In times of Crisis, Find Shelter in Real Assets

With gold as a prime example, the recommendation to protect purchasing power is to diversify by acquiring natural resource assets, particularly productive land.

Monday, November 28, 2011

Although the European crisis has shown that despite the enormity of the U.S’s public debt, bonds that back it still have the confidence of many investors, the dollar as a reserve asset raises many doubts. Other traditionally strong currencies like the euro or the yen, are also uncertain bets in terms of serving to preserve the value of our assets. Not to mention the stock market where you have to have nerves of steel and daring of a pirate to keep be at ease.

The financial planning specialist Joey Levy, in an article in, emphasized the validity and wisdom of his advice three years ago, when he warned about the financial problems in the U.S., and recommended buying gold as protection from the upcoming crisis. An ounce of gold was then trading at $850. Now it is trading at $1690, having reached $1900, which means a decrease of 16% from this record price.

When asked "Despite this, do you still recommended that people buy gold?" Levy says, "Yes! Gold is priced in dollars and, in general, if the dollar rises in value, the price of gold falls. But the recent appreciation of the dollar is temporary. I say this because a country's currency is simply a reflection of the financial health of its economy. And the U.S. economy is very sick. The U.S. government will borrow and its central bank will inflate the dollar. All this indicates that the dollar will eventually fall and, therefore, that gold will rise much more. "

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Gold-US Dollar Relation

October 2008

Tradition says that in moment of panic gold is the refuge, but this time gold has not been a good recommendation.

These are the questions being asked to antiamericans. Why, in the middle of the worst financial crisis since the great depression, the collapse of the banking system and the strongest recession experienced in our lives, is the dollar getting stronger and is giving a hard and strong lesson to the the traditional gold?

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