The economy is still fluctuating up and down and experts have no idea when it will begin a prolonged upswing. As of late, things seem to be moving in a positive direction, only to wipe out any progress in a single day, then start over again. During such uncertain times, it is wise to put one’s money into investments that offer stability.
The banking system is one area of concern and the fact that home foreclosures continue to hit record highs every few months is not easing anyone’s worries. Recently, some major banks have stated that they are halting foreclosures due to potential errors within foreclosure documents. One possible reason for this is that they cannot afford to mark the depreciated asset of the homes at current market prices.
If they become insolvent, these banks could fall under the FDIC’s solvency threshold, causing a takeover. This problem is being escalated by fractional reserve banking. In addition, banks are currently permitted to keep real estate listed at higher prices on their books but do not have to market it at those prices. If the rules reverted, some people believe the entire banking system would collapse.
Should that situation occur, individuals who have invested in gold will have a hedge against it. They are now taking time to buy gold coins, gold bullion, and gold jewelry. Physical forms of this precious commodity hold intrinsic value and will be worth something long after the dollar is not. People holding worthless paper money will not be able to exchange it for goods and services.
Though no one is certain that the economy will actually collapse, isn’t it better to be safe than sorry? No matter what the economic conditions, diversifying the portfolio by adding gold is a smart move. With the price of gold continuing to climb, those who hold it stand to make a profit regardless of whether the economy collapses.