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!

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InvestGold India

India has long been reknowned as the last gold standard nation, where, perhaps, the memory of some long-ago fiat money crisis is so ingrained into the population, that they still perceive gold as the ultimate store of value. With this in mind, Invest Gold has now launched an Indian version of it's site, which can be seen at InvestGold India.

When is investing in gold and silver not investing in gold and silver?

I just saw a fresh review of the book on Amazon. While I am slightly disappointed "Grasshopper" wasn't a fan, and I do apologise, I am grateful to those people who contacted me thanking me for an insight into an alternative world of hard currency that most people have never known existed. Given that spread betting and options are, as most experienced gold investors would agree, investments on the price of Gold or Silver over a given timeframe, rather than an investment on the long-term value of the metal itself, only a short amount of page space was required to explain them. Reading between the lines, you'll see that my only real recommendations are gold bullion coins (preferably sovereigns although that's because I live in the UK), or a trusted internet gold supplier such as Goldmoney, where you can access your gold and spend it from any location worldwide.

When it comes to Gold mining stocks, I agree the returns can be explosive, but they are very exposed to the vagaries of governments, who during a crisis will probably stop at nothing to confiscate assets, etc. and when you look at ETFs and Perth Mint certificates, there are rumours that the gold and silver behind them is not as real as it could be, if you know what I mean. Even more galling when you consider the storage fees often charged.

Gordon’s Golden Rule gets Stretched

Time to go back onto other taxes, one of my favourite taxes, basically because no-one understands that it is a tax, reared it’s ugly head. I am, of course talking about Inflation. In this case, the word was not even mentioned, yet it is the obvious net effect of future government policy. As Gordon and Alistair employ an army of skivvies to stretch, mangle and twist the “golden rule” for government borrowing, statements have already been made that the overpressed British taxpayer will not be expected to dip any deeper into his or her pockets. Net outcome therefore is that

a) The government intends to borrow money by issuing more government bonds

and

b) These guys have no idea how basic economics work. The resultant inflation and pound devaluation will do more damage to people’s pockets. Although a cynic might argue they know that, but hope it won’t happen until after the next general election.

Any attempt to issue more sterling denominated bonds means that more Pounds will be created. The government is obviously the one who gets its hands on these new pounds and feeds them into the economy through it’s own spending. After that, these pounds continue to circulate, diluting the purchasing power of the pounds already in existence. Overall, you can see why this is a good plan for Brown and Darling, although there has never been a clearer signal of why you should pull your money almost totally out of Pounds Sterling. The only solution therefore, considering the currency alternatives are Euros (20% dearer than what they cost last year), Dollars (could work out short-term, but the US has the same longer-term problems as us) or Gold and silver.

You can probably guess what I’ll be choosing, especially given I'm the author of How to Invest in Gold and Silver.

Buy WOW Gold

I recently noticed a huge increase in the number of hits to my core site, www.investgold.co.uk. One of the major search terms was that displayed above. aside from any thought of "Wow, gold has done well these past few years...", I must explain that WOW is an acronym of World of Warcraft, where gold is the main currency used in trade, in this fantastic, multi-player game, with millions of players worldwide, all connected through their PCs and an internet connection. Funny how the creators of this game, probably unwittingly, identified gold as the one true worldwide currency. (Actually, I wonder if inflation can be created in this game through over-issue of currency units?)

Anyhow, to deflect such visitors, I recommend they visit www.wowgold.eu, and check out some of the books for sale advising of the multitude of ways to obtain more gold through the game, legally and 100% above board. The US Fed, bank of England and EU central bank could all probably learn a thingor two....

My core belief in life

My core belief in life is that no man has any right whatsoever to the earnings or productivity of another man, unless the other man assigns him that right.

Obviously, in todays taxation nation society, this right is not being given, and in fact, governments probably need to become more understanding of the fact that many people today are outwardly resentful of the way others are helping themselves to their earnings, pruductivity and past earnt wealth.

Government is finished long term, simply because for now they choose to spend the earnings of the productive segment of society on schemes to secure the votes of the non-earning, parasitic portion of society.

In fact, the more you look into life in general, the more you realise everything is set up to steal your productivity and "redistribute" it to the lazy and the useless.
But thanks to the internet, globalisation, and the greater and freer movement of people, there is light at the end of the tunnel. Deep down, I'm quite optimistic that governments control over their more productive citizens is coming to an end, although there are many years of struggle on the way. It's a secret war that's already going on in many places, witness the USA and it's "patriot act", supposedly a law to counter terrorism, but really an attempt at controlling its citizens, or the EU savings directive.

Exciting and potentially troubling times ahead. I recommend we all watch governments like a hawk, and be prepared to move if the going gets too tough.

Where does gold fit into all this? Well, quite simply, it's the ultimate hard currency and way to put yourself outside of all the issues I just mentioned. Everyone should have some. Everyone whose ethos falls on the productive side of the equation, anyway!