With stocks going up and down now, gold has outperformed the stock market in the last couple of years. Gold has been on a tear the last 6 months to reach all time highs and it makes you wonder whether it is now time to pull back some of your gold investments.
Gold is customarily considered a hedge against uncertainty and the world condition at present is most assuredly uncertain. Gold have never declined to zero and that is something that cannot be said for stocks, many of which have lost incredible valuations. For those owning gold, they must be thankful to have made an investment that has performed so well.
People with money to invest have to make choices that are increasingly tough in this very bad economic environment. It is difficult to find any investment that is truly safe and pays any sort of reasonable return. If you want to put your money in government guaranteed treasury bills or bank certificate of deposits, you are now getting next to nothing in interest. It is also debatable just how safe anything with the government is since it is technically bankrupt.
While gold is seen as safe, at the present high prices, you must be concerned about getting in at the top. For just like stocks, gold has taken huge drops throughout history and that could certainly occur again. And simply because thus far it has always recovered from such drops, that is not a guarantee that the pattern would continue.
Professional investors generally recommend that you divide your portfolio among gold, stocks and other investment options so that your overall risk is spread out. Doing so will protect you from being overloaded in one area and diversifies your investment portfolio, hedging against the decline of one sector in relation to the others. Gold certainly may be a portion of your portfolio; it just should not comprise the entire amount!
I would like to give readers some information on the best reasons to own gold. If you are like many smart investors then you already know that your money needs to be in hard assets right now.
Hard assets can be a range of things from commodities to land, but gold and silver are the ultimate hard asset during times of economic uncertainty.
Why is that? To put it in simple terms, it’s because gold and silver have been money for over 6,000 years.
When people realize that paper currency is just paper, they transfer that paper for real wealth (i.e. gold and silver). People have done this for centuries, but why is it so important to do that today? It’s because never before in history has the entire worlds money supply been fiat paper currency. A fiat currency, like our dollar, just means that there is nothing backing the paper.
Well, all of the worlds currencies are fiat currencies. The only currency that is not considered fiat is the Euro, and it only has a 7% gold backing. Back in 1971, president Nixon took the U.S. off of the gold standard thereby making it impossible for foreign creditors to exchange their dollars for gold. In 1930 the price of gold was set at $20/ounce, which meant that a $1 bill was worth 1/20th the price of gold.
You could have taken a $20 bill to the bank and exchanged it for a one ounce gold coin. That is in fact how the worlds monetary system worked for hundreds of years until the creation of central banking. Gold and silver rose as a currency out of necessity, and has remained as the worlds only recognizable money for 6,000 years.
When a chicken could not be traded for a hat because the hat maker did not desire having a chicken for payment, another system of trade had to come about. Gold and silver fit that bill because it is rare, easily traded, fungible, durable, and has inherent value. When people wanted their gold and silver to be safe from thieves or whatever else could take their wealth, they would store their gold with a goldsmith for a small storage fee.
The goldsmith would simply give the depositor a paper certificate that was proof of deposit and could be redeemed for gold at any time. Over time the goldsmith realized that he had large amounts of depositor’s gold and not everyone ever came to pull out all of their gold at the same time. So, the goldsmith lent out a small portion of the gold on reserve in exchange for interest.
Over time the goldsmith realized he could lend up to 90% of the gold in his vault and collect interest on the loans. After all, there were never huge amounts of people coming to withdraw their holdings at one time, so the goldsmith could get away with it.
Once people finally caught on to the goldsmiths act, people panicked and went to redeem their paper receipts for their gold. The only problem was that there were now many more receipts in circulation than there was gold.
This is how the first run on the bank took place and also the beginning of what is known today as fractional reserve banking. It’s called fractional reserve because banks today are only required to keep a “fraction” of the customer’s reserves’ on deposit.
Out of every $100 on deposit at most banks, $90 can be lent out to customers. Just like there were runs on the banks in the great depression and other times throughout history, there will be more runs on the banks in our near future.
The banking industry is a very secretive practice, and not many people really understand the practices of our banks. It is meant to be confusing and secretive because if people understood the banking industry, they would be so outraged and disgusted that the banks would not be around for very long.
Since goldsmiths did have actual gold in their vaults and therefore real value, people who got to the banks early could get their gold coins. What is disturbing is that today if you tried to take a $20 bill to the bank and exchange it for gold they would laugh at you because dollars are not exchangeable for gold at the bank anymore.
