It's always good to own gold because:
1. Gold is money; it is liquid, universally accepted, easily portable, easily hidden, international.
2. There is no substitute; gold cannot be counterfeited, gold does not rust, gold is precious, gold is mallable, highly conductive, used in jewelry and high technology.
3. Gold's value is not dependant on another's promise to pay, it cannot go "bankrupt", nor can it be devalued to zero like fiat currencies. Gold's value is determined by scarcity, the work it takes to remove it from the earth, and the demand of the people of the world which has been timeless & incessant.
4. The amount of gold in the world has remained relatively constant in relation to population growth. There is about seven tenths of an ounce of gold per person in the world.
5. Historically, only the wealthiest people have been able to afford and possess gold.
6. It is said that "gold does not pay interest". However, from 1970 to 1980 gold went up in price from $35 to $850. This was a 24 fold increase. Calculated another way, this was an annually compounding 34% increase for 10 years straight.
7. Gold is inherently private. It cannot be taxed or inflated away.
8. Gold ownership fosters a sense of personal responsibility. Gold owners tend to support the Second Amendment to the U.S. Constitution. Both gold and guns create freedom for the owner.
9. Gold is beautiful, gold is sexy. Women have a strong affinity for gold. Women will appreciate that you own gold.
10. Tenth ounce gold coins are a great conversation piece; and make great gifts. Most people have never seen or held a gold coin and will be impressed and amazed as they hold it for the very first time.
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Reasons why the year 2002 is a great time to buy gold.
1. Gold is at a historically low valuation. Adjusted for inflation, gold is at 21 year lows.
2. Mining companies tend to mine less gold, and thus reduce supply, when the price is less than $300-600/oz.
3. The supply and demand fundamentals are great for owning gold right now. About 4000 tons are consumed each year, and less than 2500 tons are mined each year. To keep the price low, banks and price manipulators must make up the difference with increased gold loans feeding 1500 tons of gold to the market each year.
4. Another gold default is imminent. When gold contracts are defaulted on, the value of gold tends to skyrocket. The last time gold contracts defaulted was when the U.S. stopped redeeming gold contracts (called dollars) for gold in 1971.
5. There is a huge short position in gold that cannot be paid back at prices anywhere near to the prices that the gold was lent out. This is the imminent gold default. These gold contracts are called "futures" or "options", and are traded in New York at the COMEX.
6. Those who have sold short gold are finding it increasingly difficult to find any more gold to lend out. Default is coming. Those who own "paper gold", or contracts, may not benefit financially during a default. They can change the rules for holding gold contracts at any time.
7. The dollar is overvalued. Many foreign nations have huge positions in U.S. bonds. If they sold these bonds, the dollar could plumet. As the dollar decreases in value, the value of gold in dollars will increase.
8. The dollar has new competition from the Euro, which, unlike the dollar, is backed by gold.
9. Keeping a portion of one's portfolio in gold not only helps to reduce risk, it actually can dramatically increase returns. Gold stocks increased tremendously during the years after the great depression in the 1930's.
10. China is in the process of legalizing gold ownership this year after a decades long ban. China is growing increasingly wealthy, and, as all of Asia, their people have a very, very strong affinity to own gold. Mongolia, the nation just north of China, spent 10% of its GNP on gold imports in 1999.
11. Some people who have studied the gold market strongly suspect that the U.S. gold reserve has long disappeared. The last time our nation's gold has been audited was in the 60's. Even then, it was 1/3 the size it was at its greatest, down to about 7000 tons from 21,000 tons. Even if the 7000 tons were evenly distributed among the population of the U.S. who really own the gold, there would only be about 7/10ths of an ounce of gold per person in the U.S., no more than the 7/10ths of an ounce of gold there is in the world for everyone in the world.
12. If the U.S. gold reserve still exists, it would only provide about an ounce of gold to back every $30,000 dollars that have been printed or exist as electronic entries in bank accounts. (7000 tons x 32150 oz./ton = 225,050,000 ounces. 7 Trillion dollars / 200 million oz. = $35,000/oz.)
13. The U.S. dollar is not immune to devaluation. It devalued 8% overnight in international trading at one point in the last few years. From 1913 to today, the dollar has already lost over 95% of its purchasing power. Is the last 5% somehow sacred or different? If anything, the trend will continue.
14. Congress is not using standard accounting practices. They stopped counting interest on the debt as an expense, but it still has to be paid to those retired people who own bonds. There never was a surplus under Clinton, because the national debt has always continued to increase every year. See publicdebt.treas.gov
15. Congress will continue to spend more than it takes in in taxes. This is a recipee for inflation. The war on terrorism and the spending appropriated for the twin towers has increased the money supply. This is inflation.
16. Recently, the large mining companies like Barrick, Anglo Gold, and Newmont have begun buying back their hedges, reducing the gold they sell forward at locked in prices. This means they wish to participate in any rise in the spot price of gold, and they expect gold to rise. Buying back their hedges also creates upward pressure on the gold price.
17. JAPAN! Japan's economy is continuing to falter, but they still have enormous buying pressure. The Japanese have multiple Trillions worth of dollars in paper yen that is getting less valuable as time passes, while gold's value is rising. Japan is BUYING GOLD IN A RISING MARKET. This is extremely bullish. Japan bought 10 tons of gold in the first two weeks of February 2002! |
