The reason I am buying gold is because of Ben Bernanke, the chairman of the Federal Reserve. President Bernanke is an expert on the Great Depression. He believes that one of the main causes of the depression was Eugene Meyer’s tight monetary policy in 1931. During 1931, President Meyer raised interest rates and this is believed to have caused the economy to stop growing and begin to contract. Beginning in 2007, Chairman Bernanke began cutting federal funds interest rates from 5% to 0.25% to 0 in 2009. Now, with interest rates essentially at 0, the only way for could boost the economy was to buy US government bonds and add liquidity, money, to the US economy.

One of the consequences of this added liquidity is that the new money causes inflation. Things like real estate, oil, and precious metals like gold and silver go up because there is only so much supply available. While real estate is illiquid and difficult to buy and sell, oil and gold are easy to buy because they are traded on regulated exchanges. I tend to stay away from oil because it’s mainly controlled by OPEC and they try to keep it as high as possible. Gold, on the other hand, is much more difficult for anyone to control and there are several easy ways to buy it. There are gold coins that were minted in other countries in the early 20th century in the US You can also buy gold bullion that would act in a similar way.

I think with inflation looming you should have a portion of your portfolio in precious metals to offset this increase. I don’t think you can time the stock market, so owning gold is another way to protect your portfolio. The amount of your portfolio in gold should be determined by several different measures. The most important thing should be the suitability, how well it responds to market fluctuations, the size of your portfolio and the need for liquidity. All of these must be taken into account for the amount of gold you should have, there is no single answer to this question. Rampant inflation ahead will give little to no warning when it happens, so it’s best to plan now before it’s too late. I have been buying gold on dips for the past few years, and you should too.