That means that your dollar has no backing of any sort. The only thing giving your paper money value is the faith that you place in it.
It is also important to note that gold can not be inflated like dollars. If a bank decided to open and they only kept gold and silver on deposit and did not loan money against your gold and silver on deposit, then our money would be a true and sound money.
The Lakota nation bank is the only bank in the world who has done this. Since our dollars are just paper with no backing, the Federal Reserve can print as much as they want.
Since the Federal Reserve has been printing dollars like crazy, you are going to see the value of your savings and everything else denominated in dollars go down. That is why gold and silver are so important right now. Gold and silver are true money and will rise in price as an indicator of a falling dollar.
I hope you are smart enough to take the advice I am giving and buy some gold and silver to protect your wealth and hedge against inflation. The best reasons to own gold now are truly good reasons.
If you are still doing your due diligence, then let me refer you to an excellent gold investing guide with information you need to know before investing in gold and silver.
Stock markets are made to have their ups and downs. After all, the United States bounced back in the’20s after a decade of Depression due to what is recorded as the first stock market crash in the world, and for a brief moment in the’80s, it was thought that the stock market in the States and in a number of countries wasn’t going to recover from another nosedive. Playing the numbers is a risk, even in a gentleman’s game like the stock market, and whether it’s Hong Kong or NASDAQ, analysts have a difficult time of predicting exactly what’s going to happen. One thing’s for sure, though: no one quite knew what was coming in 2008.
While those scientists of the stock market might have just been bewildered, regular people all over the world were more like stupefied. With so much faith in global economic systems, including the overall stock market, and the understanding that governments are supposed to have a series of checks and balances in place to avoid potential catastrophe, the grim dismal situation was first met with disbelief by regular people.
It’s no wonder that trouble in the United States could bring a global economy down, especially when the numbers are looked at. A significant chunk of the global economy depends on the economy and the markets of the United States. A number of smaller countries didn’t have the pleasure of getting bailed out by their federal governments, with countries such as Iceland going completely broke simply because a country that small could not possibly bail itself right out.
While in the past, the markets might not have been tied together as strongly, with globalization in all areas, especially business, things are a little different now. Markets depend on one another because nations depend on one another. Nations do a great deal of business, relying on one another for markets and raw materials, but more importantly, companies invest in each other’s markets.
It’s not just the economy, either. Many investment companies have recommended branching out from one’s home country and trying various markets around the world. When the American dollar is the base of so many financial interactions and it starts to slip, it takes a whole lot of value and wealth along with it.
Unfortunately, in the past ten years, that hasn’t happened fast enough. With the real estate market booming in the United States, a number of different companies represented on the floor of the New York Stock Exchange by hordes of high-strung brokers were dealing in mortgages that the borrowers could never have possibly paid back. When the banks and mortgages houses finally got wind of what was happening, everyone made such a fuss about backing away quickly that the economy went right with them.
The most recent mess was further helped along by people bailing out immediately, with no concern for local governments stressing the importance of the system keeping participants. Many banks in Europe and the United States tanked or were on the brink of tanking, requiring extensive government bailouts that are doing their own personal number of large nation’s economics, and thus, the global economy as well.
Playing the market has always been a little bit unpredictable, but the recent events are truly unprecedented. While regular people reading the newspaper might feel as though they have missed something significant in their inability to process recent current events in the financial sector, the fact of the matter is that it is baffling things were allowed to get this bad.
When you are trying to figure out how to buy gold to protect your assets, it is important to note several things. First, inflation is rearing its ugly head and governments won’t stop until the dollar is completely devalued. Second, we are in the midst of major bailouts, layoffs, Ponzi schemes, and sky high unemployment.
Let us look at why you should be invested in gold, and how to buy gold low. In 2001, the gold price was sitting at around $250/oz. Today the gold price is sitting at over $1,100/oz. So, for a one ounce gold coin it would cost you over four times the amount it did just 8 years ago. What other investments do you know have gained 400%, and not lost any value due to inflation like dollar related investments have?
If you are going to argue that your paper investments (i.e. stocks, bonds, derivatives) made 400% returns, then you obviously aren’t factoring in the falling dollar. Even though the Dow Jones is showing noticeable increases, it is quietly crashing under our noses and most people aren’t even aware of it.
