Like many of you I am very concerned about the U.S. dollar due to the printing presses moving into high gear these last few years. In fact all fiat currencies are at great risk as countries the world over believe their only option to get rid of their debts is to inflate by decreasing the value of their currencies. Unfortunately it means the price of all things will go up dramatically and the saving (if you are fortunate enough to have any) is being debased every day. In my eyes there are only a few options to protect your money and your future. Move out of fiat currency and into physical assets such as real estate that is and will be in demand, food producing farms or precious metals. Land can be a good value in inflationary times, but it is not easily and quicly sold if you need cash. Precious metals that are physically held by you can be very secure, but turning them into cash can be a challenge and time consuming, especially if you live abroad.
Gold and Silver have been incredible performers over the last 10 years and in just the last year gold has seen over 30% increase and silver an incredible 80% against the dollar. How high can they go? The question really is, how low can the dollar or any paper currency go. In reality there is no limit because once the devaluation begins it will only continue and can accellerate rapidly. Look at every currency in history and you see they have all eventually seen hyperinflation. It is the nature of the beast.
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I can buy precious metals at the press of a button from other participants in Bullion Vault for a very small transaction fee. If I need cash I just send a notice to Bullion Vault to send x amount from my cash holdings that I recently converted by selling some of my holdings. How can I be sure someone does not access my account? Any cash sent from my Bullion Vault must go back to the bank account from which the original account was established. Even if someone got access or forced me to access the account, the funds could only go to my bank which certainly complicates life for a would be thief. For more details on how the account works go here.
I believe 2011 is going to be tumultuous for fiat currencies, especially the U.S. dollar as there is a very good chance that the worlds largest lenders will change from using the U.S. dollar as the reserve currency to another new currency and all commodities including oil must be paid for with his new currency. When that happens the price of everything in dollars will sky rocket overnight. I don't know what this new currency will be and I doubt if you or I would have access quickly enough once the announcement is made to change out of dollars, so holdings in gold and silver is the only safe bet.
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So how high can gold go in 2011? The following is from the Sovereign Society's daily newsletter today and it shares more information about the past performance and future of precious metals in 2011.
How High Will Gold Go in 2011?
Jeff Clark, BIG GOLD
After stellar years for both gold and silver, what prices will precious metals hit in 2011? Here's an analysis based strictly on their price behavior in the current bull market.
First, take a look at the annual percentage gains that gold has registered since 2001 (based on London PM Fix closings):
Excluding 2001, the average gain is 20.4%. Tossing out the additional weak years of '04 and '08, the average advance is 24.8%.
So we can make some projections based on what it's done over the past 10 years. From the 12-31-10 closing price of $1,421.60, if gold matched…
The average rise this decade, the price would hit $1,711.60
The average rise excluding the three weak years = $1,774.15
Last year's gain = $1,858.03
The largest advance to date (2007) = $1,875.09
But what if global economic circumstances continue to deteriorate? What if worldwide price inflation kicks in? And what if government efforts at currency debasement get more abusive? If Doug Casey is right, a mania in all things gold lies ahead – what if that begins in 2011? Here's what price levels could be reached based on the following percentage gains.
35% = $1,919.16
40% = $1,990.24
45% = $2,061.32
50% = $2,132.40
1979's gain of 125.7% = $3,208.55
It thus seems reasonable to expect gold to surpass $1,800 this year, as well as reach a potentially higher level since the factors pushing on the price could become more pronounced.
Here's a look at silver.
As you can see, silver had its biggest advance in 2010. The average of the decade, again excluding 2001, was 27.5%. And also tossing out the '08 decline, the average gain is 34.3%. So, from the 12-31-10 closing price of $30.91, if silver matched...
The average rise this decade, the price would hit $39.41
The average gain excluding 2008 = $41.51
Last year's advance = $56.22
The 1979 gain of 267.5% = $113.59
So, $50 silver seems perfectly attainable this year. And that's without monetary conditions worsening.
It's titillating to ponder these advances for gold and silver, especially when you consider we might be getting close to the mania. And if we are, that should do wonderful things to our gold and silver stocks, too.
I would add one caution: the odds are high that there will be a significant correction before gold begins its march to these price levels. In every year but two ('02 and '06), gold fell below its prior-year close before heading higher. And here's something to watch for: in every year but one ('08), those lows occurred by May.
In other words, a buying opportunity may be dead ahead. And if you buy on the next correction, your gains on the year could be higher than the annual advance.
At BIG GOLD, we’ll continue to keep track of gold and silver as well as some of the best medium- to large-cap mining companies in the industry. With the gold mania possibly just around the corner, there’s no better time to try BIG GOLD risk-free for 3 months, with full money-back guarantee. More here.