Uncertain Investors Hoard Cash, Buy Gold Posted by James Randolph on April 23, 2012
Investors concerned with burgeoning economic developments in Europe are now accumulating hoards of cash in case of a serious crisis point, which is creating an opportunity to buy gold now. Most Americans are relatively unaware of how grievous the current economic struggle is in Europe and how closely tied our own economic fate is to the European bloc.
Perhaps you have heard about Greece once or twice in the past year and a half. The situation in Greece is dire, literally. They may not be rioting in Athens at the moment, but they’re certainly not doing business. The latest social indicator was a report that parents are now abandoning their children because they are unable to support them, reprehensible drugs are sold for five Euros everywhere, and major parts of Athens have literally been shut down.
The problem is, essentially, that Greece uses the Euro as its currency. So do a number of other European countries. Because the economy in Greece is awful, it drags down the value of the Euro, making the economic situation potentially catastrophic for the entire European bloc. This is, of course, a simplification, and there are a number of other financial connections and financial instruments that tie the fate of Europe to the fate of Greece.
For the aware investor, this potential crisis is a major rallying cry to buy gold. The writing has been on the wall for some time concerning Europe, and in order to protect themselves and their wealth, the most mainstream investors have been buying physical gold bullion for the past three to five years.
If you have any doubts whatsoever that the fate of Europe is inextricably tied to the situation we are seeing here in the US, simply recall the MF Global debacle of October and November 2011. The major US investment firm went bankrupt after two hundred years in business due to a bad bet on European sovereign debt.
We are tied to the health of the European Union whether we like it or not. Unless Greece exits the Euro, which is not indicated to happen in the foreseeable future, we will see the terrible economic situation in the Mediterranean affect us here in the US. The best thing we can do as investors, workers, and people is hedge against the Greek balance sheet problem by taking the initiative to buy gold now.