As the dow peaks over 10,000 we are seeing a queit crash. How can this be? Many experts claim that we may see the dow reach 20,000 and even 40,000. The problem is that even if the dow goes to those levels, the dollar is losing value at an even faster pace.
The U.S. dollar index, which measures the value of the dollar against a basket of currencies, has fallen below 76. This is very bad business for those invested in dollars. Many expert economists believe that by next year the USDX will fall to 65, and the next year it will fall to 55. Many even believe it will go as low as 40.
In a real life situation like this, there is only one safe haven. Gold and silver are that safe haven. It is not a question of if the dollar will be knocked off the thrown as the reserve currency, but rather when.
We are smack dab in the middle of the greatest bull market in history. Never before have there been so many fiat paper currencies in the world, while at the same time governments inflating all of them in the middle of an economic storm like we are seeing.
Gold’s inflation adjusted price is over $7,000/oz, and it will get there according to many prominent economists. This bull market is really only just getting started. The gold price has a long way to go to make up for all of the paper money in existence.
Inform yourself about gold bullion and silver bullion before the real rush comes into gold. If you cannot afford silver bars or gold bars, then look for American silver eagle coins or American gold eagle coins.
Before you buy gold to protect your assets, you will definitely want to check out this gold investing guide.
Mining stock investing could be your ticket to financial freedom and could bring you profits you never thought possible, if you follow some very close guidelines. In this post I talk about gold mining, silver mining, gold stocks, silver stocks, mining companies, gold price, silver price, and more.
Gold and Silver have been in a bull market since 1999 when gold was around $250 per ounce. Looking at the gold price today it is at $1,002 per ounce and according to many economists it is just getting started.
For those who bought and held early on, they saw a hefty 400% increase on their investment. “Why isn’t this headline news on every major news station?” you may be asking. I will tell you.
Since we have a government who decides that anytime they want more money they can just print it at will, the value of our dollar goes down daily. Basically, we can buy less with our dollars.
Our government knows what they are doing and they know that if people get out of dollars and into gold and silver, then the dollar will fall further in value. The dollar is destined to fail, but our government is trying to prop it up for as long as possible.
Physical Gold & Silver vs. Penny Mining Stocks
Physical gold and silver are good and I would highly recommend them to anyone wanting to diversify out of dollars, but the real gains are going to come in the penny mining stocks. Why, you might be asking? It’s because gold and silver stocks provides much greater leverage due to the operating leverage of the company than does buying physical coins or bullion.
Gold and silver related assets have by far outperformed any other asset class out there for the past 10 years. How about your 401K or IRA? Did you take a huge hit like most people? If not, then you are very lucky or you are already invested in gold and silver stocks.
For an example of where the mining stock prices could go we will look at the last bull market from 1972-1980. In 1975, most gold and silver stocks were trading under $2/share and most were trading under $.50/share. “Lion Mines” was trading at $.07/share in 1975 and by 1980 it was at $380/share. YES! That is not a misprint.
So, if you had invested $500 in 1975 you would have gotten a return of roughly $2,700,000 in 1980. This is just one of the many success stories. In January of 1980, most gold and silver mining shares were trading above $50 and lots were at $100-$200.
How Do I Invest In Penny Stocks?
Penny stocks are not traded on the big stock exchanges. Instead, they are traded on the OTC bulletin board market and the pink sheets. Don’t let this confuse you. That just means that since the stock prices of these companies trade at such low levels (i.e. $.10/share), they can’t be traded on the large stock markets. Check out this Mining Stock Investor Guide to learn more.
Fortunes can be made from penny stocks, and you are not limited to just mining stocks. There are many companies out there who have stock prices trading at just pennies per share, and they could be potential buys if you research the companies well. To learn more check out this information on penny stock investing.
Silver Investing is in my opinion the best investment choice out there today. In this post I talk about silver coins, silver eagles, silver dollars, silver bullion, silver bullion coins, silver bullion bars, silver bullion price and how to buy silver bullion. Many experts believe silver is the investment of a lifetime, and I will tell you why.
Never before in the history of silver have there been so many bullish factors for the price. Once this price explosion happens, it will be historic in its magnitude. When the silver bull is over and profits have been taken, it will go down in the history books as a price explosion never before seen in a commodity.
