by Chris Matthai, Investment U Research Team
A Investment U White Paper
In 1848, a major gold strike occurred at Sutter's Mill in Coloma, California. As word spread about the gold discovery, it soon led to a gold rush as "forty-niners" (in reference to 1849) flocked to California from all around the world in search of gold and their fortune.
The 21st century gold rush began in 2001, when one ounce of gold sold for $280. Now over one hundred and sixty years after the original gold rush, it seems like modern-day forty-niners have rediscovered the hot commodity, adding it to their holdings and pushing gold prices to an all time record high.
Within a few years, the California Gold Rush ended… but how about the current gold rush?
Lets face it: These aren't the best of times for the U.S. economy. The credit markets are still in turmoil. The housing industry hasn't found its feet yet. With the unemployment numbers still at about 8%, it's evident that U.S. employers are still reluctant to hire. The dollar is losing purchasing power and the horrors of either inflation or deflation – depending on whom you ask – are knocking on the door.
If that isn't enough, we can't seem to revive this economy. So how can we protect our assets and stay diversified in this type of environment?
Quite simply, it's time to invest in what many consider the "crisis commodity." Gold.
A Solid Gold History
Gold is the only commodity that has consistently outperformed other investments during periods of world tension. Since the end of World War II, the five years in which U.S. inflation was at its highest – 1946, 1974, 1975, 1979 and 1980 – saw an average real return on stocks of 12.33%, as measured by the Dow.
Meanwhile, the average real return on gold was 130.4%!
But gold doesn't have to be "just a hedge" against inflation. We have moved into a new era, where gold is going to play a major role in generating healthy returns for your portfolio. Here's why:
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