Why Buy Gold?

If you have more paper money than you know how to spend them, and you worry the economy and political conditions might erode the value of your paper money, then what should you do to preserve the value of your wealth? Buy some gold coins (Such as 50 Dollars Gold Coin! aka American Eagle Gold Bullion Coin, or American Buffalo Gold Bullion Coin, Canadian Gold Maple Leaf Coin) or paper gold asset such as gold ETF funds (Like mutual fund, but better).

I am talking about gold as a way to park your paper money, not as speculation such as gold trading or gold futures. (However, you can expect gold price to rise substantially, because paper money and gold are opposite, one falls and the other rises. I will explain.) You may not want to invest in gold or buy gold bullion physically for the long run, but if you simply don't have a solid way to make money through other investments, or if you have a knack of losing money in stock or business venture, then gold is a safe haven and it will buy you time to figure things out during economic turmoil and uncertain times.

Inflation simply means that the value of paper money is dropping. How can that be? Whatever face value the bill says it worth means nothing. The market determines how much everything really worth.

If there are too many of the same thing, that thing will worth less than it used to be when it was not too many, right?

Same for the paper money. If there are too many of it in the market, then real assets such as the commodities, precious metals, and energy will increase in price — in other words, it takes more and more paper money to buy those.

However, gold has always been valuable and been used as medium of exchange for thousands of years, when economy fails, gold always rise. Gold is insurance for the economy.

Gold is rare, moldable, precious, and portable. It is the perfect asset to preserve wealth.

Why I Think Gold Is Going To Rise And Dollar Drops

Governments using political power to stimulate the market and increase money supply in the system will always results in economic bubbles (Too much paper money in the wrong hands). Bubbles will eventually burst to reflect the reality, and thus resulting in recessions.

When there is a bubble, there is debt-fueled increase in paper money supply. So when you see the government borrowing heavily and throwing tons of money on arbitrary programs and agencies, when you see institutions that should go bankrupt get bailed out, when you see there are sectors or industries being backed up by the government, and when you see a lot of people invest on things such as real estate with borrowed money, then you can almost tell that disaster is looming ahead. (Like what happened to the Japan in the 90s, which lasted till now)

When you see these signs and the gold is still not rising like crazy, then it indicates that the paper money is overvalued and gold is undervalued. Can you smell profit now?

Bubble is created by non-producing businessmen who try to make it big with money they never earned. It is borrowed money. They invest the borrowed money to things that have no real market demands or to produce things that people don't really want. Only people who are like them would buy these things from them, also with borrowed money, hoping that they can sell them to other people who are like them, and the cycle goes on. This is the game of "greater fool". The game is over when the ball is passed to the last fool, and the bubble bursts.

The biggest bubbles creators are governments. Just look at their deficits. They borrow money from the banks and spend it on things based on political factors and popularity, rather than true market demands. They would create synthetic jobs and new departments that no one with hard-earned money would create because it won't produce any real values to anyone.

And why do governments have so many red tapes? The more people they employ, the more paper works and red taps they create for one another and the more inefficient things become. Often times they try to solve problems that the current agencies and regulations created by creating yet more new agencies and regulations.

Who Moved My Cheese?

The ultimate criminal is central bank such as the Federal Reserve (Fed), which is the Bank for the government and other commercial banks. The Fed basically prints money out of thin air and lends it to the government and other financial institutions, and charge them interests for it.

The government got you into heavy debts. But you know what? The Fed is privately owned. In order words, they monopolized paper money and the government makes sure that they will always make profit off our tax money by heavy borrowing without your consent!

Now your great grand children who are yet unborn owe the Fed money!

To put it simply, the more debts they pump out, the more the private bankers behind the Fed make money off your tax dollars, and when the bubble bursts, many people go bankrupt. Huge wealth evaporated because non-producing borrowers waste them on malinvestment.

If you are not one of the borrowers and you want to keep your hard earned money from the invisible tax of inflation, then buy gold is one viable option.