5 top reasons to buy gold during these uncertain times.
With such an uncertain world there are plenty of reasons to buy gold mounting up as part of your longterm saving strategy. Personally I have a saving plan with a company called Karatbars, which allows me to purchase small amounts of gold on a regular basis. They offer FREE storage in their vault in Germany, or you can have your gold shipped to your door.
But why should you consider buying Gold and why now? Well here are 5 key reasons to buy gold that I feel make a strong case.
1. Demand for Gold is at a Record High
Precious metals are up so far in 2016 by around 45% and currently nearing the levels enjoyed in 2011. Of course nobody knows if gold will continue to rise, but there are plenty of reasons that suggest that it will for a while yet. Undoubtedly Brexit has boosted the bull market in the UK, and the devaluating pound and an increase for safe haven investments could be why we’ve seen such a rise in gold in recent months.
The World Gold Council certainly supports this theory, as their latest report states that the demand for gold is at an ‘all time high’. Around 1,064 tonnes were sold for investment during the first half of 2016, which is 16% higher than in 2009 when the previous record was set. With recent extensions to interest rate cuts, along with quantitative easing and more expected in the future, it would not surprise anyone to see the gold upward trend continuing, especially as the financial market’s volatility remains extremely high. Aside from uncertainty being dangerous for most asset classes, on the whole gold tends to thrive and is renowned for its popularity during economic instability, and for sure, 2016 fits that profile.
2. Britains decision to ‘Brexit’
The decision for the UK to quit the EU has certainly had a damaging effect on the value of sterling, again pushing up the value of gold. The referendum has created uncertainty about the economic future, and has potentially damaged confidence in the British economy. This has lead to investors to search for safe-haven assets that are more likely to withstand a future crises. Banks are showing unsustainable amounts of debt, interest rates are low, and markets are extremely volatile. All of these factors are pushing investors to lose faith in the financial system so alternative methods of protecting their wealth are turning them to tried and trusted assets, such as gold.
2. Increased Geopolitical Tension
The economic instability and rising geopolitical tension are for sure having a positive impact on the value of gold. Inevitably investors confidence is impacted by governments around the world who are growing increasingly concerned about security and rising tensions across the globe, leaving investors and governments on edge. Brexit highlighted the growing disaffection for the current state of affairs and there is a possibility that other EU countries will follow the UK decision in the future. A collapse of the EU could wreak havoc on the global economy if the major economies propping up the ECB pull out, which could be catastrophic.
So the rise in the value of gold since the start of the 2016 is undoubtedly connected to the poor performance of the global economy, along with growing uncertainty and pessimism about the future.
3. The USA 2016 elections
Donald Trump’s rise as a serious candidate for US President is for sure another factor that is unsettling the world. His claims and future policies to support his potential presidency seem likely to fuel an already tense geopolitical climate. More importantly, Mr Trump has made numerous claims that highlight his fondness for gold, so if he wins the election, gold investors could certainly benefit. His plan to devalue the dollar in order to improve US exports could also push up the value of gold, and as a worst case scenario, Trump’s policies could simply weaken the US economy, potentially pushing the price of gold up as it offers that safe haven many investors look for.
4) Interest Rates moving into a negative
The Global Banking system is staring at negative interest rates, and the Bank of England’s announcement to cut UK rates has pushed British banks a step closer towards negative interest rates. As soon as ‘saving’ money becomes an expense, investors will look to protect their wealth. If an investor fails to see a benefits of a system that offers little to no incentive to use it, they will look elsewhere. So its no wonder that investors are losing faith in the financial system and looking to alternative ways to protect their wealth. In addition, with banks seemingly moving ever closer to a cashless society many investors may view gold as a better option as a physical asset.
There is plenty of information out there about the merits of adding precious metals to your investment or savings profile. Timing is important, and to be honest, now is probably as good a time as any to put some gold into your savings pot. There is plenty of good information online about precious metals and personally I have purchased from Bullion By Post and BullionVault, but my favoured method is from Karatbars. They have a simple saving’s plan that you can set up, or you can simply buy a few grams as and when you want to. They offer FREE vault storage, or if you prefer you can have your gold delivered to your door.
Its simple to set up a free account as either a Customer or if you feel passionately about sharing the idea of ‘saving’ gold you can choose to become an Affiliate. This link will take you to the site – Karatbars – where you can register for FREE and evaluate the company and website for yourself. If you have any questions send me a message and I’ll get back in touch to answer any questions you may have.