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A counter argument to buying gold at today’s prices (cnn/money article)

3 posts in this topic

I’m not totally in disagreement with this article. Stocks, bonds and other conventional financial instruments should be the cornerstones of your investments. Most of my retirement saving are in those areas. And my financial planner as been on my tail about how much I have in coins. TOUGH! I need to get some enjoyment out of life!


One thing you must always keep in mind is that these guys will NEVER say good things about buying gold because they are not in the gold selling business. I’ve this since the 1970s, and I’m sure their ancestors had the same attitudes eons before that.


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Other than buying gold coins there are two other major ways to participate in the rise of Gold.


1. Buying the Bullion itself which means that you would buy some measurement of the Gold bars and would have a storage problem.


2. Buying Stocke which produce Gold which means that you are subject not only to the rise and fall of Gold Prices but the costs by the Company to mine and produce it.


There is another way but it involves the Commodity exchange itself and is not for the Novice. Of course, you can purchase Mutual Funds etc which are a number of different Gold Mining companies but are still subject to the average of the various costs.



I own Stocks but don't have any Gold Stocks. Many see Gold Stocks as a hedge against Inflation but History does not bear this out in most cases for some of the reaons I have mentioned above.


Historically people have fled to Gold and other Commodites in bad economic times but as soon as times turn good again then they come out of Gold into other types of Investments because Gold is not a reliable growth stock and it also does not produce any Income for the reasons i mentioned above.



We have been in a credit crunch for some time The Dollar is down against all other Currencies.I do not think it is a coincidence that the rise of the price of Gold started when Heliocopter Ben started restricting Credit and raisng the Federal Funds rate a total of 17 times Gold really started to advance more as the Credit Crunch became more obvious as there could be no other outcome then a declining dollar.This made some flee into Commodites and Gold being the Standard for a haven started to rise. The people who have made money in Gold have been in early. In order to make any Money now one has to believe that Gold will go up at least another 50% or more.


The lowering of the Federal Funds rate to 2 3/4 % only means that the liklihood is that the recession will not be as deep.The lowering the the "Lending" discount rate that the Fed charges Banks will also help. Heliocopter Ben is fixated on Inflation. When the Fed thinks that the Economy is recovering they will start to raise rates again and all but the hard core people will exit out of Gold.

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