The silver price today sits at an extremely cheap price of only $17/ounce. Just 8 years ago silver was down around $4/ounce. That’s over a 400% return for those who held.
To be conservative, many of the leading experts on silver have predicted prices of at least $50-$100/ounce over the next few year.
Now, that is an extremely conservative number when you look at all the bullish factors in silver. In fact, many experts believe that silver will surpass gold in price, and I will explain why this is.
Silver vs. Gold
Silver and gold play similar roles as a monetary metal. Both have been used as currency for over 6,000 years, and both act as a store of wealth. That is where the similarities end. Silver has a dual functionality in that it is used as a store of wealth, and as an industrial metal.
Everything from electronics & solar panels to water filters & antibiotic creams consume silver. In fact, over 50% of the silver demand is used for industrial applications.
Silver is much more affordable than gold. Today, you can buy a roll of 20 American Silver Eagles for around $400. It will cost you over $1,000 to buy just one American Gold Eagle. For most people, silver is the better option.
Historically, the ratio of gold to silver has been around 15:1. This means that the silver price should be somewhere around $70/ounce today.
Bullish Factors
According to the USGS (United States Geological Society), all the silver in the world will be consumed by 2020. You read that correctly. The USGS stated that silver would be the first element to go extinct on the periodic table of elements. If that is not a huge red flag and an extremely bullish factor for silver, I don’t know what is. This is just one of the many hugely bullish factors for silver’s price explosion. Other major factors include the following.
Economic uncertainty and the dollar falling in value
Government printing of money
High investment demand
COMEX price manipulation
Shortages
Increased industrial demand
Lack of good mining sites
Falling Dollar
The dollar is quickly fading as the world’s reserve currency. Many countries know this and are getting out of dollar related assets and buying gold and silver. China is the biggest holder of Treasury Bonds that the U.S. has, and they have begun selling those bonds and buying gold.
Our government knows this is bad, and they have even gone as far as to send little Timmy Geithner to China so he can beg for mercy. He was even laughed at by Chinese college students when he remarked that the dollar was still strong.
They would have you believe the same thing, but you are smarter than that. That’s why you are reading this. The very last thing the government wants is for you to trade your dollars and buy silver or gold. Why? It’s because the dollar is our issued currency.
By getting out of dollars and into gold and silver, you are taking your money out of dollar related assets like the stock market or Treasury notes.
What happens when people get out of dollars? The stock market takes a dive. We learned this during the Great Depression. Do not be duped into thinking that you are somehow supporting our economy by staying in dollar related assets.
The people of Weimar Germany and Argentina who did not get out of paper currency while the government was inflating the currency lost everything. The only winners in any inflationary situation are the gold and silver owner, and this has been proven hundreds of times throughout history.
Do not let the media play this game on you about the jobless recovery, and all this other garbage they keep spouting. There is no such thing as a jobless recovery. That’s like being almost pregnant, as Gerald Celente would say. The market will go back down, and it will fall dramatically.
Any good we are seeing in the stock market now are due to the trillions of dollars that were pumped into the system. They are just propping the market up temporarily. When they can no longer print anymore money to prop the system up, it will come falling down like a house of cards. The market is coming back down. Many experts think the Dow will drop to 4,000 or even 2,000.
Printing of Money
The Treasury department has kept the printing presses going non stop. They have printed trillions of dollars for so called bail outs and rescue packages. All of this printing is leading to the inevitable, inflation.
The more money our government prints, the more worthless our dollars become. That is why it is so important to get your money out of dollar related assets. That includes your 401K or IRA.
Many economists are saying just to take the early penalty and get your cash out of the stock market. Be very wary about how much cash you keep in the banks as well. You certainly don’t want your money sitting in a bank account earning a 0.5% return because the inflation rate is somewhere around 9%. This means you are losing 8.5% of your dollars value just having it in the bank.
You need to get that money into silver and gold because unlike the dollar, it has intrinsic value. Silver and gold will never go to zero. The same cannot be said about the dollar. It has no intrinsic value. It is a piece of paper with ink stamped on it all official like. It is a tool of deception used by the government. See my post about the federal reserve for more in depth information.
Where is the value in a piece of paper? I guess if you had enough of it you could burn it to stay warm like the people of Weimar Germany during the 1920’s. There are photos of German citizens with wheel barrels full of money to buy a loaf of bread (see google images). Their government did the same thing our government is doing now, and the value of their currency went to zero. The gold and silver owners were the only ones spared.
