Preserving your assets is one of the key things a savvy investor tries to do. Currencies can collapse in less than a day. That’s why you need to keep your wealth in other forms, preferably gold or real estate. Here’s a recent example. A while ago, Russia commenced military action towards Ukraine.
If other countries were to mix in, there is a chance that a new war could erupt immediately. That’s why most countries have decided to implement sanctions on Russia. That led to the Russian ruble decreasing 36 percent in value over the course of a single day. Matters are only going to get worse since they want to keep going with their plan. You can click here to read more info.
Has currency devaluation happened in the past?
You might think that devaluing a currency is something completely new. That’s not the case at all. There have been plenty of cases when that has happened. For example, in 1994, the Mexican peso got devalued during a Christmas Surprise, and it’s now infamous in the entire country.
The government decided to devalue it, and as soon as that was announced, tons of investors flooded the streets and formed lines in front of banks to start selling their orders. This caused a panic in the finance world, and everyone wanted to get out before they lost everything.
A lot of institutions collapsed immediately, and a lot of accounts were frozen out of the markets because they dropped so much. This got the ball rolling, and the peso did not have a good day. Immediately, the inflation rate skyrocketed to 50 percent, while interest rates got up to 70 percent.
People who had credit card debt were brought to the brink of bankruptcy because the interest was too much to handle. In a single year, the peso went down from 28 cents to less than 14 cents. Now, it trades in the 5-cent range. Go to this page to read more https://fortune.com/2022/03/09/gold-backed-cryptocurrencies-alternative-to-fluctuating-stock-and-commodities-markets/.
On the other hand, the complete opposite happened to the gold price. Over the course of a few hours, the price of gold skyrocketed from 1200 pesos to more than 2500 pesos per single ounce. During the rest of the year, it got up to 3000 pesos per year, which is 2.5 times the starting point. This just goes to show that this precious metal is the best hedge against inflation and disasters of any kind.
Now, you might be thinking that there were a couple of warning signs to the general public that something like this was going to happen. The truth is, there was no announcement and no financial preparation from the side of the average citizen.
Unless somebody had already diversified their portfolio and invested in gold, they would have been doomed. A crisis like this one can happen at any time, and it’s the investor’s responsibility to be prepared for it.
Why should you never sell your gold coins?
In the world, the dollar is considered to be the ultimate fiat representation. That’s why you should never wonder where to sell gold coins, because they’re better than fiat. It’s supposed to be linked to the power of the United States government, but there’s also an invisible link connecting it to oil. If you’ve been following recent events, you probably noticed that the dollar increased its buying power compared to other fiat currencies of the world like the euro.
That’s mainly because Russia got a lot of sanctions, and the States are selling oil at 117 dollars per barrel. Of course, even though times are looking good at the moment, the monetary unit is not immune to devaluation in the case of financial panic.
If the country makes an incorrect move, that can also lead to sanctions, and the Christmas Surprise that happened in Mexico can come early into the United States. Traditionally, gold has been considered as the ultimate form of money, both historically tested and proven to preserve wealth. That’s true even in the worst situation.
It saved the French during the 1790s, and it saved the Americans during the Civil War and the Greenback inflation. Even in 2008, this asset class was a top performer when everything else was tanking down. If you’ve got a couple of ounces or coins at home, don’t sell them unless you absolutely need them to survive. This precious metal will only get more expensive as time goes by, and it’s the best long-term investment to keep in your portfolio.
What can gold do in the future?
At the moment, this yellow metal plays a central and critical role in the financial system, even though it doesn’t look like that. There are too many private and public investors that are keeping their wealth in gold, and they’re going to keep doing so.
It gives us the protection of wealth in the most threatening circumstances, and the price to pay for that is quite high. No matter the case, it has served as an asset that can endure value and can be the symbol of wealth and freedom. The best quote about it is that it’s the only asset that’s not someone else’s liability at the same time.
You’re not lending it to anyone for safekeeping. Instead, you have the physical item in your own hands. In the case of a bond, you’re dependent on another institution to get your money. The same thing is true about stocks, certificates, and checks. To compensate for that, you get a little bit of interest. However, keeping your asset safe and letting it appreciate is much securer and better.