We’ve all seen these cash for gold commercials on television recently, yet few stop to think why gold is suddenly in the spotlight. Many gold investors should be asking the question “will silver outperform gold?” For gold followers, you’ve seen the price of gold increase from $260/oz in 2001 all the way up to $1,170/oz today. The gold rush is on, and smart investors have been buying gold to hedge against inflation.
Gold is a great investment during times of economic uncertainty, but few people are even aware of the reasons why they should be invested in gold. I’m not writing this article to talk about gold though. Silver is what I want to talk about, and that’s because silver is a much better investment. Silver has the potential to return five, ten, or even twenty times the gains compared to gold.
The silver price per ounce today is sitting at $18.60 per ounce. Just 8 years ago the price per ounce of silver was at around $4.00 per ounce. That’s over a 400% increase in price. You may be saying “But, gold had a 400% increase in the past 8 years, so why is silver a better investment?” That’s what I’m here to tell you about.
Silver is much more rare than gold in above ground inventories. There is roughly 5 billion ounces of gold above ground in the world, and most is available for investment purposes. There is less than one billion ounces of silver in the world, and most of that is used in industrial applications.
Silver is mostly depleted as soon as it comes out of the ground. It is used for electronics, solar panels, medical purposes, and many more applications. Silver is consumed and thrown away in to land fills because the price of silver is not high enough to justify recycling it.
Explosion In The Price Of Silver Imminent-Ted Butler
Most of the gold ever mined is still in existence and available today. Most of the silver that has been mined has been consumed and not recoverable. Industry consumes more silver than is mined each year so the levels have been dangerously depleted. Even the USGS said the silver would be fully depleted and extinct by 2020.
Silver really is the new gold if you look at the rarity value, and many experts have stated that the silver price will go anywhere from $100/oz to more than the price of gold. If that is the case, then silver would need to be $1,170/oz. Silver is the investment of a lifetime, and some experts are saying that there has never been as sure of an investment explosion like that of silver.
Some may make the mistake of saying that a metal like silver couldn’t or wouldn’t go that high, but look at the price of rhodium. Just a few years ago the price was at $300/oz and now it is nearly $10,000/oz. It can happen to silver, and there are many other factors that will push the price of silver up.
The COMEX short sellers, who include JPMorgan Chase and two others have been manipulating the price of silver down for many years now. These short sellers have been way over their contract limits in silver, illegally I might add, and at some point in the near future these banks will have to cover their short positions. This illegal action is being stopped, and when the banks are forced to limit their short positions we could see a price move in silver that will take the breath away of even the most bullish investors.
The factors for silver are much more bullish than gold, as is evident in my article. It is important that you be invested in silver bullion, silver coins, silver bars, and Silver Eagles to protect yourself from inflation. Most are not aware of silver’s fundamentals, but once this price explosion happens it will be the investment that CNN talks about every night.
Get in on the gold action now! Every investor should know that gold is a hedge against inflation. There has been a huge movement in the gold price, and there are several reasons for that. For one, the official inflation rate is about 10%, and investors are getting out of dollars and into gold coins, gold bars, and gold bullion as a hedge against inflation. Buy gold bullion, gold ingots, and gold bullion coins to protect yourself during inflation.
The demand for gold is going through the roof. The demand in 2008 was up 64% as scared investors searched for a safe haven for their money. Countries like China, India, Russia, and Arab states have been steadily increasing their gold reserves. India just made a huge purchase of 200 tons from the IMF.
There is currently about 23 grams of gold available per person on earth. That’s about $840 worth of gold per person. The existing value of all the available mined gold on earth is $3.7 trillion.
There is around 140,000 tons of gold above ground, and that number increases each year by 2,600 tons. That is an increase of about 2% per year, but that doesn’t even come close to satisfying the demand. The demand for gold each year is about 4,000 tons, so the mines are coming up short by about 1,400 tons. Until the recent gold price highs, gold has been selling for around the cost of production.
Due to the low prices in gold and silver, mine supply has decreased by close to 10%. Seeing how the fundamentals for gold show that the demand outweighs the supply and has for a long time, then why has the gold price been suppressed until recently?
Any situation where demand exceeds supply means the price must go higher, but until recently it has not. The gold price has risen from $250/oz in 2001 to $1,140/oz today, but the inflation adjusted price shows that gold needs to be around $6800.
The answer is that there are a few factors that have caused this price suppression and they are still to blame. The central banks have been selling their gold supplies onto the open market in an attempt to suppress the price. It has worked, but central banks are running out of gold to sell.
Another factor that has suppressed the gold price is the advent of paper gold (i.e. exchange traded funds, futures contracts). These investment vehicles simply give you the price exposure to gold. The futures contracts on the COMEX will allow you to take physical delivery of your gold, but many investors are finding that the COMEX is defaulting on the delivery. The default is occurring because the COMEX does not have the gold that they claim they have.
The way the default happens is that the COMEX will either give a cash settlement upon delivery, or shares of the GLD (exchange traded fund). Either way, you do not own the physical gold, which means that you are still holding paper. These paper investments have kept investors in dollars, which has fraudulently propped up the dollar.
All of these gold suppression tactics are starting to come unraveled, and with inflation setting in there is no doubt the gold price will continue to explode. Stay away from paper investments if you can, unless you know for sure that they are legitimately holding the gold. Stick with American Gold Coins, American Gold Eagles, and gold bars.
You have every reason to buy gold now. Remember, gold is a hedge against inflation and a store of wealth. Just look at the gold price in the past month. The price of gold per ounce one month ago was $1,058/oz, and the current price of gold is at $1,140/oz. Smart investors are going crazy for gold coins because gold is the only safe investment right now. Educate yourself about the benefits of investing in gold and how to buy gold. You won’t be sorry!
Read this gold investing guide before making a purchase. It is very informative and will save you money.
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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By Adrian Douglas Monday, January 18, 2010 Here are some Trivial Pursuit questions for you: 1) What is the biggest market in the world for a physical commodity? 2) Is the gold market one of the smallest markets in the world for a physical commodity? I would guess that you answered: 1) Crude oil. 2) Yes. Gold is one of the smallest commodity markets in the wo […]
Get in on the gold action now! Every investor should know that gold is a hedge against inflation. There has been a huge movement in the gold price, and there are several reasons for that. For one, the official inflation rate is about 10%, and investors are getting out of dollars and into gold coins, gold bars, and gold bullion as a hedge against inflation. Buy gold bullion, gold ingots, and gold bullion coins to protect yourself during inflation.
