THE ESSENTIAL VALUE OF GOLD
Whether governments and central bankers like it or not, gold and silver are re-establishing their 5000 year role as mainstream financial assets. So many factors including geopolitical tensions, economic turmoil, uncontrolled government spending, excessive debt, fragility of the financial system, population growth, resource scarcity or simply declining mine supply have created the perfect storm for gold and silver to again become the centre of the monetary universe.
Despite nine consecutive years of rising prices gold still represents less than 0.2% of the world's wealth, down from 5% in 1971 and over 30% in 1932. Given the inelasticity of supply, even a small shift in global asset allocation could result in dramatic upward movements in price. Recent announcements that the Chinese, Russians, Indians, Saudis and other "smart money" creditor nations are extremely significant and revalidates gold as the ultimate money, that is, a medium of exchange, universally accepted AND a store or value. How many paper currencies can claim the latter?
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