The author of Death of Money was on Fox Business last week, advising investors to put approximately 10% of their investment portfolio into physical gold. (Source: Fox, last accessed September 8, 2015.)
The renowned gold investment expert likened the yellow metal to fire insurance for your home. Nobody expects their house to burn to the ground, says Rickards, but if it does you can at least be confident that your insurance company will minimize your loss. (Source: Gold Seek, last accessed September 8, 2015.)
Gold functions in the same way, acting as a hedge in the event of an economic collapse. With slumping commodity prices, negative economic signals from China, and wider global stock market volatility, such a financial collapse is looking increasingly more likely.
This is why you should be thinking about allocating a small portion of your investment portfolio to gold, which will act as a nest egg in case of a market crash.
Rickards maintained that if you begin to think of gold as insurance, and only an investment in the long-term sense, the benefits of buying it becomes a no-brainer. When you purchase insurance for your home, you don’t worry about when it will decline. You’re simply happy it’s there, feeling secure that if and when a bad situation arises, you’ll be covered.
Money is a virtual commodity, subject to the pulse of global commerce, but gold is a physical thing with intrinsic value. It can be difficult to disassociate ourselves with our attachment to money, says Rickards, but historical data does not lie. In times of financial crisis, the gold price skyrockets while paper currencies inevitably plummet.
Once confidence in money disappears, as it always does in cycles, the yellow metal is king.
Rickards restated his opinion that the gold price will surge to $10,000.00 an ounce, but not for the reasons you might think. It will be the decline in value of the U.S. dollar due to economic collapse that will drive the gold price forecast so high.
If Rickards is correct, our fundamentally unstable financial system could collapse at any moment, bringing down the house with it. You might want to make sure you have that home insurance, then.