That is the great thing about silver and gold. You can hold it, it’s heavy, and it has a distinct value that paper does not offer. That is why it is always used as a safe haven for people who want to protect their wealth. If you stay in dollars you are not protecting your wealth, but rather burning your wealth.
Investment Demand
The investment demand for silver is at an all time high. The U.S. mint even had to stop minting silver eagles due to the extreme demand. Many mining companies who mint their own silver have you wait 4-5 months before delivery.
All of this increased demand has caused the premiums on silver coins to sky rocket. So, the spot price of silver might be $16 but the consumer pays around $25. This is the markets way of saying that the spot price of silver should be valued at $25 at least. There are forces trying to keep this price down, however.
As I stated earlier, China is buying heavily into precious metals. China has historically outlawed the ownership of silver, but has just recently announced the legalized ownership of silver.
They are even marketing silver ownership to Chinese citizens on TV. Can you imagine where the price will go when this really catches on with the citizens of China. Let’s not forget that there are 2 billion Chinese people.
Ted Butler On Silver Shortages
COMEX
The COMEX (a.k.a. Commodities Exchange) is a part of the NYSE. It is set up to facilitate futures trading of commodities like silver. Each COMEX silver contract is 5,000 ounces. Just like any futures contract you can go long and bet that the price will go up, or you can go short and bet that the price will drop. If you are right then you make a profit.
This is where the COMEX gets interesting. There are commercial banks who buy thousands of silver contracts. For a long time now there have been three commercial banks shorting the price of silver.
These banks hold most of the outstanding silver contracts on the COMEX. So, when these banks short the COMEX it pushes the price of silver down, and they own so many contracts that they are able to easily push the price down when it is beneficial to them.
These banks are making billions of dollars by shorting the COMEX, and every bit of their activity is illegal. The COMEX just refuses to stop them from manipulating the price of silver down. Why would they want to push the silver price down? Well, because they want the dollar to appear strong. These banks are in the process of being stopped for their illegal behavior due to the efforts of many people exposing these commercial banks illegal acts.
Once the manipulation of the silver market is stopped, and it will be soon, the price will go bananas! Even if the manipulators aren’t forced to stop short selling, the physical demand will eventually overwhelm them and they will be forced to cover their short positions.
Shortages
Major shortages exist in silver right now. All of the above ground silver has been depleted over the past 25 years due to the massive industrial demand. In fact, Silver is more rare than gold above ground, by a large margin.
Industrial Demand
Industrial demand will be ever increasing as more and more uses for silver become available. Silver is used in almost every electronic device you have in your home. It is the best conductor of electricity that is available. Imagine every Chinese citizen having a refridgerator or tv in their home. You can see where this is going?
Most of the industrial applications that are used are consuming silver. What this means is that the silver is not recoverable. It is simply thrown in a landfill never to be seen again. Silver will one day become recoverable, just like gold when it is used in electronics, but first silver must go to a price where it is economical to recover it.
Mining
The mining of silver is becoming more and more difficult. Companies are having to dig deeper mines and a lot of the mines that were once producing have been completely mined out. This is making it harder for companies to keep up with demand and even harder to find new locations to mine. Most junior mining companies trade for around $.10-$3.00/share. These are referred to as penny stocks because they trade so cheap. Do not invest in penny mining stocks until you check out this information on penny stock investing.
Since the price of silver has been floating in the $12-$15 range for so long, many miners are shutting their operations because it simply is not profitable. Also, most mines do not produce just silver. Mines also produce base metals like nickel, copper, zinc, and iron. However, money is starting to flow into the miners now that silver has started to take off. When the economy started slowing back in 2008, so did the demand for these base metals. That resulted in less silver coming out of the ground as well. This is very bullish for silver! If you want to make money investing in silver stocks then check out this Mining Stock Investor Guide.
When I began investing in gold and silver, I spent many hours researching and trying to educate myself before making a purchase. If you simply read this gold and silver report ,you will save yourself time and money. Happy investing!
Gold Investing is becoming more main stream as governments around the world continue to print more and more paper money. In this post I talk about how to invest in gold, why to invest in gold, gold coins, American gold coins, gold bullion, gold bullion coins, gold bullion bars, gold prices, and other related stuff.
