Here’s Why You Should Buy Gold Now

The price of gold is about economic conditions around the world. To understand the price of gold, we have to understand money.

The remains of the Spanish galleon Nuestra Señora de Atocha sat on the bottom of the ocean for over 380 years. The famous treasure-laden ship sank in 1622. In 2005, Capt. Jack Jowers of the R/V Dare lifted a 4-foot-long golden chain from the sea floor.

The gold sparkled in the sunshine as if no time had passed.

It was a fantastic discovery that whetted the appetites of treasure seekers all over. There’s nothing more alluring than seeing a diver, still in the sea, holding up sparkling gold.

The fact that gold keeps its luster even in the ocean speaks to the secret of its longevity and desirability.

The Superman of Elements

There aren’t many substances that don’t break down in seawater. Most metals in seawater become something else. Silver, zinc, copper and iron all happily combine with oxygen and rust.

Gold, on the other hand, does not rust. It takes high temperatures and pressures to make gold form compounds with other elements. The reason is simple: It’s a happy element.

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Most elements are unhappy with themselves — they need to add or drop electrons to feel good. That means they turn into something else by combining with other elements. Most metals want to join with oxygen to get those extra electrons. The result is metal oxides — rust.

Gold isn’t like that. It’s happy all by itself, which makes it the Superman of elements. It’s so durable that nearly all the gold ever mined is still around today. That’s roughly 187,200 metric tons, according to the World Gold Council.

To put that in perspective, we produced about 3,100 metric tons of gold in 2015, a record volume. That means, on our best year ever, we added just over 1% to the total gold available.

For investors, that means we can’t rely on fundamentals such as supply and demand to give us hints on the direction of gold prices. The price of gold is much more about economic conditions around the world. To understand the price of gold, we have to understand money.

Scraps of Paper and Cloth

Money is actually just a fiction that we all agree upon. We say that this scrap of paper and cloth with writing on it has value, so it does. The price of gold, on the other hand, is set by people hedging their bets on that fiction.

Sometimes we feel less confident about the value of a currency. When that happens, we want to own fewer scraps of paper and more “stuff.” Gold is a good choice. It has a long history of being a store of value because of its appearance and utility.

The price of gold shows the long-term confidence of investors versus their faith in the dollar:

The price of gold is about economic conditions around the world. To understand the price of gold, we have to understand money.

As you can see, gold is more than four times more valuable today than it was in 2001.

The reason is simple: There is a finite pool of gold. The amount added to the total every year is minimal. On the other hand, the number of new dollars in circulation is unlimited. The stated goal of most governments today is to create inflation. They do that by flooding the world with currency.

Think of the volume of gold in the world as a big pie. There are only so many pieces of that pie. The more money we add, the smaller the slice of the pie you can afford becomes. On the other hand, if you already have a slice, it becomes worth more and more money.

That’s why owning some amount of gold is critical for every investor. It’s insurance against inflation. It doesn’t have to be bars or coins either. Jewelry makes a great investment … and it looks nice too.

Good investing,

Matt Badiali
Editor, Real Wealth Strategist

Editor’s Note: EverBank created the non-FDIC insured Metals Select® accounts to help you purchase metals the smart way. Choose from owning bars, coins or bullion with no annual account fee. There’s also an automatic purchase plan available so that you can buy metals at your own pace. To get all the information, click here.

For the sake of full disclosure, we receive a marketing fee based on our relationship with EverBank. But, honestly, we’d work with them regardless.

  • Poor

    Better to buy silver now than gold. Silver is more practical than gold and easy to barter with than gold. Silver is at an all time low of $15. Also there is no more silver to mine, most of the mines have been already found and discovered, meaning that recycled silver has lots of value. Mr. Badiali I suggest you start doing your research and not spread nonsense in your newsletters.

  • reijo

    Where are your manners?

  • Poor

    Expressing your opinion with words such as nonsense does not indicate a lack of manners. It is called debating an issue. Also, what I’ve said is factually correct. The Banyan Hill people are talking about gold when gold was high like in 2011. Silver is much more lucrative to hold rather than gold. I suggest you look into silver not gold. Giving out misleading information on gold and silver like Banyan Hill just did will get most Americans in a bigger pickle than they already are. Most Americans don’t know their elbow from their wrist and are indebted to the hilt. Doing your own research works very well as opposed to buying FREE BAD advice from people at Banyan Hill.

  • GreatHomeBiz

    I have silver bullion in the form of Canadian Maples. They are a great coin and high quality however there is a drawback with Silver – it is very heavy, bulky and difficult to store. As a result I now have a commercial vault subscription but this is not ideal – I have to visit it in daytime and it costs me a yearly sub. So while I like silver – I also like gold and I recommend you look at Matt’s recommendations a little more closely

  • Silver Savior

    I am a firm believer of buying silver over gold right now. There is so much gold out there but not that much silver available for investment.

  • Silver Savior

    Why would one go after gold at such a big expense per ounce when you could get what? 70 silver eagles. Silver no doubt has more upside than gold. Yeah I want the 70 eagles!

  • Silver Savior

    Never had a problem with silver being bulky. I also save copper pennies that are even more bulky and U love it. I even have buckets of zinc pennies and nickels because in the future they will be worth more than face value too.

  • GreatHomeBiz

    The reason I said silver is bulky is two-fold – firstly because when you pay for a vault locker you pay more for a large one than a small one, and boxes of silver coins take up way more space than boxes of gold coins. The second reason is that because they are stored in a commercial vault, I have to carry these boxes to the car to either deposit or remove. So I tuck a monster box of silver bullion under each arm and walk 500m plus to where my car is parked. Believe me, it sure feels bulky when you do that – try it for yourself and see what you think.

  • JohnNY K

    I hope you have an “open carry” permit!
    BUY AND HOLD IT IN YOUR OWN VAULT AND MOVE OUT OF ANY BIG CITY AREAS!

  • Silver Savior

    So you are trusting a third party with your silver? If there was an economic collapse will these people be there to give you your silver upon demand? Doubtful.

    I never understood why people use third party services. Not to say either way but I sure would not do that no matter how much I had.

  • GreatHomeBiz

    The third party vault that I use was recommended to all members by Jocelyn Smith on 28 April 2016 and again by Ted Bauman.I investigated their recommendation and decided that it was a very wise decision for people who are not in a position to hold their bullion at their own location. If you don’t understand why people would use a third party service, then I recommend that you refer to the reports at Banyan Hill that address those very issues.

  • GreatHomeBiz

    Here is a quote from Matt’s Real Wealth Strategist portfolio posted today. “Five of our eight stocks are in double digits” – yes out of eight recommendations, one is flat, seven are in profit and five of those are double digit gains. To suggest that Matt Badiali doesn’t do research is absurb. I can only wonder how your last eight personal investment choices are doing.