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Swiss 1 Kilo Fine Gold Bar

I have written this website principally for my family and friends who may need to position themselves ahead of the coming financial storm. If my parents were to ask me why they should put some money into precious metals I would say that I see high or hyperinflation coming in the years ahead and that they should purchase precious metals in order to protect a portion of their wealth from its ravages. If my brother were to ask me, I would say that the probability of making impressive investment gains is high as investors rush out of paper investments and into precious metals. I would also suggest that he fixes the interest rate on his mortgage debt so as to benefit from the erosion of that debt by the inflation process.

Focus on the Big Picture

It is often difficult to see the wood from the trees, especially at times like this when the markets are volatile. Headlines about bailouts, financial collapse, plunging asset values and the onslaught of recession fill the newspapers and TV shows daily. It’s certainly hard to keep up. It is also difficult to know what to focus on in light of all of this “pushed noise”.

Your job as an intelligent reader is not to get bogged down in the details, good investing is all about focusing on the big picture – the tide is far more important than the swimmers. When big picture developments are identified ahead of time it allows us to shape our financial strategies in the best possible way. A clear picture is unfolding which is crucial to our vision of the years ahead: massive bailouts = massive money creation.

Dying of Money

The years ahead will be extremely challenging and quite frankly, frightening. Until the early 70’s our currencies were backed by a store of value – gold. In 1971 the U.S. suspended the convertibility of dollars into gold and by 1973 all of the major trading countries had agreed to follow suit, letting their currencies float freely against one another. From that point onwards the world’s major currencies have not been backed by gold, or any other store of value for that matter. The correction mechanism put in place to prevent economic excess disappeared.

So, nowadays money is just a piece of paper. Its value depends on how many of those pieces of paper are in circulation. Oh dear! The world’s governments and central banks own printing presses, or their electronic equivalents, and for the last 30 years these have been running at full speed, causing the global money supply to increase exponentially.

Money printing has become even more prevalent in response to the global credit crisis. The monetary powers are completely focused on bailing out the financial system. Central banks are pumping truly vast sums of money into financial institutions and into the economy. The authorities are trying their best to provide a financial fix, however the problem is too much debt, and by focusing very intently on adding more debt they inadvertently create bigger problems for themselves further down the line. I would liken current events to the monetary powers focusing on diffusing a candle in one corner of a room, while a time-bomb situated on the other side of the room ticks down towards zero.

The risks of hyperinflation - a complete loss of trust in our currencies and a currency default - grow stronger by the day.

Hyperinflationary Outlook

The process of inflation is little understood by the general public and neither is its impact on their wealth. Inflation works by transferring wealth from those with cash, savings and paper assets to those with debt. The government will benefit first hand as it has the largest debts. By taking appropriate actions now, individuals can mitigate the impact of the inflation on their wealth.

As a result of the coming inflation I see the price of gold, silver and platinum increasing as a safe haven, a store of wealth and a hedge against inflation. The precious metals may suffer from market volatility over the short term, but longer-term their destiny has already been set out by the actions of government today.

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