The thing about gold investing that makes it so great is that gold has been money for over 6,000 years. People have used gold and silver as a unit of exchange because it has real intrinsic value.
Gold is recognizable in every country in the world. Our U.S. fighter pilots even carry British Sovereign gold coins in their survival kits, not dollars. Aristotle, who lived from 384-322 b.c. stated the qualities of good money. Gold is the only money, other than silver, that has all of the qualities to qualify as a unit of currency.
Gold is rare.
Gold is easily divisible and easily measured as a currency. For example, diamonds are not a currency because of the simple fact that diamonds are graded for their quality. That would make each diamond a different value. Gold is not because gold is gold. Period.
Gold is small enough to be carried and used as an exchange of currency, and is durable enough to last virtually forever.
Gold is rare and that’s what gives it value. Oil could technically be used as money, and there have been currencies backed by oil, but it does not meet all of the requirements listed above. You wouldn’t buy oil and store 100 barrels in your backyard to use as currency.
But my financial advisor said…
First, I just want to say that nobody will look after your finances better and in more detail than YOU! A financial advisor is not going to take an hour a day, each day to look after your finances. Only you are going to be that diligent about your money.
That seems pretty straight forward and practical, but it’s amazing how many people don’t get that or say they don’t have the time to look after their own money. Do your own research and determine what’s best for you. Trust yourself.
It’s important to note that financial advisors get paid a commission on the products or services that they sell you. It is their job to promote their products or services. They are there to make money and give advice, however, many times they are selling products that bring the biggest commission.
If your advisor is arguing against buying gold and tells you to keep your money in stocks and just wait out the storm, he is either intentionally giving bad advice to make money or isn’t informed himself. Let me tell you why.
The Media
Our mainstream media is bought and paid for by the powers that be. By that I mean that everything that is shown on the major news networks, be it a two hour special on Michael Jackson every night for two months, or someone spouting off about how our economy is showing “green shoots” is put there to distract you.
What they do on those news networks everyday is far from reporting the truth. They are calling for a “jobless recovery”. That’s like being almost pregnant as Gerald Celente would say.
What the media and our government won’t let you know is that if people sell their dollars and buy gold, it could cause a systematic collapse of our economy. That sounds bad on the surface, but it’s important to know that our government has created the collapse by printing trillions of dollars.
Bill Murphy-Fed Audit=Gold To The Moon!
The media and government hide the need to protect other forms of investment from nonperformance due to economic conditions. While a mortgage bond can protect certain
assets, only gold and silver are guaranteed to weather the storm.
The Dollar
Gold, and silver for that matter, are the only sound money. The dollar is what is referred to as a fiat currency. This simply means that the currency is not backed by any gold, silver, oil, etc. All of the currencies in the world now fiat currency. The Euro is the only currency backed by gold, and it is only a 7% backing.
What is gold backed currency? A currency backed by gold means you can take your paper dollars and exchange them for gold. For example, in 1930 you could take a $20 bill and exchange it at the bank for a $20 gold piece.
So, every dollar you had in your wallet could be exchanged for gold at the bank. The paper dollar was simply a means of making your money more transportable.
Here lies the problem
President Nixon took us off the gold standard in 1971. Today, if you took your $20 dollar bill to the bank and tried to exchange it for a gold piece they would laugh hysterically. Why? It’s because today the gold price is at $1,032 for a one ounce coin.
So, you may be asking what your paper dollar is worth since you can’t exchange it for gold. Well, I’ve got news for you. Your paper dollar is just that, paper. The only thing giving your dollar any value at all is the faith that you put into it.
We have all read this note written on a dollar bill:
This note is legal tender for all debts public and private.
This is the governments’ way of saying that you have to accept paper dollars as a currency, even if it has zero intrinsic value like paper does. This is the fraud of the dollar. There have even been governments who have enforced the death penalty to citizens who refused to accept the government printed fiat currency.
How did the gold price go from $20 to $1,032? It is what our government calls inflation, but I will give you an easier and clear cut definition. Inflation is not when prices magically rise over time. Have you ever thought about that? Why would prices just rise for no apparent reason? Inflation is just that, inflation. Have you ever inflated a balloon? Well, that’s what they are doing to the money supply. They are inflating it which simply means printing more and more.
Taxation vs. Inflation
See, our government gets funding for their everyday operations either by taxing the citizens or by printing the money they need. Governments want to use taxation as a means of funding first. When they can no longer tax the citizens due to outright revolts, they opt for the other choice which is to print money.
