Gold – Inflation Protection
gold nugget
Inflation is a decline in the value of money caused by an increase in the money supply. As the supply of paper money increases – without a commensurate increase in production – the excess demand manifested by a greater money supply causes the price of goods and services to rise. More currency chasing fewer goods will eventually lead to price inflation. If the money supply is growing faster than GDP then prices will necessarily move upward. Business decisions become more difficult to make without stable money, hence investment often declines. Inflation can distort the economy and can lead to hoarding out of concern that purchases must be made now because prices will be higher in the future.
The Value of Gold
Australian gold nuggets
Have you ever held an ounce of gold in your hand?
Since humans have walked the earth, gold has always and will always have a store of value. It is the only metal that anyone with an IQ over 40 knows it has value just by touching it. If it is only a yellow rock, then please tell me why every currency over the past 10,000 years or so has had its value based on it and or silver?
pocket gram scales
Gold the Perfect Inflation Hedge
While the prospect for short-term inflation is muted, the risk in the longer (over the next 3 years) term is not. FOMC has controlling inflation as its goal, but the American people simply will not tolerate tightening to control inflation (if it surfaces) in the face of 8% or greater unemployment in the 2010 and 2012 election cycles. The fall of the dollar is an important factor that explains recent gold bullishness, but I think the bigger story is an appetite to hedge inflation risk in 2010-2012 due to the aforementioned political and fiscal (deficit, stimulus) risks.
Gold Nugget Found In England
gold nugget found in UK
One of our UK subscribers (Stuart) sent in this info on a beautiful gold nugget find when out coin hunting:
I have found a 5 gram nugget of Crystalline Gold.
I found it two days ago on a friend’s farm in the UK, as far as I know gold is extremely rare in England (Manchester) and it’s possible that more will be buried deep on this land. My piece was found about 6 inches deep; it is in the shape of a ‘seated dog’ and has about 90% gold to 10% crystals. It is not worn and the detail is superb and overall is very attractive.
Area is North West UK, machine is a Minelab Explorer.
The gold is thumb nail size and weighs 5gram.
Regards Stuart
