Gold As An Insurance Policy


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Are you intrigued about the reasons why investors are purchasing more Gold? A primary reason for this interest in Gold is its role as an insurance policy. Possibly because no one has ever defaulted on Gold, it is considered an insurance policy that will pay out when needed.  The following are examples of how Gold reinforces that belief and how it provides financial security and protection against uncertainty:

  • The fragile economic recovery we are experiencing in the U.S.
  • The high level of debt in our cities, states and federal government.
  • The fragile economic recovery in the European Union, Russia, Japan and many other parts of the world.
  • The sovereign debt crisis in Greece, Portugal and Ireland that threatens to spread into Italy and Spain and eventually the entire European Union.
  • The geopolitical tensions in the Middle East; India and Pakistan; North & South Korea and elsewhere
  • The volatile currency markets. Even Central Banks are becoming less reliant on paper money and trading it for gold.
  • The devaluation of the U.S. dollar.
  • Investors try to deal in financial markets which move at the speed of light, and where “flash crashes” occur and one year later can still not be explained.
  • Inflation in the U.S. and other countries where governments choose to print more money to cover their debts.
  • Black Swan Events. The recent earthquake, tsunami and nuclear reactor problems devastated Japan. Unexpected events with severe negative consequences cannot be predicted. We know they will come but we cannot anticipate the time and locations.

Gold holds value in times of uncertainty where your other investments do not. There is an old saying, “Put 5-10% of your money in Gold and 90-95% into the three primary asset classes; then every night go to bed and hope Gold prices go down because that means everything else just went up.” 

Geoff Varner, APMEX Account Manager