I was thinking of investing some money in gold because I’m assuming with the $600 billion the Fed is going to create gold prices are going to rise. I never really invested in anything so I don’t really know how to do it, any suggestions?
You might wanna try Peter Schiff’s new www.europacmetals.com. Or www.bullionvault.com. Good luck. Always be careful before pressing the ‘buy’ button.
Consider that the Financial Times and Wall Street Journal have recently published pieces suggesting that gold is a good investment. These are 100% pro-central bank rags that regularly pooh-pooh gold. I’m nervous about the gold price in the short-term. Marc Faber has said “there’s a bubble in everything”. So, be cautious, even of commodities. Ag commodities and oil are good hedges against a gold bubble. Keep your money out of any tax-deferred instrument, such as a 401k or IRA because they’re eventually going to nationalize those one way or the other. If you do buy gold, I recommend that you keep it in your physical control in a bank safe-deposit box or buy a real, commercial safe and self-store it (though you should have a dog and a gun that you know how to use in self-defense if you decide to self-store… and don’t tell anyone, especially family and friends, about the safe, let alone what’s in it).
Clayton -
I bought a significant amount of gold about 6 months ago and have made 35%. Or to be more accurate, I have not lost 35%, unlike everyone else who holds U.S. dollars. The funny thing about the gold standard is that it exists whether we’re on it or not. People are panic buying lately, it is true, but they have every right and justification to do so.
Gold, silver, and commodities-- especially foreign commodities-- can see us through periods of high inflation. Whether the dollar collapses because of inflation, or because we default on all the money we owe is immaterial. It will collapse. The only question is how long it will take.
Wait for a dip in the market, and invest as much as you feel comfortable with. You will never lose money by investing in gold. You are sure to lose it by holding onto paper.
Good point. A friend of mine put a lot into silver at $20/oz, and now its 27 3 months later. Sick. He’s afraid to put more in but speculates that it will keep going up. QE2 is not the last QE.
His tentative analysis is that even if silver goes back down to $23 in the next 6 months, a good expectation would be that it’ll be $30 in a couple years (at least). Like you say, you are sure to lose by holding onto paper.
On a cautionary note, if you bought gold in January 1980, you would have had to wait nearly 30 years to recoup your money. In other words, timing does matter and you absolutely can lose money investing in gold when the gold market is hot, which it is. Ask yourself, how many people who are buying gold do you really think believe that gold is potential money. Most of the influx is from the minivan-driving 401k crowd whose investment advisors are telling them “you should have some gold, for safety” whatever the hell that means. Do you think those people are going to stay in gold if it drops 25%? I don’t. Only time will tell whether gold is in a bubble or this is just a long-overdue correction. In the meantime, there are other commodities, such as ag and oil (not BP!), that are pretty safe by comparison to gold. Given the level of excitement about gold and the number of people saying “gold can never go down!”, I would recommend shifting out of gold into other commodities or Asian stocks, if you’ve done your homework. If you don’t own any gold, you might buy a limited quantity for “doomsday” safety. Unless the elites really are planning to unleash Armageddon on us, the gold market is definitely overheated.
It’s going to be hard to know what’s going on before 2011 rolls in and the financial system is forced to deal with the commercial real estate crisis. If that fizzles, then the Fed could succeed in “stabilizing” the phony economy and restarting the illusion. If it commercial RE turns out to be a Molotov cocktail in the middle of our tinder-dry economy, then the scenario Marc Faber has described, where the Fed just prints and prints until the final crisis might unfold. In this scenario, yes, gold will go up and up and up and up but food and water might be even more costly than gold. In other words, the sky really would fall.
The strategy of the monetary elites is to keep the phony inflationary economy going until it collapses under the weight of its malinvestments… the Misesean crack-up boom. But instead of just allowing the economy to slough off the phoney money and malinvestments and rebuild from the ashes on a foundation of sound money, private property and honest industry, the monetary elites will attempt to lure the world’s economies into war, turning the crack-up boom into Armageddon. After the last B2 has dropped its last load of bombs on the last desert village, the public will long have forgotten the monetary crisis that preceded the wars and gladly embrace Beijing-Bretton III, with the “copper/iron backed” Renminbi as the world’s new “reserve currency”. When Beijing cuts the link to commodities in 2031, people around the world will be shocked as Beijing’s Military-Industrial Complex goes into hyperdrive, building the latest robotic soldiers and deploying them to keep order in backwards US cities, overrun by drug-gang warlords.
Clayton -
Ah, yes, this is true-- that is, the rest of the scenario as well, more than likely-- but in particular the price of gold dropping in the 1980’s. However, I would much rather have my savings in gold right now than in dollars. There seems to be no end in sight to the devaluation of the dollar. A second such dip in the gold market is unlikely, and frankly I do not see how it would ever come about right now, even if interest rates did rise sharply. But if gold did tank and drop 25%, the first thing I would do is take out a loan to buy more gold. However you choose to invest these days, it’s time to get out of paper money and start converting it to real money.
Or to be more accurate, I have not lost 35%, unlike everyone else who holds U.S. dollars.
Lost 35% as compared to what? Gold? Certainly not relative to any other good on the market that I’m actually interested in buying. The dollar has lost value compared to food and the like, but as compared to 2007 the dollar has gained value relative to almost every other consumer good. I’m not saying it will remain this way, but let’s be careful when talking about inflation.