Why should you make sure you get outright ownership of bullion quality physical gold bars and gold coins? After all, it would be so much easier to just get a gold account.
The reason is risk of default. One of the patterns which recurs throughout history is that growing financial sophistication leads to widespread expansion of credit and exposure to default. Then few people successfully avoid it when it matters.
Lack Of Risk With Physical Gold Bar and Gold Coin Investing
Banks, pension savings, mortgage guarantors and all the major financial institutions on which we depend are now tied up in a web of undelivered assets. A is the registered owner of a bond payable by B, the principal on which has been credit-swapped out to C. The terms are controlled by a deed drafted by an investment bank D, which itself receives the interest.
This has been aggregated with 30 others and sold notionally to E. E is foreign, and flattens the FX risk with a bank F, who sells and rolls a future on his long currency book. Now this is bought by another bank for an assured profit by running the position against a higher yield bond bought from a junk-status borrowing customer. They have been insured against the risk of default with G, a major insurer, who happens also to be A.
You don’t need to understand all that to understand something so complicated is also like to fall apart eventually.
These are the styles of relationship which dominate the world in which ordinary peoples’ savings are bound up, and they are profitable in the short term. This is why financial rather than commercial companies increasingly dominate the list of the top companies in America and Europe. They find it easier to make profits by providing credit and assuming eventual repayment, rather than by actually demanding settlement; a habit which could put off no end of potential customers.
Physical Gold Bullion is NOT Subject to Financial Market Manipulation
All our common savings products are bound up in these webs. We don’t know anybody who really knows when and where these webs will break. With the greatest possible respect, we don’t think you do either. But it is so certain that they will break, and at an unexpected place and time, that we believe every forward thinking person with a respectable private reserve would do well to opt out with at least part of their savings.
A purchase of gold is a good way to do this. But gold accounts, indexes, spread bets, and futures all fail to extricate the buyer from the web of dependencies, because they are based on undelivered gold. The only way to opt out of the web is to own physical property outright.
Billionaire hedge fund managers use Physical Gold to help protect their customers.
Gold typically goes up when there is uncertainty or a collapse in other financial markets. Take for example the global financial crisis from 2008. While the markets were crashing, banks failing, and people lost their jobs and houses; gold increased an unprecedented amount.
Many smart smaller investors are putting a portion of their portfolio into gold. There are a number of different ways to help hedge against economic disaster buy buying gold. If you would like to know about some of these options then read our previous article here.