Thinking About Investing in Gold?

This article may contain the most important information you will ever read! Unless you have been living under the proverbial rock you know that the price of gold and silver has been skyrocketing! The price of gold news dominates the financial segments daily! If you are considering making a purchase of gold and silver for your investment portfolio, you need to pay attention to what I am going to share with you in this article!

Why Buy Gold?

For those of you who are neophytes to the gold and silver market, you probably have many questions. You may be asking yourself, "Why buy gold?". That is a very good question. Depending on whom you ask you will probably get a different answer. I will tell you the reason why you should buy gold...Because GOLD IS MONEY!

When (notice I did not say "if") our currency fails (and it has to!) and our paper money is worthless, owning physical gold (and silver) will become the globally accepted currency. People will need gold to purchase the essentials of everyday life!

Another reason to buy gold is... Because Gold Is A Store Of Value! Gold never loses its value. The same amount of gold will buy an average home today as it did in the 1920s! The price of gold has an inverse relationship with the value of the dollar.

When the dollar is up the price of gold goes down. When the dollar falls the price of gold increases!

Quick Historical Fact: Throughout history, all the fiat currencies of great civilizations have failed! The U.S. dollar has had a nice run but it too is coming to a fast end! Learn from the past or you are doomed to repeat it!

Our nation is on the verge of a TRAUMATIC Economic disaster! The perfect economic storm is forming and it is just a matter of time before it hits. When that happens, hyperinflation will occur and the dollar will collapse.

Those who own gold and I mean "physical" gold, not stocks of gold companies, will become wealthy! At this writing, the price of gold is approximately $1,500 per ounce! I predict that within two years or less the price of gold will hit $5,000 per ounce or MORE!

In addition, here is the reason not to buy gold... Because Gold Is Not An Investing Vehicle! Yes if you bought gold and especially silver in the past few years, and held on to it, you have made quite a nice profit! However, trying to play roulette with the price of gold and silver is a fool's game.

Buy gold because... It Is A Hedge Against Inflation! As prices go up and the purchasing power of the dollar drops, your money is becoming worthless. So what if I am wrong and we do not experience hyperinflation and you went out and bought a boatload of gold and silver?

What is the worst thing that could happen to you? You would still own a boatload of gold and silver. Guess what? The value of gold and silver NEVER GOES TO ZERO!

The Problem With Gold As A Currency

When the dollar crashes and people start using gold for business transactions using gold bars, gold coins, and gold jewelry will not necessarily be practical. They are too big and will be worth too much money. You will not be able to buy groceries with a one-ounce gold coin worth $5,000!

The Answer: buy gold in small denominations of.5 grams, 1 gram, or 2-gram ingots! More on that later.

Where You Can Find Gold

It seems that gold is ubiquitous. It is everywhere you look these days, isn't it? These "Cash For Gold" places are apparently in every strip center in the country! Gold purchasing companies are advertising for you to mail in your gold and they will give you money back. Every other television commercial is promoting gold commemorative coins!

IMPORTANT TIP: Avoid these places like the plague! They are a supreme rip off. They are gold experts. You're not. They buy and sell gold every day. You do not. They do this for a living. You do not. They will beat you all day long.

I know times are tough and people need to pay bills so they resort to trading in their keepsake jewelry for easy cash. My advice: KEEP YOUR GOLD AND SILVER JEWELRY! It will be worth 100 times as much in a couple of years!

Beware The Pitfalls Of Buying Gold From These Sources

Exchange-Traded Funds (ETFs)

ETFs for gold and silver can be very good vehicles for trading but they can also be a major pitfall for investing. When you buy an ETF, you are buying shares in a trust that is owned and run by a bank, which might be holding gold or silver. However, shares in an EFT are not gold or silver, which is allocated to, and wholly owned by a single entity, YOU!

Numismatics

Numismatics is defined as the study or collecting of coins, medals, and paper money. They are considered "collectables" and as such are subject to being valued in terms of rarity and sentimentality. Numismatics coins are easy to buy, however, they can be very difficult to sell!

Online Sellers

Although there are many legitimate and reputable online services to buy and sell gold, there are just as many scams and fraudulent services out there as well! Only buy from a well-known online company. Do your homework and check with consumer watch dog agencies to confirm the online seller you buy from is trustworthy. Buy your gold from a service that comes recommended by someone you know and trust.

How To Buy Gold

Find a company that sells gold in small ingots or bullion. Ingots will be the perfect size for use as gold money currency. Make sure the gold in 99.9% pure kina-bar quality gold certified by an authorized agency. Be sure to shop around for the lowest storage fees. The best gold brokerage firms offer storage for free! Feel free to visit my website for a list of the best gold brokers in the market.

