Gold continues to hit all-time highs. When this happens, it’s reasonable to wonder whether it will continue to climb or if it will drop. Some of the common questions we hear in these seasons are:
Is it too late to buy gold? Isn't the price too high?
In reality, a more accurate question would be: “Is the dollar going to continue to lose its value because of Congress’s spending and the Federal Reserve’s excessive printing?”
The answer is an undeniable yes. Gold, and especially silver, still remain highly undervalued, and you want to buy things that are undervalued and sell things that are overvalued. Hence the significant increase in demand from central banks to replace dollars with gold– go check out central banks' gold buying record over the last few years.
The “price” of gold and silver is less important than the purchasing power of gold and silver. If you had an ounce of gold 100 years ago, it was worth approximately $20. This would have purchased a suit, a pair of shoes, and a nice dinner out. While the price of gold kept rising, its purchasing power held steady for decades (equal to a suit, shoes, and dinner) until the first decade of the 21st century. Since then, its purchasing power has climbed considerably.
Today, $20 will barely get you an appetizer, but that same ounce of gold will get you a custom-tailored suit, a fine pair of shoes at Saks, and a half-dozen fine meals.
The purchasing power of gold has strengthened, while the power of the dollar has collapsed—and regrettably, will continue to do so.
The key is to hold your wealth in something that doesn’t deteriorate over time.
Gold and silver have maintained their value and purchasing power in good times, and in times of uncertainty, they gain purchasing power at the same time currencies lose their power.
There you have it, do you still think it's too late to protect your purchasing power?
