GOLD IS BACK.
GOLD IS BACK.
The recent gold bear market was one of the longest and deepest on record in terms of the overall price decline. Most believe the correction seen in early 2016 is a small reflection of what this major bull market has in store.
S&P/TSX GLOBAL GOLD INDEX IN $USD
CAPITALIZE ON INCREASING DEMAND
There's been a $32 billion net inflow to bullion-backed funds so far this year. That's the most since 2013. Central banks are among the buyers. According to the World Gold Council, this has been a trend since the financial crisis, but buying accelerated in the second half of last year, with a record 336 tonnes of gold purchased.
Production cratered when prices collapsed from their record high of nearly $2,000 in 2011. The mines that are producing are running low on reserves. And the quality of those reserves is rapidly deteriorating.
AMIDST A GLOBAL SUPPLY SHORTAGE
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- ALAN GREENSPAN 2015 | CHAIRMAN OF US FEDERAL RESERVE 1987-2006
Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.
- ALAN GREENSPAN 2015 | US FEDERAL RESERVE 1987-2006
Investors typically look at gold as a safe heaven during times of political and economic uncertainty. History is full of collapsing empires, political coups, and the collapse of currencies. During such times, investors who held onto gold were able to successfully protect their wealth and, in some cases, even use gold to escape from all of the turmoil.
Regardless of whether you are worried about inflation, a declining U.S. dollar, or even protecting your wealth, it is clear that gold has historically served as an investment that can add a diversifying component to your portfolio. At the end of the day, if your focus is simply diversification, gold is not correlated to stocks, bonds and real estate.
GOLD PRESERVES WEALTH
In 1971 an ounce of gold was $35. At this time both an ounce of gold and $35 would buy you a brand new business suit. Today an ounce of gold still buys you a business suit, but $35 won't even buy a tie.
Governments around the world are printing money to manufacture economic growth. Central banks have lowered interest rates to rock-bottom levels. With rising inflation, gold typically appreciates. When investors realize that their money is losing value, they will start positioning their investments in a hard asset that has traditionally maintained its value.
LEGAL & TRUST CO.