Line Gold

Line Gold

Investing In Gold - Knowing The Ins And Out

Why You Should Not "Invest" in Gold
Don't get me wrong - I am certainly not against buying gold but as an asset class it is worthwhile seeing how it behaves differently to other investments such as stocks, bonds or real estate. When you buy a stock in IBM you receive a yearly dividend (hopefully) and (hopefully) the value of the stock goes up over time, the same when you buy real estate as an investment. With Gold it is a little bit different. The reason why gold is seen as a safe haven is that it is a store of value, it never loses its purchasing power. There is an oft quoted adage that an ounce of gold in Roman times would have bought an army officer a fine suit of clothes, that in Shakespeare's times an ounce of gold would have bought a good quality set of clothes and today with gold at just over $1000 this would buy you a good Armani Suit. BUT just as over time it does not lose purchasing power it does not increase purchasing power. The real long term nature of gold is as Insurance and not as an investment. As wars are fought, governments collapse, economies tumble people have rushed into gold because they know it is a place where they can preserve the wealth they have.

Yes you can point to gold's meteoric rise over the last 8 or so years and say what a great "investment" it has been but if you see gold as insurance and mainly buy it as that then you will be able to withstand volatile swings in price that often occur in the gold market, you will be less worried about day to day actions in price and you will perhaps see that the price of gold did not go up just the value paper money in your wallet went down.

Gold Will Protect Me From Coming Super or Hyperinflation - Or Maybe Not
Many gold commentators talk about excessive money printing by central banks, how it will inevitably lead to sky high inflation even hyperinflation and how gold will protect you. Well yes and no. Gold is not such a immediate hedge against inflation that everybody thinks as much as it a hedge against political risk. When Gold skyrocketed to $850 in 1980 it was not a reaction to high prices so much as to the uncertainty surrounding the future of the dollar. In the following years inflation still persisted but the gold price plummeted. Gold is a hedge against inflation really in the long term because in the long term it retains its purchasing power but will it rise 10% just because inflation rose 10% - history is unclear on that.

There is A High Risk of a Worldwide Currency Collapse - So Gold is the Only Safe Haven????
It is February 2010 and Greece is on the brink of bankruptcy with Portugal, Italy, Ireland and Spain all waiting in line to follow suit, if these countries go down then they will take many others with them. Countries like Germany will also be drastically effected because they lent the money, kept part of the debt and then sold the rest on to Insurance companies and Pension Funds along with insurance called Credit Derivatives. States in the USA like California and Illinois are in worse shape than Greece. The whole worldwide financial system is massively intertwined through a complex system of derivatives, there was massive over borrowing and someone will have to pay the piper. There is therefore a certain inevitability about a full on currency crisis making gold ever more attractive because it is no one's liability it cannot be printed ad infinitum. However much they try governments cannot corrupt it.

However inevitable a currency crisis or collapse may seem to you, for there to actually be one the majority of the market or at least the big players in that market have to agree with you. While the fundamentals are in place it can take a long time for the mass to catch on to those fundamentals. You may not be fooled by bailouts and government posturing but in the short term many people are. So for you to be proved right may take many years with lots of twists and turns.

What we face at the moment is a huge credit collapse never seen on such a magnitude before so who knows how it will play out. If you remember back to 2008 this particular crash caused the gold price to collapse and the dollar to strengthen -so in the short to medium term this could happen again. Once again if you see gold as insurance - the short to medium term does not matter so much.

Gold as Protection during a Financial Crisis
If gold is your only hedge against financial crisis then this could be playing with fire a little. Think that there are many scenarios where having gold will not help because no one has any use for it, no one wants to exchange their bag of wheat for your ounce of gold because well you cant really eat it. Gold is a great store of value but it is not the only one. Food, basic clothes, seeds, - essentials that people always need are also great stores of value with a much wider market so if you are motivated towards buying gold because you envision financial catastrophe then it may pay to have a good think about other stores of value. The great thing is about having a large store of food and essentials is that regardless what happens YOU will always need then. So it is never money down the drain!!!!

Bartering with Gold Could Prove Very Expensive
If you are investing in gold because you envision you may be bartering with it some day - well think on. I'm sure someone will swap a loaf for an ounce of gold but that will be a mighty expensive loaf!!!! Look at having precious metals in smaller denominations - junk silver coins - old US coins that have silver in them are a great alternative. They are easy to buy from any coin store and are very low denomination (a silver dime has less than$2 worth of silver in it )

Here are some links to articles that may be of use

How to Buy Junk Silver Coins

This article is meant for informational and educational purposes only it does not constitute advice of any kind - financial or otherwise.

