We live in an uncertain world which means there are lots of things that could go wrong, both financial and political. If that concerns you then you might want to consider investing some of your portfolio in gold, which is where Karatbars comes in. Offering the opportunity to save gold on a regular basis makes it affordable for everyone and in our eyes means there is no excuse to not have a small portion of your portfolio protected in gold.
In this VIDEO by Ed Bowsher from Money Week, he looks at how gold provides an insurance policy against disasters and crises.
In this video, he looks at why you should invest in gold right NOW (April 2014) and why you should put some of your portfolio into gold. There’s a lot of global risk and global uncertainty out there, and that uncertainty could lead to crises both political and economic, and when you have a crisis, gold normally performs well as an investment.
Just think about the ultimate crisis of the last 20 or 30 years. 9/11 was a massive crisis and gold went on a really strong run for the next decade basically as people saw it as a safe haven when there was a lot of uncertainty in the world.
Gold can also be a good safe haven AFTER an economic crisis, and again this was seen when gold went up a long way after the big financial crash of 2008.
The point is that when other investments are falling in value gold often rises, and Ed thinks there is quite a few potential ‘flashpoints’ around the world that could lead to another political or economic crisis.
- Ukraine; We all know about Ukraine and it could easily get worse.
- Korea; In North Korea, you’ve got a young, inexperienced dictator who is probably not a 100% sane. That could easily spiral into a crisis or even a war.
- Syria; Across the Middle East, there’s a huge amount of tension between the Sunni and the Shia Muslim population. Al Qaeda is in the mix on the Sunni side.
- Israel; Continues to be understandably nervous about its security.
All of these issues and uncertainty could easily spiral out of control into a war or a major crisis at any time.
What about climate change?
The floods that have hit Britain this winter and major storms in the US over the last two or three years all indicate that there’s a decent chance that these severe weather events were caused by climate change.
So if you think climate change is a serious issue, then there’s a real chance that the globe will get more of these severe weather events and that could lead to, water shortages, migration of populations, and so we could see a serious political and economic crisis there.
Even if the climate change theory is all wrong it’s still worth buying gold because there is enough of a potential crisis out there to make gold a decent investment. You’ve only got to look at the Eurozone, high inflation, and high unemployment in Spain, Portugal and Greece. The main banks in the euro zone all have pretty poor balance sheets that need a lot of repair work. The whole Euro arena is unstable so there’s a real chance we could see another eurozone crisis which could trigger more economic problems, which once again points towards gold as a safe haven.
What about inflation or deflation?
The financial system across the developed world has too much debt, both private and public. Too many banks are still fairly weak and that could easily produce another 2008-style financial crisis and if we think about inflation and deflation, a lot of people think inflation could take off at some point in the next five years mainly due to all the money-printing that’s been going on since 2008. When inflation soared in ’79 and 1980, gold performed really well as an asset and went to an all-time high, so if we do see high inflation again, you’ll be glad you put some of your money into gold.
Of course, gold has been known to performs well when you see deflation, which is where we see prices falling across the economy for more than a month or two. Back in the 1930s in the Great Recession, we saw some real deflation and gold still performed pretty well relative to other investment assets. There are some who think deflation could be a serious problem over the next decade and point towards what’s happened in Japan over the last 20 years and they think Europe is particularly prone to potential bouts of deflation.
So the suggestion is not to put your whole portfolio into gold, just consider putting some of your portfolio into gold as an insurance policy – somewhere between 5% and 20%, depending on your age, how convinced you are by the gold story and your attitude to risk. But it makes sense to at least have some money in gold.
Karatbars offers an affordable way to build up your gold portfolio one gram at a time.