This printing of money is why all fiat currencies in history have failed, and there have been hundreds of them. There has actually been more than one fiat currency in the U.S. The first was called the “continental”. The continental was around about 200 years ago, and it became so worthless due to over printing that it earned the saying “not worth a continental”.
Inflation is a hidden tax
What the Federal Reserve and all other central banks would hate for you to know is that they are stealing from you everyday, and it’s not by accident either. Every time they print more money to bail out companies or wage wars, that means there are more dollars chasing the same amount of goods and services.
Overtime, prices gradually begin to rise because the businesses must adjust prices to the supply of currency. That means the value of your dollar is going down, to certain death even.
The only winners in this scenario are the gold owners, because the same amount of gold has historically bought the same amount of goods. For example, in Roman times you could buy a nice toga and pair of shoes for a one ounce gold coin. In 1930 you could have bought a nice men’s suit for a one ounce gold coin. Present day you can still buy a nice men’s suit for a one ounce gold coin. So, gold never loses its value. It may fluctuate in price, but it will never lose its value. Before you even get started investing in gold and silver, check out this information.
Hyperinflation
During the 1920’s in Weimar Germany, their people experienced hyperinflation (which is an extreme inflation of the money supply) so bad that it took wheel barrels of money to buy a loaf of bread. The currency finally became so worthless that people burned their money to stay warm. The few people that did well during the crisis were the ones who owned gold. You could even buy up square blocks of real estate in Weimar Germany for a few gold coins.
Many economists believe that we are headed towards this kind of scenario. One thing is for certain, you do not want to get caught holding paper currency in a situation like that.
Stock Market
The pundits on main stream news are all talking up stocks, and it’s no wonder they are. They are not stupid, and believe me they are not ignorant to gold. They just aren’t going to promote something that may not be in their best interest to promote. There are a lot of ties with these financial guys on tv to government and wall street.
It is in everybody’s best interest to keep people invested in the stock market, and out of gold. Why? Because people who buy gold are essentially getting their money out of dollars, and that’s bad for the stock market.
Finally, GOLD!
With all this said, and with your new found knowledge, let’s talk gold. When it comes to buying gold you have several different choices. You could buy government issued coins, numismatic coins, bullion rounds, bullion bars, and mining stocks. I will also talk about gold that you will want to stay away from like the COMEX contracts, ETF’s, and gold jewelry as an investment. The idea behind buying physical gold as an investment is to get the most gold for your money. That is why I would recommend buying government issued or bullion coins and bars only. They offer the best prices for your money. If you are a collecter, then the numismatics would be your choice.
Before you get started investing in gold or silver you should take a look at how to safely buy gold. It will explain everything you need to know before you put your money into gold and silver.
Government Issued Coins
These include coins that are minted specifically by governments. They include coins like the Gold American Eagles, Canadian Maple Leafs, Austrian Philharmonics, and South African Krugerrands. These coins are considered bullion coins which means they are 99.9% pure gold and produced in mass. Each of these coins has a face value on them. For example, the American Eagles have face values of $5, $10, $25, and $50. This is because you can buy the coins in different sizes. Sizes include 1/10 oz, ¼ oz, ½ oz, and 1 oz.
The face values mean nothing and are just there to show that the coins are legal tender. In other words, a one ounce gold coin will always be redeemable for $50. I say the face value means nothing because it drastically undervalues the price of the coin, and who knows if the dollar will even be around to redeem your coin even if you wanted to.
I highly recommend buying government issued gold coins.
They are 99.9% pure.
They carry a low premium.
They are recognizable around the world.
Numismatic Coins
The first time I heard the word numismatic I was taken back. It is just a fancy way of saying that the coin carries some kind of rare or distinguishable quality. A one ounce numismatic gold coin may fetch twice as much or 100 times as much than the gold content itself.
Do not invest in numismatic coins unless you are a collecter. Remember, you are investing in gold for the metal itself, not because it is rare. Numismatic coins can cost considerably more money than the bullion coins and are best left to collectors.
Bullion Coins & Rounds
Bullion coins, like the Gold American Eagle, are a good choice for investors. There are, however, bullion rounds on the market that may offer an even better deal than the coins. Coins vs. rounds: what’s the difference? Coins are minted by the government, whereas rounds are minted by independent companies. Many mining companies will mint their own rounds with their company name on the round. Rounds should be on the top of your list because they are 99.9% pure gold, and they do not carry the premium that government coins carry.
