19 June 2015

Texas and The Physical Gold Trend

One of the biggest stories that will dominate the Gold market in the coming years is that there is not enough physical Gold to satisfy the paper claims that exist in the market. Countries such as Germany, Holland, and Austria, just to name a few, recognize that having physical Gold stored in a place you trust is of utmost importance.

According to an article in ZeroHedge, the State of Texas has enacted a bill to repatriate $1 billion of Gold from the vaults at the New York Fed to a newly established state Gold bullion depository. In addition, the bill includes a section to prevent forced seizure from the Federal Government. (Source: ZeroHedge 2015 June14th)

Physical Gold in a Paper Financial World

The move by Texas is another sign of the distrust that exists in storing Gold in the financial system. The biggest problem with paper Gold when stored through a bank or financial institution is that you may not have clear title to the Gold. 

Paper Gold involves counter party risk. If the counter party runs into a problem the paper Gold holder could become an unsecured creditor and may not be protected. The other issue has to do with how much more paper Gold there is than the physical metal. It is important that Gold owners take steps to ensure that their Gold is held in physical form, free from counter party risk.

With all of the money printing by the Central Banks over the last several years, one of the biggest reasons to own Gold and Silver is to protect savings from the devaluation of currencies. Therefore, holding the metals in physical form is the the form of ownership that will provide the best chance of wealth preservation.

Why the Physical Trend will Accelerate 

The Gold repatriation by Texas demonstrates that large holders of bullion want to ensure that Gold is owned in purely physical form. Large pension funds, hedge funds, high net worth individuals, and nation states may follow in the same plan as Texas, while Gold is still available.

In the coming Gold bull market the yellow metal will likely become so valuable that those who own it will want to own it in physical form only. The problem as we mentioned above is that there is not enough physical Gold to cover the paper claims. 

This is also one of the reasons why Gold and Silver prices will rise exponentially higher in the near future.

Author: celticgold.eu

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