If you have been watching the news in the last few days you have most certainly seen the situation in Egypt heating up. The protests against the President Hosni Mubarak’s 30-year rule have created some issues in addition to the 150 dead and another 4,000 estimated injured. Normal everyday operations have come to a stand still.
Once the internet was shut down it rendered the banks useless. The banks count on the internet and wireless transmission of data to do business. But in addition to that the Central Bank of Egypt has ordered all commercial banks to close for fear of looting. As a result, Egyptians cannot get state aid or cash payroll checks. ATM machines are out of cash and have been for days. No one has access to money! You can imagine that those that had some cash lying around immediately went out and bought food. As a result the food prices have doubled in Egypt.
On January 29th Jim Rickards, who is a brilliant economist and is featured on CNBC regularly, posted on his twitter account “I guess middle-class Egyptians with 20 or so gold coins stashed away feel slightly better than those lined up at soon-to-be shut-down ATM’s.” He points to the main reason why everyone should own some physical gold-it is first and foremost a financial insurance. Gold coins will protect you better than cash and will also give you stability in the currency in the event of a complete collapse.
The Egyptian currency has fallen in value since the protests but it has not collapsed. Those that own gold coins have some security and ability to purchase food when cash runs out and have hedged themselves against the falling value of their currency. To buy gold coins and put them away for a “rainy day” just makes sense. These types of occurrences can happen anywhere.
There have been many times throughout history when crisis has occurred, whether that be banking failures, terrorist attacks, civil unrest or tremendous money printing, gold has proven to be a store of value and a hedge against uncertainty. Now more than ever we believe it is time to own gold, if you haven’t done so I encourage you to start. One only needs to look at the amount of money we are printing in this country to gain assurance.