As this is just the start of the new calendar year the most important question that comes to one's mind is where to invest in 2011. Should one choose stocks or go for commodities, especially precious metals?
Today lets have a look how each of the assets have performed over the past 5 years. While stocks have gone up significantly, the precious metals - gold and silver - have massively out performed them. The average gold price during the year 2005 was hovering round about US $ 444.75/ounce. In 2010 the average price of gold is US $ 1421.22/ounce. Gold has become a red hot investment in the year 2010 just for the reason being that there are concerns about inflation and mounting fiscal pressures in the US and Euro. Sovereign debt worries in Europe and large stimulus spending in the U.S. resulted in a particularly volatile year for both the euro and the dollar. That left investors seeking safe-harbor in gold, which is often seen as an alternative currency. As far as Silver Prices are concerned you can very well guess that the Price for Silver has reached to its highest till date since 1980. At present Silver is dealt at the rate of US$3091/kg.
Today lets have a look how each of the assets have performed over the past 5 years. While stocks have gone up significantly, the precious metals - gold and silver - have massively out performed them. The average gold price during the year 2005 was hovering round about US $ 444.75/ounce. In 2010 the average price of gold is US $ 1421.22/ounce. Gold has become a red hot investment in the year 2010 just for the reason being that there are concerns about inflation and mounting fiscal pressures in the US and Euro. Sovereign debt worries in Europe and large stimulus spending in the U.S. resulted in a particularly volatile year for both the euro and the dollar. That left investors seeking safe-harbor in gold, which is often seen as an alternative currency. As far as Silver Prices are concerned you can very well guess that the Price for Silver has reached to its highest till date since 1980. At present Silver is dealt at the rate of US$3091/kg.
However, the question is – will silver and gold continue to outperform stocks? Well they have proven themselves to be safer havens over time. And this has attracted investors who have poured money into them and most likely will continue to do for some time to come.
But a word of caution here! Gold unlike other investments acts as an insurance policy. Like a home insurance policy that protects us against any loss on our homes, gold protects our nest egg against inflation. Taken into account that the world is over, central banks are hell bent on debasing their currencies, they are just laying the ground for high inflation in the future. However, then we need to be careful not to have an over exposure to this insurance.
But a word of caution here! Gold unlike other investments acts as an insurance policy. Like a home insurance policy that protects us against any loss on our homes, gold protects our nest egg against inflation. Taken into account that the world is over, central banks are hell bent on debasing their currencies, they are just laying the ground for high inflation in the future. However, then we need to be careful not to have an over exposure to this insurance.
No comments:
Post a Comment