The Only Incentive is in Buying Gold Posted by James Randolph on March 28, 2012
While the Federal Reserve has announced a third round of Quantitative Easing, it is becoming apparent to all Americans that there is only an incentive to buying gold. Quantitative Easing is meant to bolster the markets and save the economy but it has the necessary consequence of diluting the purchasing power of the dollar.
Even though the Fed has promised it will “sterilize” the Quantitative Easing in an attempt to make some of its effects more palatable to Americans, it is unlikely to be entirely successful. Injecting trillions of dollars into the market has the necessary effect of making all the dollars already in the market slightly less valuable.
This makes saving, among other things, very difficult for Americans. For some time now there has actually been a disincentive for Americans to deposit money in a savings account because the Federal Reserve simply continues a policy of watering down the purchasing power of the dollars. This means that all those dollars in a savings account are actually losing value over time instead of accumulating.
Buying gold is the obvious solution to the money problems from a financial standpoint. Gold has an inherent value and therefore cannot be so easily changed as the value of the dollar. This is the basis of the Fed’s ability to alter the money supply. They can and are printing dollars through the Quantitative Easing programs.
Because they are printing so many dollars, the value of gold is going through the roof. Prices peaked over $30 on Monday after Ben Bernanke, the Chairman of the Federal Reserve announced there would be a stimulus program. This is because the market knows the prices will skyrocket with the additional stimulus. This rise in price was on the news of a Quantitative Easing alone. The funds have not even reached the market yet, but when they do the price of gold will increase dramatically.
This is one of the most fundamental dynamics at work in the gold market right now and one of the ways investors know that gold is the best investment available in the current market. Buying gold now is possibly the most sensible and best choice for any investor looking to retain their savings in a meaningful manner.
Senior Staff Writer – Certified Gold Exchange