The major consequences of inflation are a shrinking dollar, a decrease in purchasing power and real wealth destruction due to a declining currency. Investors see the opportunity to invest in gold or other precious metal is in reality a hedge for their retirement account or investment monies. They use hedges as a counterbalance to other asset classes. If a certain asset class is experiencing losses, then they are protected with their hedge in a different asset class. Precious metals surge in value as the dollar declines.
Precious metals preserve wealth and create investment portfolio stability in turbulent times more effectively than any of the other asset classes. The preservation of wealth and the stability that is offered remains as strong as ever to today’s investor. It is one of the few assets that are not affected by a promise to pay, as it offers safety from widespread default risk.
Safe haven investments provide protection from any potential financial disasters that may arise. In times of crisis or stressful economic times, precious metals carry the least amount of risk and the greatest amount of liquidity.
Investors know that holding physical precious metals will provide them with long-term buying power.