Saturday, October 9, 2010


Super-rich investors buy gold by ton

To read full news article click on "Super-rich" above.

I have never particularly cared for gold as an investment.  My personal experience with it is when you invest in it at one price, when you want to actually sell it you wind up losing money. So for example, as a young man I might buy $1000 worth of gold as a hedge against inflation or deflation. But then later, when I needed to sell it for one reason or another, I wound up getting only about 700 or 800 dollars for the gold coinage. After doing that a couple of times I decided I didn't want to own gold as an investment.

However, in these times it is recommended by many investors to have gold coinage be 7% to 10% of your investment portfolio. The reason for this is that money these days is not backed up by silver or gold generally in most countries. What this means in real terms is that currency is based "ONLY" on the Gross National Product of a nation. So in good times the value of the currency goes up. But in bad times there is no limit to just how far a currency could theoretically go because it is not backed up by silver or gold anymore. So owning Gold "Because Gold is something intrinsically real" means that since there is only so much of it that it will retain some value always even if currency "in a dire emergency" is worth nothing. Now, the likelihood of currency being worth nothing is less than 1% in any given situation more or less. But people these days worldwide are spooked. And when enough people get spooked they might create that 1% situation at one point or another. So owning 7% to 10% gold in your investment portfolio might save your families lives in order to move to another country should that system ever collapse.

No comments: