Precious Metals Could Help Protect Your Retirement
source: tradingeconomics.com On Social Media, there are number of views regarding this sitaution.
In the Fiscal Policy Statement of 2020-21, the Ministry of Finance also admitted that the government violated the Fiscal Responsibility and Debt Limitation (FRDL) Act of 2005 by failing to reduce the federal fiscal deficit to 4% of the size of national economy.
The federal deficit stood at 8.6% of GDP - more than double the limit set by the law, it added.
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KARACHI, Sept 20 (Reuters) - Pakistan’s central bank raised its benchmark interest rate by 25 basis points to 7.25% on Monday, the first move it has made since slashing borrowing costs last year.
The bank also signalled that it could raise rates further in coming months as the need to support the country’s economy due to the COVID-19 crisis has eased, but it said any future moves would depend on emerging economic data.
“Since its last meeting in July, the MPC (Monetary Policy Committee) noted that the pace of the economic recovery has exceeded expectations,” the State Bank of Pakistan said in a statement accompanying the decision, noting the country’s COVID situation was improving and domestic demand strengthening.
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Here is a screenshot from Trading Economics, you can easily see that all precious metals will be at great place whether it is due to current situation or COVID-19 or may be a great shift in overall world economy.
Gold should be an important part of a diversified investment portfolio because its price increases in response to events that cause the value of paper investments, such as stocks and bonds, to decline. Although the price of gold can be volatile in the short term, it has always maintained its value over the long term. Through the years, it has served as a hedge against inflation and the erosion of major currencies, and thus is an investment well worth considering.
1. Weakness of the U.S. Dollar
2. Inflation Hedge
Gold has historically been an excellent hedge against inflation, because its price tends to rise when the cost of living increases. Over the past 50 years investors have seen gold prices soar and the stock market plunge during high-inflation years.
3. Deflation Protection
Deflation is defined as a period in which prices decrease, when business activity slows and the economy is burdened by excessive debt, which has not been seen globally since the Great Depression of the 1930s (although a small degree of deflation occurred following the 2008 financial crisis in some parts of the world).
4. Geopolitical Uncertainty
Gold retains its value not only in times of financial uncertainty, but in times of geopolitical uncertainty. It is often called the "crisis commodity," because people flee to its relative safety when world tensions rise; during such times, it often outperforms other investments.
5. Supply Constraints
Much of the supply of gold in the market since the 1990s has come from sales of gold bullion from the vaults of global central banks. This selling by global central banks slowed greatly in 2008. At the same time, production of new gold from mines had been declining since 2000.
6. Increasing Demand
In previous years, increased wealth of emerging market economies boosted demand for gold. In many of these countries, gold is intertwined into the culture. In China, where gold bars are a traditional form of saving, the demand for gold has been steadfast. India is the second largest gold-consuming nation in the world; it has many uses there, including jewelry.
7. Portfolio Diversification
The key to diversification is finding investments that are not closely correlated to one another; gold has historically had a negative correlation to stocks and other financial instruments. Recent history bears this out:
- The 1970s was great for gold, but terrible for stocks.
- The 1980s and 1990s were wonderful for stocks, but horrible for gold.
- 2008 saw stocks drop substantially as consumers migrated to gold.
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