2015 is leaving us and 2016 is just 2 weeks away, it has been 4 years since the global economy recovered from the 2008 Anglo Saxon crisis which lead to the Euro zone meltdown in 2011.
China’s miraculous 3 decade economic growth has come to an end and the entire world is reeling from the repercussions, to top it off, America’s rising currency value has made trading expensive for SMEs for in general never establish a future contract to protect their trade, and as most of us know, SMEs are the backbone of almost every economy and when they start faltering, they cut costs, and when they cut costs, people lose jobs and when that happens they don’t spend, and when they don’t spend, demand drops and when demand drops, production slows down and when that happens the cost of production increases and this raises prices of goods and services leading to inflation!
Yes, that’s the gist of how things work with economies and when inflation knocks on your door, the 100 dollars in your wallet will not be worth 100 dollars anymore and this would mean you would have to change your lifestyle to adjust to the lower purchasing power that you are left with.
So, how do you avoid this scenario?
Buy gold bullion, or silver bullion, it does not matter (although buying gold is a better option), the fact that the value of gold in most case scenarios increase in value during inflation has been proven, time and time again.
This is due to the fact that when inflation is inevitable, most investors dump their stocks, bonds and shares, stop investing in the capital markets and become gold buyers to maintain their purchasing power and hedge them against the coming inflation. If we look into the past, prices of gold rose above 1,800 USD per troy ounce and passed the 1,900 USD per troy ounce mark in August 2011 at the height of the global financial meltdown that was primarily due to subprime mortgages from the US (America is to blame for that crisis).
According to reports, he global inflation picked up by only 2.4 %, nevertheless the prices of gold surged by more than 21 % in that year (see: http://money.cnn.com/2011/08/22/markets/gold_prices/) at that point in time although the cash for gold business was booming, after prices went above 1700 USD per troy ounce, most cash for gold business owners practically stopped buying and even if they did, they were buying at 10 % lesser than market value which is without doubt one of the primary reasons for gold prices holding off at about 1,800 USD per troy ounce.
It does seem that history is repeating itself and based on how things are starting to look, the best thing to do at the moment is to buy gold bullion while prices are still warm as 2016 it looks like a very hot year for the precious metal market.
For more information on gold trading, please visit the Cash For Gold Melbourne website