If you are among the many people who do not spend a lot of time following the investing world outside of what you read in the newspaper before work each morning, you may not know why there is so much fuss around precious metals these days. You have likely read that gold and other metals are trading at astronomical prices and that many wonder if prices are really going to keep soaring, but you may not know just why everyone is buying gold or why it may in fact be the best decision that these people have ever made.
The surge in precious metals prices and the trend towards buying gold, silver, and platinum started in the wake of the economic crisis a few years ago. Until this point, the metals were used primarily as a means of offsetting the risks associated with stocks and other fiat based investments. But when the economic crisis hit and most people took major losses to their 401k plans and other investments, many realized that a better solution was in order. As more and more people started turning to precious metals, their supplies diminished, in return creating a massive surge in value.
If you stop here, this has all the makings of a bubble market story. Everyone invests, something falls flat, and everyone loses money. But before you leave with that thought, understand this. Buying gold isn’t just something investors are doing. Governments and corporations are doing the same. Why? Because we have collectively realized that fiat currency is not safe. And as the US nears the debt ceiling and another global economic crisis looms larger, everyone is seeking a better option.
The bottom line is that everyone is buying gold because it may well be the safest and smartest option available. There is little chance that the US will avoid hitting the debt ceiling, and the risks of fiat currency investments in the face of that are far too great. Even if you do not consider yourself an investor, gold may well be worthwhile as a purchase. Not only does it hold the potential for a financial gain, but if the economy crashes and the dollar really does lose its value, it will be gold and other hard assets that provide the power and wealth to those holding them. In short, gold and other precious metals may well be the currency that remains if the economy fails.