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6 Powerful Charts: Reasons to Invest in Precious Metals

Advantage Gold is committed to providing you with the education, understanding, and comfort you need to make sound financial decisions. These 6 powerful charts and graphs draw on public data such as the U.S. Treasury’s national debt figures to help you learn about gold and why you should choose Advantage Gold for converting your existing IRA or eligible 401(K) into a gold IRA or other precious metals IRA.

Market Volatility

Gold vs. The Market

Global Demand

The Shrinking US Dollar

Inflation

U.S. Corporate Debt

U.S. Student Loan Debt

Global Government Debt

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6 powerful charts: Market Volatility – Advantage Gold

Overvalued or Undervalued

Since the year 2000, the price of gold has experienced significant fluctuations, while the national debt in the United States has grown alarmingly. At the beginning of the millennium, gold prices hovered around $280 per ounce. Still, they steadily increased over the next decade, reaching an all-time high of around $1,900 per ounce in 2011, overvalued compared to the National Debt. Multiple factors, including concerns about the stability of the global economy, geopolitical uncertainties, and a decline in the value of the US dollar, drove this increase. Conversely, the national debt in the United States has continued to rise, reaching over $30 trillion in 2022, representing more than a 400% increase since 2000.

Compared to the growth of the national debt, the price of gold seems undervalued, especially when considering gold’s historic role as a store of value and a hedge against inflation. However, the correlation between the national debt and gold prices implies that as the debt continues to grow, the value of gold should increase in response. However, the price of gold has kept pace with the escalating national debt, suggesting that its actual value needs to be accurately reflected in the current market price. Nevertheless, as the national debt continues to climb, gold’s undervaluation may eventually be recognized, leading to a potential increase in its price as investors seek a reliable store of value in an increasingly uncertain economic environment.

Chart: Gold vs. The Market – Advantage Gold

Gold vs. The Market

In order for the DOW to have kept pace with Gold over the past 15 years the DOW would need to be trading at 56,212 points.

If you had invested $100,000 in 2000 you would now have:

  • $625,428 in Gold
  • $288,908 in the DOW
  • $274,353 in the S&P
  • $288,160 in the NASDAQ
Chart: Global Demand – Advantage Gold

Global Demand

Gold has been viewed as a way to pass on and preserve wealth from one generation to the next, especially because of global demand. This global demand has been driven by numerous factors including but not limited to the Great Financial Crises, inflation, central bank activities, central bank demand, and more. According to The World Gold Council, the amount of gold bought annually has roughly tripled since the 1970s. The demand for gold is unlikely to weaken anytime soon. Central banks have been buying gold like gangbusters in recent years. With global central banks trying to unwind their years of ultra-low interest rates and quantitative easing, the need for gold is greater now than ever, setting a new record high of up 152% to 1,136t in 2022.

Chart: The Shrinking US Dollar – Advantage Gold

The Shrinking US Dollar

The U.S. Dollar has been the flat currency of the world since President Nixon took the U.S. off the gold standard in 1971. Fiat currencies are not backed by any physical assets such as gold and silver but instead derive their value from the credit of the issuing government and its promise to pay. Thus, paper currencies are often vulnerable to global market instability, political uncertainty, frivolous government spending, and, most recently, irresponsible money supply increases through various central bank policies, including quantitative easing and government bailouts.

SHIFTING TIDES: GLOBAL MOVEMENT AWAY FROM THE DOLLAR

With a loss of 98% of its purchasing power over the past 110 years, a large-scale move away from the Dollar has already begun. Countries are now seeking to transact major commodity purchases, such as for crude oil, outside of the traditional dollar path.

These nations are now looking to use alternative currencies, such as the Chinese Yuan, or even commodities like gold to buy their crude oil. A shift away from the Dollar will have significant implications for currency users and the U.S. Government.

GOLD: A RESILIENT HEDGE AGAINST ECONOMIC UNCERTAINTY

Investing in gold has long been regarded as a prudent strategy, especially in times of economic uncertainty and currency devaluation. Unlike fiat currencies, gold possesses intrinsic value and has served as a store of wealth for centuries. Its scarcity, durability, and universal appeal make it a reliable hedge against inflation and market volatility.

In times of economic downturns or geopolitical turbulence, gold tends to retain its value or even experience appreciation, providing investors with a safe haven. Moreover, gold is not subject to the whims of central bank policies or government decisions, offering a degree of independence that is particularly appealing in times of financial instability. As concerns about the long-term stability of fiat currencies grow, gold’s status as a tangible and time-tested asset continues to make it an attractive option for those seeking to preserve and grow their wealth.

