Wednesday, August 02, 2006

A World of Uncertainty

We live in a dynamic, fast-moving world where change has become a routine part of our daily lives. For example, the effects of changing government policies, shifting political alliances and mounting internal and external social pressures can and often do combine in unforeseen ways to impact the economic health of our country and that of other nations.
In our uncertain world of the 21st century, the whims and fancy of a select few can quickly alter the economic security, stability and order we have come to expect and take for granted in our free society. In the end, it is the responsibility of each of us, individually, to be prepared for change . . . recognize change when it happens . . . and take the steps necessary to adapt to change when it occurs.
Uncertainty in the Markets
Nowhere is change more prevalent and pronounced than in the world's financial markets. Prices on stock and bond markets, and on currency and commodity exchanges, can and do change throughout each trading day. Periodically, these changes are quite dramatic, resulting from volatile and unpredictable market conditions. At such times, a diversified investment portfolio may help protect an investor from the full effect of unanticipated and potentially disastrous market movements such as a stock market crash.
A Question Of Value Investing.
Many experts believe that the stock markets, and the mutual funds that invest in them, are overvalued and potentially at risk for correction similar to the corrections seen in 1929, 1987 and 2000. Every stock market investor should consider balancing his market risk with real precious metals and not just gold stocks, which like all stocks, are subject to business risk as well as market risk (and can be extremely volatile at times). Historically, physical gold has been a premier and desirable financial asset in times of market turmoil. Precious metals are one of the only financial asset classes in an investment portfolio that are not simultaneously someone else's liability.
The Prospect Of Inflation.
In an attempt to avoid a recession, the U.S. government has been forced to inflate the U.S. economy with an easy monetary policy and increased spending. Precious metals can offer inflation protection and profit opportunity, as evidenced by the skyrocketing precious metal prices in the late 1970's when inflation reached double-digit rates
Government Debt May Also Spur Inflation.
Despite political jawboning, our colossal national debt has continued to snowball and now stands at $7 trillion-plus. Interest payments on this debt now drain the budget of billions of dollars each month. If history provides any guidance, this escalating debt could lead to a new wave of inflation, particularly if the government prints money to pay it off.
Wealth Protection in the 21st Century
Many investors are growing increasingly nervous about what they see in the world today: Increasing levels of domestic and international strife, war and terrorism . . . the declining value of the U.S. Dollar eating away at their nest eggs and their futures . . . stock, bond and real estate markets that appear chronically overvalued . . . and the very real possibilities of inflation, deflation, recession, depression and tougher times ahead.
In such an uncertain environment, it is natural - and highly appropriate - to seek out strategic investment alternatives in order to 1) Preserve one's wealth; and, ideally, to 2) Increase one's wealth. For thousands of years, in good times and bad, precious metals have offered investors a solid, long-term and tangible way to hold and protect wealth with relative safety. Unlike paper investments (like stocks, bonds and currencies) that can and have become worthless overnight, precious metals have true intrinsic value . . . and, hence, will always be valuable.
What's more, in recent years, precious metals have also proven to be outstanding short-term trading vehicles, offering traders periods of outstanding profit potential as metals prices fluctuate, sometimes dramatically, on world markets.

Three Good Reasons to Own Precious Metals Now
Investment experts have long-recommend portfolio diversification and that 10% to 20% (and sometimes more) of an investor's assets be devoted to tangible assets such as gold, silver and platinum bullion and bullion coins. That's prudent asset diversification strategy at any time. But in today's uncertain political and economic environment, there are many (and very sound) reasons to consider investing in precious metals now. Here are three:
1. Precious Metals Have Been a Solid Hedge Against A Declining U.S. Dollar. The value of the U.S. Dollar declined more than 30% from 2001 through 2004, plunging 5% in just a few weeks. For a long list of reasons, including massive increases in U.S. government deficits totaling trillions of dollars, the cost of a prolonged war against terrorism and a massive trade imbalance, this trend may be just the beginning. This means U.S. Dollars could now be worth less and less every day. Which also means that investments pegged to the U.S. Dollar could be worth less and less every day. Gold, silver and platinum, though, are held and traded throughout the world . . . and their true value (that is, their purchasing power) is not solely or directly dependent on the falling fortunes of the U.S. Dollar. Precious metals, therefore, can be a form of protection against a falling U.S. Dollar. As demonstrated during 2003 and 2004, as the value of the U.S. Dollar declined, gold and silver prices and the value of precious metals expressed in dollars increased.
2. Precious Metals Have Been a Proven Safe-Haven in Times of War, Political Strife and Uncertainty. Today's financial markets are increasingly at risk from terrorism, political instability and war. As we saw so clearly after the 9/11 tragedy, financial markets can be closed down, and remain closed down, for extended periods of time. As terrorism incidents continue to increase around the world, it is not unreasonable to expect further (and potentially more severe) disruptions in financial markets, banking and commerce in the future. Whenever and wherever tension or hostilities break out, people everywhere quite naturally gravitate toward the assets they trust most. And today, even in our high-tech driven 21st century, the asset class millions rely on in times of trouble is gold and silver. Precious metals have always been, and likely will continue to be, a valued form of "wealth insurance" in good times and bad.
3. Precious Metals Can Offer Outstanding Price Appreciation and Profit Potential. After the infamous stock market "bubble" debacle in early 2000 wiped out trillions of dollars of investor equity, the major stock indices have failed to return to anywhere close to their previous highs. Gold and silver prices, on the other hand, have increased dramatically - more than 40% - during that same time period. Which means precious metals can produce impressive investment returns even when (and sometimes, especially when) returns from stock, bond and other paper investments decline in value or evaporate completely. The Monex Atlas Account, a way to purchase precious metals using up to 5-to-1 investment leverage, can be a powerful short-term trading vehicle during periods of rapidly changing precious metals prices. And many financial experts have predicted and continue to forecast rising gold, silver and platinum prices in the months and years ahead.

2 Comments:

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