Why are there more gold buyers than ever before in Trinidad & Tobago?
Within the last few years there has been an increased prevalence of advertisement attempting to induce consumers to part ways with their gold jewellery. Though the practice of cash for gold is not a new one and is a legitimate business; this article seeks to inform consumers before they make such a decision.
Clearly these new gold buyers realize something that the gold sellers or the public in general may not realize. Gold is very popular as an investment, particularly as a store of value and investors generally buy gold as a hedge or a safeguard against economic, political or social crises which look more and more likely by the day. Here’s why:
The US Is In Severe Economic Trouble and the $US dollar and by extension the $TT which is pegged to the $US will lose substantial value. Here are a few basic stats:
- US national debt $US16.9 trillion
- US Total GDP of $15.6 trillion
- The actual liabilities of the federal government—including Social Security, Medicare, and federal employees' future retirement benefits—already exceed $86.8 trillion, or 550% of GDP
- US Federal Budget Deficit $1.05 Trillion
- Many European countries debt to GDP ratios are in similar or worse shape
The US is temporarily spared the inflationary effects as the rest of the world absorbs all these excess dollars and even hoards $US since the rest of the world deems the US dollar as a safe haven. These dollars therefore are currently stored all over the world and are not demanding any goods, services or assets of the US economy to any real extent. These inflationary chickens ultimately must come home to roost.
Since Trinidad's currency is artificially pegged to the $US when this inflation hits the United States Trinidad and Tobago will experience parallel loss in purchasing power. Even more so because Trinidad imports significant amounts of consumer good from the US.
Currently the world has implicit trust that the US dollar value is backed by the full faith and credit of the US i.e. the ability of a holder of a $US to purchase goods in the US at any time. Note that scarcity makes anything more valuable –conversely the increased availability of anything reduces is value. In other words when more dollars are printed the less existing dollars are worth.
Other international investors are figuring this out as well, aside from governments and central banks, ordinary citizens of developing nations see gold as the present and future method of preserving wealth. In fact international central banks have begun sensing whats up ahead and have started to accumulate significant amounts of gold as an attempt to diversify their holdings and hedge against the inflationary effects of global money printing, central banks, for the first time since the mid 1960s, have become net buyers of gold.
It is highly recommend you hold on to your gold and other precious metals, moreover try to ensure your investments are invested in hard assets, real estate, agricultural lands, food production and/or productive businesses not government bonds denominated in $US or $TT or mutual funds that invest in these financial classes. Investments denominated in the Canadian dollar, Australian dollar, New Zealand dollar etc i.e. countries that have sound monetary systems should be considered.