For newer generations, buying gold may have seemed the pastime for eccentric, doomsday crowds. Now, as the economy continues to disappoint, an increasing number of investors are taking heed of the advice to buy into solid assets. The specter of continuing inflation, deflation, national debt, and the dropping Euro appears to be the driving force behind gold prices today. This is why investing in gold, in one form or another, has moved beyond the fringe and is currently a trend among mainstream investors.
Consider that coin collecting has been taken up by serious investors hoping for lucrative future profits. The United States Mint is unable to keep up with gold coin demands. In fact, American Eagle one-ounce gold coin sales were three times as high as the month before. As further proof, the South African Mint has increased production to its highest level in 25 years.
Ever since the Nixon Shock of 1971, US currency has literally no solid backing. Since that time, the Federal Reserve has been able to print as much money as they believe necessary. While this may help them to adjust the amount of money in circulation in times of recession, it can create great uncertainty among the investment community. While paper money, otherwise known as fiat money, is not backed by anything, it leaves the system open to mistakes, which, as has been witnessed during the recent economic recession, can cause major economic instability.
There are many economists who believe that the monetary system should return to a gold standard. In the meantime, investments in gold via a variety of investment vehicles have become internationally popular. This high demand for gold has resulted in the rising gold prices today. Those involved in all sectors of gold trade, from gold miners to gold investors, have, for the most part, benefited immensely from the current trend in gold prices.
Investors who have done their homework know that, since ancient times, gold has held an intrinsic value that is retained even as governments have collapsed. While gold prices have periodically faltered, gold’s intrinsic value remains and has always rebounded eventually. While many investors have learned the hard way that fiat money-based investments can bottom out completely, those who have taken part in gold-based investments often feel confident knowing that gold will always hold its intrinsic value. Gold prices today are turning more investors onto the idea of making an investment in this precious metal.