Several reasons have been put forth for the recent decline in gold. At the top of that list is recent dollar strength, higher stocks and rising interest rates. While all of these are legitimate reason for gold to come under some pressure, how about what recently took place in India?
In case you have not already heard, India recently announced (on November 8th) that its 500 and 1000 rupee notes are no longer considered legal tender. While you might be thinking “so what?” if you think this through for a moment it is rather scary. What if the all of the $10 and $20 bills in your wallet right now were suddenly worth nothing? Zero zilch, nada…
That is essentially what just took place in India. There were some exceptions to the decree, including use of the notes to pay now for gas or hospital care, and receiving a “digital credit” for depositing your notes in the bank.
Although the Indian Government has cited counterfeiting, corruption and black money in India as the reasons behind this decision, it also begs the question of whether or not this is simply another move away from cash and more governmental control.
The move has possibly driven selling in gold for this reason: According to a recent article in Marketwatch.com, some estimates put the size of the Indian underground economy at 20 to 25% of the total economy, obviously a significant amount.
The article went on to discuss a common method of converting black money into white by slowly buying gold using large bills. This has reportedly been a significant source of buyer demand in India. Because the 500 and 1000 rupee notes represent so much of the outstanding cash in India, it Is plausible that immediate demand for gold could go down if in fact there is less need to convert cash from black to white.
Others, however, seem to be of a different opinion.
In a recent article from Dailyreckoning.com, Jim Rickards had this to say regarding this latest development in India:
“This war has been in full swing in Europe and the U.S. for a long time. Governments plan to use negative interest rates, confiscatory taxes and other techniques to rob savers of their wealth. In order to do this, they have to force savings into digital accounts at large government-controlled banks. As long as savers can hold cash, they can avoid many of these confiscation techniques. Therefore, governments must eliminate cash.”
So, if there is in fact a war currently being waged against cash, what asset class can investors turn to for peace of mind? What assets can investors actually hold in their hands, see smell and touch? What kind of asset can investors hold that is tangible and not simply some form of digital credit?
The answer is physical precious metals like gold and silver.
If you don’t currently have an allocation in physical gold and silver, now is the time to consider one. If you already own gold and silver, now is the time to consider adding to your holdings.
These precious metals have been considered a reliable store of wealth and value for thousands of years, and are recognized and exchanged all over the globe. In our view, they are the only form of real money.
Fortunately, acquiring and holding these physical precious metals has never been easier than it is today. Speak with an Advantage Gold account executive about the potential benefits of physical gold and silver ownership. Our professionals can show you the easiest ways to begin acquiring and holding physical precious metals, and can even show you how to buy these metals using your IRA account.
Don’t wait for prices to rise from current levels. Explore your options today. Call us at 1-800-341-8584 to get started now.Tags: advantage gold, cash, confiscation, digital credit, gold, government control, india, negative interest rates