About the Author

The In Gold We Trust is a website offering information on buying and selling and collecting gold and other precious metals. The Scrap Gold Calculator will give you up to the minute scrap gold prices,calculate the price of all your gold coins, junk silver coins, old US coins etc

Circle Line Cruises - The Beast $24 Circle line sightseeing cruises the beast!

The Gray Line New York Eat and Play Card $24.99 The Gray Line New York Eat and Play Card

Circle Line Harbor Cruises - 75 Min $27 75min Harbor boat Cruise of NYC by Circle Line.

Circle Line Harbor Cruises - 3 Hours $36 Circle Line 3hr Harbor Cruises of New York City.

Circle Line Harbor Cruises - 2 Hours $31 2 hr Harbor Cruises of New York harbor by Circle Line.

Manhattan Comprehensive $89 New York Tour packages from Gray Line New York

Freestyle New York $109 New York Attractions Pass from Gray Line New York

Night Tour Loop $44 The Best New York Night Tour from Gray Line New York.

Midtown Cruise (90-min) $28 NYC Cruises of the harbours and skyline on Gray Line's CitySightseeing Cruises.

Land and Sea $69 NYC bus tours and sightseeing harbor cruises from Gray Line New York.

Downtown Cruise (60-min) Gateway to America $18 Sightseeing cruises of New York on Gray Line's CitySightseeing Cruises. Cruise by the Statue of Liberty, The Brooklyn Bridge and the NYC Skyline.

Classic New York Double-Decker Bus Tour $89 Double decker New York sightseeing bus tours from Gray Line New York.

Brooklyn Loop $44 New York's best Brooklyn bus Tour provided by Gray Line New York.

VIP New York Private Tours (4hrs) $696 Private tour guide in new york from Gray Line New York Sightseeing.

Uptown Loop $44 New York tour of uptown Manhattan on board Gray Line hop on, hop off bus tours.

City Tour in Foreign Languages + All Loops Tour $69 Foreign language bus Tours of New York City in Deutsche (german), Francais (French), Italiano (Italian), or Español (Spanish).

Harlem Gospel Tour (Wednesdays) $55 Gospel tour New York, Harlem, Churches and many more.

United Nations Tour $16 A guided tour of the United Nations, with a brief overview of the Organization.

The Hamptons, Sag Harbor & Shopping Day Trip $149 Tours of the Hamptons via bus from New York City.

Statue of Liberty + Empire State Building $35 Ferry ticket to the Statue of Liberty and the Empire State Building. Visit 2 of New York City's greatest attractions at a great price!

Empire State Building Observatory Tickets $21 Tickets to the Empire State Building Observation deck for a panoramic view of New York City.

Statue of Liberty + Top of The Rock $35 The Top of the Rock Observation deck ticket and a ferry ticket to the Statue of Liberty.

Empire State Building + NY Skyride $43 Tickets to the Empire State building observation deck and the NY Skyride, NYC's only virtual tour simulator.

Madame Tussauds New York Wax Museum $39 Madame Tussauds wax museum in New York City, tickets and information.

Freedom Trail Boston Tours from New York $149 Boston day trips from New York, NYC

All Loops Tour with Top of The Rock $76 New York Tour package of Uptown, Downtown, Brooklyn and Night tours plus ticket to The Top of The Rock Observation deck.

Washington D.C. - Bus Tours from New York $149 Washington DC day trips from New York City.

Harlem Gospel Tour (Sundays) $55 The best Harlem gospel tour in New York City.

Manhattan Helicopters : Classic Manhattan Tour $160 Manhattan Helicopters : Classic Manhattan Tour

National September 11 Memorial $10000 National September 11 Memorial

NYC Tribute Tour $99 9/11 Memorial tours NYC. Get your tickets here to enjoy admission to the Ground Zero Memorial, visit to the Tribute WTC Visitor Center, Ferry ride to the Statue of Liberty National Monument and 72 hours of Hop-On, Hop-Off double-decker fun.

Manhattan Helicopters : VIP Manhattan Tour $260 Manhattan Helicopters : VIP Manhattan Tour

New-York Historical Society Museum and Library $15 New-York Historical Society Museum and Library

Tribute WTC Visitor Center $1000 Tribute WTC Visitor Center

BODIES.. The Exhibition $29 BODIES.. The Exhibition

Dialog in the Dark $22.5 Dialog in the Dark

City Tour in Foreign Languages $49 Multilingual Tours of New York City in Deutsche (german), Francais (French), Italiano (Italian), or Español (Spanish).

CSI: The Experience $29 CSI: The Experience

Downtown Loop $44 The Downtown Loop tour includes the oldest neighborhoods in New York City.

Top of the Rock Observatory $22 Tickets to Top of The Rock observation deck for Unobstructed 360 degree views of New York from the 70th floor.