The precious metals experts at Advantage Gold are ready to help you transfer, roll over, or establish your Gold IRA.We are the highest-rated gold company, and welcome you to read some of the thousands of online five-star reviews our clients have written.

Click the link and tell us how to contact you, or call us today. An account executive is here and happy to help. We look forward to your call.

Chart: Inflation – Advantage Gold

Inflation

Inflation has been a significant concern in the United States over the past five years. The Consumer Price Index (CPI), which measures the average change in prices for goods and services, has risen by 6.2% over the past 12 months, the highest rate of inflation in over 30 years. Rising prices for goods and services have put a strain on households, particularly those on fixed incomes or with lower incomes, who are more vulnerable to the effects of inflation. In addition, higher inflation can lead to higher borrowing costs, which can put a strain on businesses and lead to lower investment and hiring.

The COVID-19 pandemic has contributed to inflationary pressures in the United States. Supply chain disruptions and shortages of key goods, such as semiconductors and building materials, have driven up prices for everything from cars to housing. In addition, large-scale government stimulus programs, including direct payments to households, have injected more money into the economy, contributing to higher prices for goods and services.

While these programs have provided critical support for households and businesses during the pandemic, there are concerns that they could contribute to longer-term inflationary pressures.

Addressing the challenge of inflation in the United States will require a careful balancing act by policymakers. On the one hand, policymakers will need to continue to provide support to households and businesses as they recover from the pandemic. On the other hand, they will need to take steps to ensure that inflation remains under control and does not threaten the broader economy. This may involve tightening monetary policy, including raising interest rates, as well as measures to address supply chain disruptions and other factors driving up prices. Ultimately, the goal will be to strike a balance between supporting economic growth and ensuring that inflation remains under control.

Chart: U.S. Corporate Debt – Advantage Gold

U.S. Corporate Debt

Over the last decade, the corporate debt market in the United States has grown significantly, with total outstanding debt surpassing pre-financial crisis levels. According to data from the Securities Industry and Financial Markets Association, the total amount of outstanding corporate debt in the United States stood at $11.1 trillion in 2021, compared to $6.7 trillion in 2010. This growth has been driven in part by low-interest rates, which have encouraged companies to borrow money to finance investments and acquisitions. However, the increase in corporate debt has also raised concerns about the ability of companies to manage their debt loads in the event of an economic downturn. This is particularly true for companies with lower credit ratings, which have accounted for a growing share of the corporate debt market in recent years. While low-interest rates have provided a boost to the economy, there are concerns that the buildup of corporate debt could pose risks to financial stability in the future.

Chart: U.S. Student Loan Debt – Advantage Gold

U.S. Student Loan Debt

Over the past decade, student loan debt in the United States has grown significantly, reaching unprecedented levels. According to data from the Federal Reserve, the total amount of outstanding student loan debt in the country surpassed $1.7 trillion in 2021, more than double the amount from a decade ago. This increase in student loan debt has been fueled by a combination of rising tuition costs, increasing numbers of students attending college, and a lack of government funding for higher education. As a result, many recent graduates are facing significant financial burdens, including high monthly payments, difficulty finding affordable housing, and delays in starting families or pursuing other life goals. The impact of student loan debt on the economy and the well-being of individuals is a growing concern, and there are ongoing discussions about potential solutions to address this issue. Including Debt forgiveness, resulting in US tax payer responsibility.
Chart: Global Government Debt – Advantage Gold

Global Government Debt

Over the last decade, global debt has reached historic levels, driven in part by a surge in borrowing by governments and corporations. According to the Institute of International Finance, global debt reached $301 trillion at the end of 2021, more than three times the size of the global economy. This represents an increase of around $100 trillion from the levels seen at the end of the 2008 financial crisis. While low-interest rates have made it easier for countries and companies to borrow money, there are concerns that this buildup of debt could pose risks to financial stability and economic growth in the future. High debt levels can lead to higher interest rates, which can put a strain on households, businesses, and governments alike. In addition, there are concerns that the pandemic has made it harder for many countries to manage their debt loads, particularly in the developing world, where many countries are struggling to cope with the economic fallout from the pandemic. Addressing the challenge of global debt will require a coordinated effort from policymakers, investors, and other stakeholders to ensure that debt remains sustainable and does not threaten global economic stability.