Why Bullion?

What would you rather have stored in a vault for the next 10 years, an ounce of gold or $1,400?

Real money holds its value over long periods of time, this was already known during Aristotle’s time. As dollars get continuously printed and debased (reflected in higher prices of everything) it becomes harder and harder to store your wealth reliably. Back in Aristotle’s day, he would be able to buy a fine set of gentleman’s clothing for about 1oz of gold. Today that same ounce will buy a nice suit, shirt, shoes and belt. When Zimbabwe’s hyperinflation sent the economy in to ruin, 0.1g of gold (roughly $3) was used to buy a loaf of bread. In Canada, the dollar lost 25% of its value during the first decade of the new millennium, while gold gained 400% in value.

The demand for gold is rapidly rising. For the first time in many years central banks are now net buyers of gold. The Central Bank of India recently purchased 400 tons of gold from the International Monetary Fund, nearly the entire amount the IMF can sell each year by law. China is also expanding their gold holdings as a hedge against a declining US dollar. Gold currently makes up a tiny fraction of China’s reserves and they would have to increase their holdings by more than 700% (8,200 tons) in order to catch up with the USA. Chinese citizens are buying physical gold and silver in massive quantities since the government opened the market up in 2003. Indians, the world’s largest consumers of gold, continue to buy up massive amounts of the metal in the form of jewelry and bullion.