Philip Diehl on the Value of Gold

Philip Diehl is the current president of US Money Reserve. Prior to this he was director of the US Mint. Due to his years of experience in the precious metals industry Diehl has a good perspective on the value of gold, and according to him now could be a good a time as any to buy.

According to ePodcast, Diehl believes there are four main factors that have affect the price of gold recently. The most prominent being the 2008 financial collapse and the subsequent development of gold ETFs. Both of these events rapidly fueled demand as people everywhere were searching for a hedge against stock prices that seemingly could not stop falling.

Another factor that has led to increased demand has been speculation based on what will be done with US Monetary Policy. Those assuming that changes by the Fed will make the dollar will decline are buying up gold as prices may soon rise. The final factor that has led to perhaps the biggest increase has been the continued rise of the dollar. This rise has led to foreign countries buying vast amounts of gold. In stark contrast to the limited amounts purchased by Western countries, 65% of recent gold purchases were made by China and India.

Going forward one of the biggest things that Diehl thinks will be affecting gold’s value is geopolitical instability. Coupling this instability with rises in the middle class in the BRIC countries could lead to massive increases in the demand for gold as people everywhere look for a safe haven to store their wealth.

The US Money Reserve president also knows that what comes up must eventually come back down, even the US dollar. He believes it is unsustainable for the currency to stay at the top forever and that when it comes down demand for gold will surge as the prices drop in other countries.

Taking all of this in to account Diehl still believes that these short-term possibilities should not influence an investor’s decision. He views gold as an extremely long-term holding. It should be used more as insurance, or a vehicle to safely store wealth for extended periods.

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