Gold Investing 101- Precious metals, particularly gold, are a very common investment opportunity in our modern world. Gold has become extremely popular both as a hedge against inflation and currency devaluation and as a primary investment with historically solid returns over time. Many small-time or new investors are eager to invest in gold; however, the high prices and multitude of investment options can be overwhelming. Buying gold physically in the form of bullion or coins, trading for gold in the foreign exchange markets, or trading a variety of gold related stocks or mutual funds are all viable methods to invest in gold. Some of these methods can seem downright frightening for the new … [Read more...]
How the Dollar Affects Gold Prices
Interview with Jim Puplava, by Jeff Clark, Casey Research Jim Puplava has robust convictions….The CEO of Financial Sense News Hour, Jim is a man you should listen to carefully if gold factors in your portfolio or if you are thinking about adding gold anytime soon. In this interview, Jim talks about how the dollar affects gold prices. He discusses whether we are moving into a phase of deflation or inflation and gives his views on what exactly that will mean to gold investors. He discusses the likely impact of inflationary or deflationary forces, which one he believes will win out, and the effect it will have on our economy. Finally, he makes a very interesting prediction. Of course, … [Read more...]
Inflation and Commodity Prices
It is critical to understand the correlation between inflation and commodity prices and the effects of inflation on commodity prices themselves. In recent years, the global financial markets have been in flux as they've gone up and down repeatedly. The commodities market has been especially volatile with items like gold and oil going up significantly. While a number of different factors contribute to the prices of commodities, inflation is one aspect that has a direct impact on the price of commodities. Inflation and Commodity Prices Inflation is a process that occurs when the purchasing value of a currency is lowered. This is usually determined by comparing the prices of a good or … [Read more...]
How Does Gold Fare During Hyperinflation?
By Jeff Clark, Casey Research Inflation is a natural consequence of loose government monetary policy. If those policies get too loose, hyperinflation can occur. As gold investors, we'd like to know if the precious metals would keep pace in this extreme scenario. Hyperinflation is an extremely rapid period of inflation, but when does inflation (which can be manageable) cross the line and become out-of-control hyperinflation? Philip Cagan, one of the very first researchers of this phenomenon, defines hyperinflation as "an inflation rate of 50% or more in a single month," something largely inconceivable to the average investor. Hyperinflation has One Root Cause While there can be … [Read more...]
Why Buy Gold?
Gold has been one of the best investments over the last decade going from a low of $252 to a high of $1889. If you're looking for a way to protect against the effects of inflation, currency collapse or economic instability, here are a few things to consider about why gold should be in your portfolio. Return to the Gold Standard If you've been paying attention to what is going on in the world these days, you know that the financial markets have been in turmoil. Much of this relates to the basic underpinnings of the economic system. In the United States, the Federal Reserve is in charge of the money supply and interest rates. Nothing is backing the paper money that is printed, other than the … [Read more...]
What Happens to Gold if We Enter a Recession or Depression?
By Jeff Clark, Casey Research Mayan prophecies aside, many of the senior Casey Research staff believe that economic, monetary, and fiscal pressures could come to a head this year. The massive buildup of global debt, continued reckless deficit spending, and the lack of sound political leadership to reverse either trend point to a potentially ugly tipping point. What happens to our investments if we enter another recession or – gulp – a depression? Here's an updated snapshot of the gold price during each recession since 1955. … [Read more...]
Inflation Adjusted Gold vs Stocks vs Bonds
Recently our good friends at Casey research published the following chart comparing the inflation adjusted Gold returns to stocks and bonds for the period 1971 through the present. From this chart we can see that as bonds fell during the late 1970's gold rose equivalently and stocks were basically flat. During the 1980's bonds rose and gold fell while while stocks rose slightly. During the 1990's stocks rose sharply gold fell and Bonds were volatile but basically flat to slightly up. During the 2000's gold was up sharply, stocks were volatile and bonds were pretty flat. … [Read more...]
Why (and How) China is Boosting the Price of Gold
The History of Gold Prices (and How We Got Here) To get the full picture of the current price of gold we have to look back nearly 100 years. In the 1800's and early 1900's gold played a key role in international monetary transactions. The gold standard was used to back currencies. Each country determined a fixed exchange rates for its currency, i.e. how many ounces of gold each unit of currency was worth. Trade imbalances (importing more than they exported or vice versa) could rectified via the exchange of gold reserves. A country with a deficit would have to ship gold to the country with an excess. Any country experiencing inflation would lose gold and therefore would have a decrease in … [Read more...]
Gasoline 20 Cents a Gallon?
Many of us aren't old enough to remember Gasoline at 20 cents a gallon. I can remember gas during the 1960's at 29.9 cents a gallon. The last time that gasoline averaged 20 cents a gallon was in 1942. That was during WWII ! But if you know us here at InflationData.com you probably know that we usually talk in inflation adjusted prices. So adjusting for inflation, the price of gas in 1942 would have been $2.78 if you are paying in January 2012 dollars. But that is still a long way away from the average price of Gas in 2011 of $3.48. We track the inflation adjusted price of gasoline based on the annual average price using the Consumer Price Index (CPI) generated by the U.S. Bureau of Labor … [Read more...]
How Global Financial Developments are Affecting the Price of Gold
Let’s face it. With the US economy facing the bitter consequences of extravagance and unscrupulous spending, it has become quite difficult for the US to manage both its public and private debts now. In this phase of post recession hangover and economic meltdown, the U.S. federal government has bumped up against its permitted borrowing limit. According to Alison Fraser, director of the Roe Institute for Economic Policy Studies, America’s debt just crossed $15 trillion, which means presently, the amount owed by the United States government to the world, is equivalent to the amount produced by the American economy per year. All these factors lead to higher prices and intensifying inflation … [Read more...]