Storing Your Gold vs Possessing Your Gold

I recommend that you store most of your gold in a Swiss Bank or a Hong Kong bank.

This way in the event of an economic disaster the Federal Government cannot mandate you give your gold to them as they did during the Great Depression!

Should I Buy Gold or Silver?

For practical purposes, that is, using precious metals as a new global currency Gold is a better choice. It is not as soft as silver and small ingots bring a higher price. The price of Silver is forecasted to continue its meteoric rise with more room to go higher than gold. So if you are trading precious metals, silver is a better bet.

Best Book On Buying Gold and Silver

Easily, best book on the subject: "Guide To Investing in Gold & Silver" by Michael Maloney.

About This Article's Author

Tim Cronin is a Partner with KB Vision USA. For more info about the new global gold backed currency, visit his website. For more information about Buying Gold, please visit my website, and click on the page titled, "New Money System..."

Tim Cronin

Partner

KB Vision USA

For more info about Gold, The New Global Currency Please visit my website: [http://thevaluemarketingcoach.com]

email: tim@thevaluemarketingcoach.com

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Rising Gold Prices - An Overview

It is important to grasp the big picture of why gold is going up and the factors that are fueling its rise.

An Overview Since 1974

In 1971 President Richard Nixon ended US dollar convertibility to gold, bringing to an end the central role of gold in world currency systems. Three years later Congress legalized the ownership of gold by US citizens. Freed from the government-mandated price of $35 per ounce, the dollar and gold floated. In 1979 and 1980, investors' lack of confidence in the government's ability to restrict the expansion of the money supply resulted in panic buying of precious metals as a hedge against inflation. Gold prices soared, and in January 1980 the gold price hit a record of $850 per ounce. During the four-year period from 1976 to 1980, the price of gold had risen by more than 750%.

In the early 1980s the US Federal Reserve raised interest rates to restrict money supply growth. This policy achieved its purpose and by 1982 interest rates were declining and the fear of inflation had subsided. Investment capital responded by moving into financial assets from commodities including gold, and the market soared. After the historic highs of January 1980, the price of gold meandered in the $300-$400 range until hitting a low of $256 in February 2001. Then the bull market for gold returned, and by November 2009 the price had pushed up to $1,140 - a rise of 445%. To some investors, this suggests that history is repeating itself and gold is heading beyond $2,000 per ounce. To return to the 1980 high, when adjusted for inflation, the price would need to be over $2,000 now.

Today's Gold Market

The price of gold is set by the Gold Fixing, which is also known as the Gold Fix or London Gold Fixing. Twice a day by telephone, at 10:30 GMT and 15:00 GMT, five members of the London Gold Pool meet to settle contracts between members of the London bullion market. These settlements brokered by the Gold Fixing are widely recognized as the benchmark used to price gold and gold products throughout the world.

Let's examine some of the factors that influence the price of gold.

Gold Supply

There is an agency that tracks of all the gold in the world. Gold Fields Mineral Services Ltd (GFMS) is an independent, London-based consultancy and research company, dedicated to the study of the international gold and silver markets. GFMS publishes the annual Gold Survey, which features comprehensive analysis and statistics on gold supply and demand for over sixty countries. GFMS estimates that above-ground gold stocks represent a total volume of approximately 160,000 tonnes, of which over 60% has been mined since 1950. GFMS estimates that all the gold ever mined would form a cube measuring 20 yards (19 meters) on each side.

The production of new gold does not generally keep pace with inflation. The aboveground gold stock increases at a fairly constant rate of around 1.7% per year. During the last 50 years the largest annual increase was 2.1% and the smallest increase was 1.4%. This is less than the long-term historic rate of inflation, which is 4%.

The single largest holder of gold in the world is the United States government, with 8,133.5 tonnes. As of November 2009 this gold supply was worth approximately $330 billion. Other top holders of gold include Germany, the International Monetary Fund (IMF), Italy, France, SPDR Gold Shares, China, Switzerland, Japan, and the Netherlands.

The US Dollar

The price of gold is widely understood to inversely track the dollar. When the dollar falls the price of gold tends to rise. But there have been many cases when the price of gold did not keep up with changes in the value of the dollar, or even ran counter to it.

