Do Gold, Silver, and Precious Metals act as a Hedge Against Inflation ?

Grandpa Bill continues today talking about- How investors would prefer to buy assets whose values remain the same or increase with increase in inflation. One of such assets often considered is gold. There are some features of gold that make it attractive and unique relative to other commodities namely its durability, universal acceptability and authentication, transportability, its role as a store of value.

What's Your thoughts on Gold, Silver, and Precious Metals?
Do You Own Gold, Silver ,or Precious Metals?
Interact Leave Your Replies at THE BH SALES KENNEL KELP HOLISTIC HEALING HOUR MESSAGE BOARD

During the 2008 financial crisis, the price of gold increased by 6% while many key mineral prices fell and other equities plunged by around 40%. Following the cessation of Bretton Woods in 1971, a freely floating period of gold price was initiated. Similar to most commodities, gold price is determined by its demand and supply. The supply of gold is stable and relatively inelastic. This has been attributed to the challenging extraction process, tediousness of creation of new mines and passive keeping of stocks of gold by Central Banks irrespective of the patterns of the real gold price.

Two components of demand for goldare the use and the asset demand.The use demand is related to the direct use of gold for producing jewellery, coins, electrical components, medals, among others. The use demand is mainly affected by the business cycle, specifically by the purchasing power of firms and households. However, due to the appealing features of gold during crisis and recessions, the asset demand could act counter-cyclical.
The asset demand emphasises the use of gold as an investment by individuals, governments and fund managers to hedge inflation, recession and other forms of uncertainty,investors purchase gold to hedge against any economic, political, or currency crises, for diversification as well as financial arbitrage purposes(The simultaneous purchase and sale of equivalent assets or of the same asset in multiple markets in order to exploit a temporary discrepancy in prices.

The calculation of the relative value at the same time, at two or more places, of stocks, bonds, or funds of any sort, including exchange, with a view to taking advantage of favorable circumstances or differences in payments or other transactions; arbitration of exchange).how unexpected changes in the CPI affect gold prices. Two different hypotheses purport to explain the relationship between expected inflation and gold prices. The expected inflation effect hypothesis argues that changes in expected inflation will cause immediate changes in gold prices. The carrying cost hypothesis argues that higher expected inflation will cause higher interest rates (the Fisher effect). The higher interest rates will, in turn, cause a higher cost of carry.
#preciousmetals #silver #bullion #gold #silverstacking #silverbullion #silverstacker #coins #silverdegenerates #goldbullion #silvercoins #silverbars #silverbar #silvercoin #finesilver #goldcoins #silverporn #coincollecting #stackingsilver #coin #silvercommunity #pouredsilver #numismatics #goldcoin #investment #investing #money #goldstacking #coincollector #handpouredsilver,#gold #jewelry #silver #fashion #jewellery #love #k #handmade #diamond #diamonds #art #necklace #earrings #ring #luxury #style #accessories #design #instagood #emas #rings #bracelet #beautiful #jewels #black #wedding #oro #jewelrydesigner #handmadejewelry #beauty,#goldbullion #gold #bullion #silver #silverbullion #goldcoins #preciousmetals #silverstacking #silvercoins #coins #goldcoin #silverstacker #silverdegenerates #silvercoin #silverbars #goldbars #silverporn #numismatics #silverbar #goldstacking #goldbar #coin #coincollecting #stackingsilver #coincollector #investment #coinsforsale #stacking #finesilver #coincollection



---

Send in a voice message: https://podcasters.spotify.com/pod/show/bhsales/message

Powered by Firstory Hosting