Friday, May 29, 2015

Which One is Best for Long Term Investments? Investing in Gold or US Dollar as Safe Haven Currency

Many investors stay confuse what exactly the best investment for better gain, Investing in gold or US dollar as a safe haven currency, oke lets see the simple description, as we knew that The U.S. owns about 258 million Troy ounces of gold that is of course mostly stored in The United States Bullion Depository Fort Knox, Kentucky, and that gold in 2015 is worth about $310 billion dollars. That's a relatively paltry sum when you think about it, it's only about 1.7% of our current $18 trillion dollar national debt.

Based on histroical gain by value, Gold increased in value from about $400 per Troy ounce in 2005 to about $1,200 per Troy ounce in 2015 or about three times (3X) in 10 years. US national debt however went up from about $500 billion dollars to about $18 trillion dollars or about thirty-six times (36X) over the same period.

That is the fact that gasped you, surely bother you that gold has increased so little over the past 10 years while US national debt has increase so much over the same time period? Trillions and trillions of paper US dollars or just electronically created dollars and the value of gold has hardly moved? of course it does not make any sense, some investors and gold or forex trader has been argued that the value of gold can not be directly related to dollars but only to its relative value in goods.

Some simple example often used is "if a Troy ounce of gold purchased a suit in 1920 the same quality suit could be purchased for an ounce of gold today." I'm sorry, but in my opinion that is a ridiculous comparison. At this point we can argue that gold is valued on a supply and demand basis and when there is anxiety about the monetary system money gold prices take off. Gold is one of the few things that is difficult to create. You can't just decide you want to "create" a trillion dollars worth of gold, it just doesn't appear.

US dollars is just a papers and numbers but Gold is commodity, As long as gold is seen as a commodity, a material that makes beautiful jewelry, and there is no instability in the monetary system, gold's relationship to any currency will remain irrelevant. So what do you think... which one is best for long term investments??? saving gold or US dollar as a safe haven currency?

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