By Craig R. Smith
Chairman, Swiss America
Feb. 16, 2012
We are often asked this question: "What good will gold do in a meltdown of the system or a failure of our currency?" One only need look across the Atlantic for the answer.
Today Greece is in major trouble economically and socially. Riots are breaking out in Athens and business disruptions are rampant.
To establish value on the street for everyday transactions (such as food and gas), Greek citizens are using gold, U.S. dollars and, when they can be found, Euros. However the Euro's buying power has been greatly diminished in recent months. Fine art and collectibles are even being used as tender in private transactions for everything from automobiles to plastic surgery.
Gold coins are more readily accepted than regional currencies or the Euro at the moment. Interest rates on the drachma and Euro are now over 17% and climbing. Some long-term money is as high as 30%. Bonds are being discounted by as much as 60% for liquidity.
The average Grecian citizen with a portion of his/her money in physical gold find themselves with very little or no disruption in their every day life, short of their favorite local market perhaps going up in flames amid rioting. The stores that are still open prefer gold coins and U.S. dollars over any other form of payment because they know they will be accepted worldwide.
Holders of gold are discovering their buying power has actually strengthened in a crisis. Gold owners are actually able to buy more goods and services with their ounce of gold than they could buy just six months ago - even if the price of gold was unchanged!
Greece is a excellent illustration of why a minimum of 5% to a maximum of 25% of your assets should always be held in physical gold for emergencies. Not for the potential return on investment. Not just to make money. But simply to assure that no matter what happens, your lifestyle will not be drastically altered. Having a valuable commodity, such as gold, in a crisis to exchange for your everyday needs is critical.
Gold is real, liquid money worldwide. If you don't own any yet, buy it at any price!
Owning gold offers peace of mind during times of upheaval, disaster or financial collapse. As the Greek crisis clearly demonstrates, taking steps to put yourself on a personal gold standard is no longer a luxury but a necessity in today's uncertain world.