keannu
VIP Member
- Joined
- Dec 27, 2010
- Member Type
- Student or Learner
- Native Language
- Korean
- Home Country
- South Korea
- Current Location
- South Korea
This surely needs some economic expertise.
1. I can't understand why gold can be an investment with rising prices. Is it because gold's value never changes?
2. What does "money flees to investments "?
ex)Investors should understand that gold is the ultimate inflation hedge, because the federal government cannot increase the nation's supply of gold at whim, the way it can paper or electronic dollars. During periods of inflation, gold has been one of the only investments to keep pace with rising prices.
...it turns out that the real force behind gold's rise is not inflation per se but rather negative real interest rates, which generally accompany inflationary surges. When real rates are negative, you lost money by parking it in cash or in interest-bearing bills or bonds. Thus, money flees to investments that keep pace with inflation, and historically gold has been the surest choice.
1. I can't understand why gold can be an investment with rising prices. Is it because gold's value never changes?
2. What does "money flees to investments "?
ex)Investors should understand that gold is the ultimate inflation hedge, because the federal government cannot increase the nation's supply of gold at whim, the way it can paper or electronic dollars. During periods of inflation, gold has been one of the only investments to keep pace with rising prices.
...it turns out that the real force behind gold's rise is not inflation per se but rather negative real interest rates, which generally accompany inflationary surges. When real rates are negative, you lost money by parking it in cash or in interest-bearing bills or bonds. Thus, money flees to investments that keep pace with inflation, and historically gold has been the surest choice.