The Case for Gold and Silver
Gold is Money! (Photo credit: r0b0r0b)
Yesterday, the European Central Bank announced that it would not limit the amount of bonds it would purchase from Spain and Italy, which immediately caused the interest rates on Spanish and Italian bonds to drop and markets everywhere rallied.  This was a bold step, but one that continues to reinforce what all countries are seeking to do to avert crisis and ensure stability:  print money and keep borrowing rates artificially low. Gold is now trading close to $1,700/ounce and silver is trading close to $33/ounce as the precious metals continue to be favored by investors who are uncertain about the future and are worried about inflation from the monetary operations of the European Central Bank and our own Federal Reserve.  Bernanke has clearly signaled the Fed's concern about unemployment and their willingness to continue to keep interest rates low, even if it means using "unconventional" policy tools:
As we assess the benefits and costs of alternative policy approaches, though, we must not lose sight of the daunting economic challenges that confront our nation. The stagnation of the labor market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years.
Over the past five years, the Federal Reserve has acted to support economic growth and foster job creation, and it is important to achieve further progress, particularly in the labor market. Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.
Silver Chart:
Some believe that gold and silver cannot continue to rise in value, and yet they have consistently over a long period of time (silver, of course, is much more volatile). Â Many investors believe that with the entire world printing money, the value of gold and silver could double or triple in the next year. Â I could be wrong, but I think the truth is probably somewhere in the middle and gold and silver will continue to steadily increase in value over time. Â Investors should have a portion of their portfolio in precious metals, preferably physical gold and silver (Silver Eagle and Gold American Buffalo bullion coins produced by the US Mint are excellent ways to invest). Â
Since 1985, the value of the dollar has declined by half. Â This will continue to provide fuel to the value of gold and silver:
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