Philip Diehl knows a thing or two about gold. Currently, he is the president of US Money Reserve, the largest distributor of gold, silver, and platinum coins issued by the United States government. Prior to this position he was the director of the US Mint where he was first introduced to gold bullion. Now thanks to his years of experience in the industry Diehl has developed a keen eye for the industry.
Over the past few years Diehl noticed several major events that significantly affected the gold market. Numbers one in two going in hand in hand were the 2008 financial collapse and the creation of gold ETFs. After the stock market plummeted, investors were desperate to find somewhere reliable to hold their money and turned to gold as an answer. In order to help feed this demand gold ETFs were created which offered increased liquidity for the precious metal as well.
Furthermore, demand has been rising for gold in foreign countries due to the rising value of the dollar. This has led to massive purchases in gold from countries like China and India, who have accounted for as much as 65% of recent gold purchases.
The final major factor that has recently affected the gold market is United States monetary policy. Many investors have begun to buy up gold in speculation of what the Fed will do with interest rates.
While hindsight in to the market can help explain past changes, it is much more helpful to try and look forward to the future of gold. Here Diehl sees plenty of opportunity. A major factor being the growing middle class, particularly in BRIC countries. This could lead to a huge increase in the worldwide demand for gold especially due to the major political instability across much of the world right now.
Another big opportunity will present itself when the dollar eventually comes down, which Diehl believes is an inevitable possibility. When this happens gold will become much cheaper in other countries which will make it a very attractive buying opportunity for investors.
While all of these events could surely affect the value of gold, Diehl stresses that investors should not worry about the short-term. Gold should be though of as a long-term form of insurance for one’s wealth. In this way investing in gold can be used as a hedge against any geopolitical events or financial collapses that may occur in the future.