Gold, Silver & Platinum with WhichWayGold - House Price Predictions with WhichWayHomes   House Price Predictions & Real Estate News - WhichWayHomes   How to buy Gold, Silver & Platinum - WhichWayGold
Buy Gold Now - How and why to buy gold

Buy Gold Now: Why should you buy gold? How do you buy gold? Investment expert Shayne McGuire explains how to profit from this precious metal and how buying gold can protect you from financial risk. Read more about Buy Gold Now >

Join WhichWayGold on Facebook Follow WhichWayGold on Twitter

Category Navigation:

You're currently on:

Hard Foreign Currencies

Richard W. Fisher, President, Dallas Federal Reserve: "Throughout history, many nations, when confronted by sizable debts they were unable or unwilling to repay, have seized upon an apparently painless solution to this dilemma: monetization. Just have the monetary authority run cash off the printing presses until the debt is repaid, the story goes, then promise to be responsible from that point on and hope your sins will be forgiven by God and Milton Friedman and everyone else.

We know from centuries of evidence in countless economies, from ancient Rome to today’s Zimbabwe, that running the printing press to pay off today’s bills leads to much worse problems later on. The inflation that results from the flood of money into the economy turns out to be far worse than the fiscal pain those countries hoped to avoid.

Earlier I mentioned the Fed’s dual mandate to manage growth and inflation. In the long run, growth cannot be sustained if markets are undermined by inflation. Stable prices go hand in hand with achieving sustainable economic growth. I have said many, many times that inflation is a sinister beast that, if uncaged, devours savings, erodes consumers’ purchasing power, decimates returns on capital, undermines the reliability of financial accounting, distracts the attention of corporate management, undercuts employment growth and real wages, and debases the currency".

Savers Face Challenges in a Low Interest Rate Environment

Saving money is a good thing but with inflation threatening the purchasing power of the U.S. dollar and the British pound, simply piling money into savings or money market accounts or even government bonds is not a realistic way to sustain or grow your wealth. With interest rates at absurdly low levels, savings accounts do not offer suitable returns. Furthermore, our governments' are going to great lengths to keep interest rates low in order to encourage yet more spending and more debt.

Bond Prices are Overvalued

In order to keep interest rates depressed government is purchasing vast quantities of government bonds and mortgage-backed securities. As a result, the prices of these securities no longer reflect free market forces. Rational buyers may consider these securities overvalued, reducing their appetite to make further purchases. Foreign buyers may stop purchasing U.S. and U.K. government bonds, causing a severe decline in the value of the dollar and the pound. Indeed, these currencies will also decline if U.S. and U.K. citizens sell their bonds and invest their money abroad.

Rising Interest Rates are the Beginning of the End

When the impact of inflation starts to emerge through rising prices, the expectation is that interest rates will rise. But when interest rates do start rising, they will do so on an even larger pile of debt, posing an even bigger problem for government. At that point government will have only one option: default on the debt. The default will take place suddenly or over time, but it will take place, destroying the value of the U.S. dollar and British pound in the process.

Finding Safe Havens for your Cash Holdings

In light of these factors, investors should consider adding a diversified selection of hard currencies to their portfolios - the currencies of countries pursuing “sound” monetary policy, providing an environment which fosters long-term price stability.

Read more about Hard Currencies: A Safe Haven for the Cash Component of Your Portfolio >

GoldMoney. The best way to buy gold & silver Buy gold online - quickly, safely and at low prices