Gold is a Risky Investment

I have not updated this blog in a while, but thought it was worth reminding people of something that has not been true for many years - Gold is a Risky Investment. Now, this might seem ridiculous, especially considering I will further quantify it by saying I believe in the long-term fundamentals, international inflation prospects of Western nations and the will of government to do all it can to save it’s own skin at the expense of your life savings. Given that last factor, especially, nothing will do as well in the next 10 years as gold…except maybe silver…and food…but that is for another day.

However, look at where the price of gold is now. No-one should be surprised to invest and see it fall, even short term, by 40-50% back to the 900$ level. What am I basing this on? It is exactly what happened in 1976, when it fell from 200$ to 100$, even as the long term trend was for gold to move another 5 times higher in 4 years. 1976 must have been a very hard year to sit there and talk to your friends about gold and reconcile the long term belief with what was really happening in the market.

The point I want to make is that anything is a risk, but gold is much more of a risk at 1800$ than it was at 400$, when it really could not have fallen much further at all.

What can you do about it, even if you want to invest in gold or silver now? Invest monthly in small amounts, via physical bullion ETFs or the internet gold sites such as BullionVault or Goldmoney and promise within yourself to keep those monthly savings going, after all, falling prices mean you actually buy more ounces each month!

Silver shortages

There are rumours these past few days, partly thanks to Jason Hommels Silver Stock Report, of a silver shortage in the USA and Canada. Interestingly, for all the conspiracy theorists out there, Silver has dropped approx 10% these past few days alone. Now, if that doesn't fit the description of a conspiracy theory, what does? Desperate short-sellers trying to flush out a few naive sellers?

No such problems in Europe, where the mainstream are not at all onto this story thanks to a strong Euro and the disappointing rule where VAT of between 15-25% is added to the price of Silver bullion. They may regret missing their chance though, and there are in fact many ways to buy silver and avoid paying the VAT even in if you live in the EU.

You can find out what they are in the new book on How to Invest in Gold and Silver. It will repay its purchase price many times over.

Why Silver is on the up too

Gold is a purer representative of true wealth than silver. Although both metals have been heavily used throughout history as currency and to represent wealth, Gold has few uses apart from as money, whereas Silver is a heavily used industrial commodity and that can affect its price and desirability outside of any investment considerations. For example, some commentators are convinced that the rise of digital photography and the resultant downturn in traditional photography will result in a massive decrease in demand for silver, affecting the price as a result. This may or may not turn out to be true.

As a much used industrial commodity, it is in the best interests of many to keep the price as low as possible for as long as possible. It is thought by many commentators that the price has been manipulated for many years to be artificially low, and is in no way representative of how much Silver exists in physical form. For example, on COMEX, the main New York USA exchange for trading silver, there may be more short sales than there is silver to back them up. If this is true, then imagine what would happen if those sellers were all forced to buy silver on the open market to meet their promises? And more importantly, would they even be able to? In the USA, there is even a Silver Users Association, representing the viewpoint of businesses that consume silver, and lobbying government when necessary to protect those interests. They successfully managed to delay, but not stop, the introduction of the first ever Silver investment fund, the Barclays iShares Silver ETF in 2006 (for an explanation of ETFs, see the Exchange-Traded Funds chapter).

You can read more about this, and other gold and silver government conspiracies, in the new book on How to Invest in Gold and Silver. It will repay its purchase price many times over.

More Gold Investing Scammers

I couldn't help but visit this GoogleAd, Gold investing classic

http://pinvest.biz/index.html

Which offers an amazing 1800% in 48 hours! Wow! With that kind of return I could own all the e-gold in the entire world within about 3 months.

I'll leave it up to you to decide if it's genuine or a scam, but with no address, telephone number or contact other than admin@ email address, I have already drawn my own conclusions.

Please don't do it...