For example, when gold peaked in 1980, it reflected a prevalent fear of inflation in the wake of the 1979 oil shock and a U.S. monetary policy that lacked credibility. The case for gold as a hedge against inflation was persuasive. But today, the price of oil is up significantly in currencies other than the dollar. Even measured in euros, it has returned to the February save-haven peak. The weakness of the US dollar alone cannot explain the rise in price.

In early November, with the goal to support the United States' recovery from recession, the US Federal Reserve decided to maintain the massive stimulus measures and hold down US interest rates for "an extended period." With the Federal Reserve keeping rates low, a record US budget deficit continuing to rise, and central banks all over the world diversifying away from the dollar, gold may continue to be a very attractive choice. After all, the cost of borrowing money to invest in gold is next to nothing.

On the global markets there is a persistent lack of confidence in paper-based currencies. The weakening of the U.S. dollar has had a broad effect that reduces confidence in other currencies. And with central banks and government policymakers still entangled in their unprecedented fiscal and monetary interventions, this could continue for much longer.

The current strength of gold may be a reflection not of a specific response to the value of the US dollar, but rather the expression of the same underlying malaise with the lingering effects of the global financial crisis.

Supply and Demand

In recent years the decline in mine supply has been supplemented by several factors including sustained central bank gold sales. In the 1990s, central bankers were acting as a group to reduce their gold holdings, confident that the fiat currencies were a better store of value. Central bank reserve sales, which during the past decade have played a key role in keeping gold prices in check, have slowed recently. Now gold's attractions are re-emerging and bankers look set to be net buyers, which should help tighten the market.

In addition, scrap sales offset mining declines. In the first quarter, scrap sales rose sharply as gold re-visited its all-time high.

Industrial demand for gold is influenced by fabrication needs, which have dropped sharply since 1997. The global economic downturn, coupled with higher prices, further reduced the demand for jewelry, and supply-demand changes add little in terms of explaining bullion's rise.

Government Bonds

Ten-year U.S. treasury yields have rebounded from their end-of-2008 lows between 2% and 3.3%, but this does not necessarily represent widespread fear of inflation. There is little evidence that gold buying is the result of inflation concerns.

Speculation and ETFs

The 2008 surge in crude oil prices to US$147 per barrel suggests that a similar speculative bubble is forming in gold. However, one obvious difference between then and now is that when oil peaked, the forward market was anticipating a decline in prices. The gold market anticipates a rise, and forecasts a value of US$1,250 per ounce for June 2014. While ETFs were cited as a culprit for the rise in oil and are also playing a role in the gold market, their impact may be limited in the gold market.

Early in 2009 ETFs may have been active buyers, but their activity has leveled off since. There has been a sharp increase in long forward positions in gold at the Commodity Futures Trading Commission (CFTC) and net longs have reached a record.

Despite all the attention being paid to sales of gold by central banks and the fact that world gold holdings have experienced a broad decline, holdings in industrialized economies are on the rise as a share of total foreign reserves. And this trend was renewed in the first quarter.

China and Foreign Markets

China is emerging as an international economic force and its reported gold holdings are not necessarily reliable. This is particularly significant now that Chinese authorities can make their purchases on the domestic market. The People's Bank of China (BOC) holds about 1,054 metric tons of gold, which is about two percent of its $2.3 trillion in foreign currency reserves.

Retailers and jewelers are increasingly reluctant to buy at higher levels. In recent years India has been the world's biggest importer of gold, and in February 2008 imports stood at 23 tonnes. The figure fell to 1.8 tonnes in January 2009 and in February there was no gold imported. But in October 2009 on the back of rising demand India's gold imports surged by over 45% at 48 tonnes. India had imported 33 tonnes in the corresponding period during the previous year.

In September 2009 the International Monetary Fund (IMF) announced that it would sell 403.3 metric tons of gold to strengthen its finances and increase its ability to make loans to developing countries. In November IMF revealed that from Oct. 19 to Oct. 30 it sold 200 metric tons of gold to the Reserve Bank of India (RBI). The RBI paid $6.7 billion for the equivalent of about 8% of the world's annual mine production. As a percentage of foreign reserves, India's gold holdings are now higher than even China's. Many analysts believe India's purchase will spur other countries and investors to ramp up their gold purchases. Indeed, with 203.3 metric tons still on sale at the IMF, China may become the next big purchaser.

For more on the rising price of commodities and how to profit through gold stocks subscribe to the free WallStreetWindow stock trading newsletter.

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Remember - This only works if your do

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>open FIREFOX

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REMEMBER

A YOUNG MAN ONCE PLANTED AN ACORN AND LOOKED AFTER THE SAPLING

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SLOW AND STEADY WILL ALWAYS WIN IN THE END