Bullion Bars/Ingots
Bullion bars (a.k.a. ingots) will give you the most gold for your money. Why? Well, because you are buying in bulk of course, and with everything bulk you get a discount. You can buy gold bars for considerably less than bullion coins or rounds.
There is such a premium on coins and rounds because it’s more labor intensive to produce. The bars are simply poured and stamped with 99.9% pure gold. That’s it. The only problem with bars is that most people cannot afford to buy gold in bulk amounts. This may not be the best choice for most people.
When you are ready to purchase, I would like to refer you to the most reputable dealer I know. The company is run by an expert in monetary history and his name is Mike Maloney. His website GoldSilver.com is a great place to get started and he provides a great selection at good prices.
Gold Mining Stocks
Mining stocks offer unmatched returns for those who choose to take a risk. They can make millionaires in a very short time, as was proven with “Lion Mines” from 1975-1980. The share price went form $.07/share to $380/share in 5 years. You do the math. Before you choose to invest in mining stocks it is imperitive that you read the Mining Stock Investor Guide.
There are choices when it comes to mining stocks. By far the highest profits are taken in the junior mining stocks. These stocks usually trade around $.10-$3.00 and can be risky, but the payout is huge. These stocks are referred to as penny stocks since they trade for very cheap. Do not invest in penny stocks until you read this.
Diversify
I don’t think that gold is any different than any other investment. You need to diversify your gold holdings. I wouldn’t just buy only American Gold Eagles. I would buy some other coins or rounds.
Caveat Emptor-Let the Buyer Beware
There are some gold investments that your financial advisor may try to push on you, but remember this one thing when it comes to buying physical bullion. If you can’t touch it, you don’t own it. Period.
COMEX
The Comex is part of the NYSE and is set up to trade commodities futures contracts. That is, you buy a futures contract for 100 oz. of gold, and if you are long on the contract and the price of gold moves higher, then you can sell your contract for a profit. The same goes for being short on the contract. If the price moves down and you are short, then you make a profit.
The Comex keeps all of the gold that they use for the contracts in a storage vault. So, if you have a gold contract and you want to take physical delivery, then all you need to do is put in the request. The problem is that the Comex has many more contracts outstanding than they have gold in the vault. So, recently they have been delivering ETF contracts instead of physical delivery of the gold. DO NOT put your money here!
ETF’s
These are known as exchange traded funds. An ETF is a derivative and is similar to a mutual fund, but it’s traded on the stock exchange. GLD is one of the gold ETF’s. With this ETF you do not own the gold, you simply have exposure to the price of gold. The ETF also has a storage vault for all the gold they own, but several problems exist with the ETF. The main problem is that they refuse to prove the gold is there via third party audit. That is a red flag and many experts say to stay away from the GLD.
Jewelry as an Investment
Most people would not invest in jewelry due to many factors.
It’s too expensive for the amount of gold you get.
It’s not easily divisible into units.
The jewelry is not pure gold. Most of the time it is 14K gold.
In India, jewelry is the main avenue for which people invest in gold. It is just not the most economical way to go about investing.
What is a Premium?
The premiums on gold is the additional costs of producing it and getting it to market. It is the cost per ounce over the spot price. For example, if a gold coin has a spot price of $1,000/ounce, then you can expect that gold coin to sell for around $1,040/ounce.
What is Spot Price?
The current price at which a particular commodity can be bought or sold at a specified time and place.
Storing Your Gold
If you are going to put your hard earned money into gold, then I would suggest getting a good safe for your home. Buy something heavy enough to deter someone from trying to carry it out. Also, it needs to be bolted to the floor. Another option is private storage companies.
There are companies here and overseas who will store your gold for a small fee. I would avoid keeping your gold in a bank lock box. During the 1930’s when the government confiscated gold, the first place they went were the bank lock boxes. Not that gold confiscation would happen again, mainly because we are off the gold standard, but it is just better not to keep it at any bank. Check out this information about how to store your gold offshore.
Before I invested in gold and silver, I did a lot of research. The best advice I can give you is in this gold investing guide. If you read this report, I promise it will save you many hours of wasted time and lots of potentially wasted money.
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