Our world financial economy was once down with one of the worst financial crisis in year 2008 caused by the sub-prime crisis in the US. Even before the world could make a full recovery, another catastrophe spawned from the Eurozone crisis currently struck the global economy again.
Of date, no one can make prediction on how long the crisis will linger or the blow it may cause to the global economies with countries namely Portugal, Ireland, Italy, Greece and Spain facing huge debt-GDP ratios and massive fiscal deficit problems. However, as investor, we can always turn to investment asset such as physical gold to help ease and combat the crisis.
Physical gold would be the best and most minimal in risk form of investment due to its quick and secured nature in making profits. These days, most people normally look for return of 3% or 15-18% from any asset investment. However, only a scarce number of people realize the importance of protecting their purchasing power from the monetary term perspective as in too many people currently own too much money worldwide.
According to Public Gold Group Executive Chairman, Dato’ Louis Ng, “Looking back at the history dated in 1971, when former US President, Richard Nixon decided to remove the back of US dollar to gold and ended the Bretton Woods System, each ounce of gold only cost USD35 at that point of time while presently cost USD1600.”
“This denotes a 40 times increment within 40 years. It happens due to the depreciation of currency. Hence if mankind world financial system still continues playing the game, more fiat money will be wasted in vain. Therefore, gold and silver should be the ultimate money,” he said.
Although fiat money is well maintained in holding, a number of European countries are struggling with their economy crisis. More and more debts are being issued in those countries due to the use of fiat money without any backing of gold or silver to their currency.
Nevertheless, an escalating number of European countries have gradually come to their senses and realized the importance of gold through their struggle with the Eurozone crisis. Issuing too much paper money without any backing of physical assets will lead them into lethal debts scenarios. Of date, European central banks have started acquiring gold to counter the crisis in hopes of restoring the confidence of the international market towards their currency, and also the confidence of their local people.
As a whole, physical gold is the best form of investment which poses the lowest risk, with it being ranked at the bottom based on the “Pyramid of Investment Asset Class.” Pertaining that, if the world financial system were to succumb to a deadly fall, investors can still hold their gold physically where else stock market, fixed deposit in banks, mutual funds are money that needed time for a wait before attaining the money physically, as they will first fall into other people’s pocket.
Source: http://articles.economictimes.indiatimes.com/2012-01-23/news/30655796_1_euro-zone-european-stability-mechanism-efsf