One of these recent days I found out there is a review on commodities’ prices and their relationship with real goods, conducted by someone who has a history as a mathematician but has been, for his entire life, somehow “immersed” in financial news. Chris Laird, the analyst known by many as a certified administrator of Oracle database and publisher of Prudent Squirrel Newsletter (I think few are aware that he is in fact the son of Jere Laird, business editor of KNX news AM 1070, Los Angeles, and that his grandmother was Alice Widener, publisher of USA magazine in the 60′s to 80′s, a newsletter that covered many of the topics you find today at the preeminent gold sites) performed this analysis and was driven to the conclusion that gold accurately reflects the changes in prices of goods. As a very simple example, if in 1908-1930 the loaf of bread amounted to 10 cents, it nowadays costs 3 dollars, which is 30 times higher. Similarly, the price of gold is now roughly 30 times higher.
This conclusion does not come as a surprise to most of us, I will say, even to those who did believe in the “gold manipulation” story (which is true, according to Chris Laird). In these uncertain times, gold is clearly the one market that seems to be doing very good. That is because people finally understood (I have always said that forcing people to think “saving” was the only bright side of crises) that they need to protect their savings against the hard time that any liquid asset, like cash, has or is to face at some point in time. This will involve not only finding the appropriate mix of currencies, but also consider gold or any other precious metal stocks to hedge against the depreciation of the US dollar.
Known as “the safe heaven” or the “crisis commodity”, gold is the ultimate insurance policy, in economic terms. But even in more calm circumstances, experts advise that anyone should own some gold in his or her portfolio, in case the economy gets worse. Taking this piece of advice may be a wise thing to do, considering that gold has definitely been one prospering market in these troubled times.
There is a quite wide range of possibilities to use on the market, from buying bullion gold bars, to gold coins – apparently the most popular way of holding gold – or gold certificates of ownership (available to gold investors to avoid storage of the actual gold bullion). There are also the Gold exchange-traded funds (ETF) which can be traded similarly to shares on the major stock exchanges in many large cities of the world.
However, one very important aspect is being continuously informed and updated in gold news and monitor the developments of precious metals’ stocks. This is the safest available method to access information, analyze and understand the market to allow good investment decisions. Let’s stay alert.
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