need for the protection afforded by holding Precious Metals. We trust the Banks, We trust the Government and our deposits are insured up to $250,000, so why worry. Or at least that’s what most people felt during the previous 200 years. Have your thoughts changed? Are you questioning the guarantees of the Banks and the Government?

The world was on some variation of the Gold Standard up to 1971 and the Dollar was considered “Good As Gold”. When Gold is a part of the monetary system it restrains Banks and Governments. They don’t like the oversight and constraint, but it is the “Peoples” protection against these institutions.

In stark contrast to the US Citizen, people in the rest of the world understand Gold and Silver and use them to “Preserve Wealth”. In India, families accumulate gold in lieu of savings accounts. The Chinese Government is accumulating Gold at an accelerated pace and is publicly campaigning for its citizens to buy physical gold. They also feel that the Dollar’s Reserve Currency status is undeserved and would like to replace it with the Chinese Yuan or basket of currencies. With the recent decline in the price of Gold, Asian buyers have lined up in unprecedented numbers to buy the yellow metal.

Chinese People Buying Gold

Chinese People Buying Gold

What do they know that we don’t? Well, it goes back to the beginning of this commentary, “What Is Wealth”. US Citizens are comfortable holding wealth in US Dollars, Asians are NOT. Is wealth better held in stocks, bonds, real estate, currency or precious metals? Bottom line, “What Is Wealth To You”?

Precious Metals are not the end all but the rest of the world sure feels it necessary to hold some. We at the Gold Xchange take a historical and world view of Precious Metals and how they fit into the definition of Wealth. A basic understanding of how to value and buy Gold & Silver may be beneficial to you in these uncertain times. So, if you have Wealth, define a portion of it in Gold & Silver after a discussion with us at the Gold Xchange.

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