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So what can you do to protect your portfolio from stock and sector specific declines? Here are some of the steps I take to help protect my portfolio...
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With the price of gold having risen from its low of 255 us$/oz in 1999 to around the 400 level today, it is an interesting time to have a look at Precious Metal Stocks (PMs).
The volatility in this sector, particularly among the juniors, is legendary.
As Bill Bonner of the Daily Reckoning has identified in his best seller, "Financial Reckoning Day," there is a certain rythym measured in decades as to what sector one should be investing in per decade, as evidenced by the last 30 years.
From this perspective, the PMs had a good run in the late 70s and again from 1993 to 96,( as in this chart of the XAU Gold and Silver index), parallel to the rise in price of gold and other precious metals.
The PMs appear again to have started a secular bull market in the last 4 years, (as seen in the HUI, the more recently created gold bugs index).
Financial historians may search in vain to trace some of the PM companies, (especially the juniors) from one PM Bull Market to the next.
Why is this?
One way to explain this phenomenon is to compare these Junior Mining companies(JMs) to the world of butterflies (and moths).
The laws of Darwinian survival of the fittest and the strategies for survival have some remarkable parallels!
1) Birth
Many butterflies lay large batches of eggs for survival of their species in an effort to avoid total liquidation by predators.
Similarly, there always seems to be a great number of new JM companies being founded, probably because of the high number of predators, and failure rate through lack of finance!
2) The hungry Caterpillar
The young caterpillars need masses of food, and the ones who survive, have massive growth, often shedding and renewing their skins to accomodate their new girth several times, in the spring and summer time.
JM companies that survive this growth phase, are the ones that do numerous financings mainly through Private Placements, giving exponential growth, and an increasing number of fully diluted shares issued. The summer/ winter analogy corresponds to bull/bear market conditions for the PM markets.
3) Surviving the winter
Depending on species, butterflies can survive the winter with different strategies, some as caterpillars, some as pupae, and some as adult butterflies... until the sun rises again sufficiently to reactivate them.
Junior mining companies likewise. Some shut down exploration and hibernate with zero costs... until the metal prices rise again. Others transformed into dot.com high tech companies during the last period of depressed metal prices, only to re-emerge as PM companies again when the sector revived.
The lucky PM companies, who survived the winter as butterflies, went on to another bull market, provided their wings were strong and undamaged enough to enable them to fly.
4) Mating
Of course for the species to survive, reproduction is necessary. Some male moths have antenna that enable them to smell the pheromones of an interested female at a distance of several kilometers. With the number of species of moths running into the tens of thousands, and finding your mate in the dark, this is perhaps a fortuitous Darwinian attribute.
Here the pheromones represent resources in the ground measured in millions of Gold ozs, and it takes first of all clever geologists to find it, and later on good management with the right antenna to secure it in the form of staking claims, joint ventures or similar deals.
5) Aesthetics
Butterflies are among the most beautiful of all insects; the Peacock, Swallowtail, Red Admiral, Fritillaries, to name but a few.
JM companies are also one of the most exciting of all sectors of stocks. In a PM bull market, there are always several JMs that are "10 baggers," ( a stock that increases 10 times in value), and occasional 100 baggers!
Extreme leverage to the gold price combined with rerating of the gold ounzes in the ground, as a junior drills its way towards increasing ounzes, (and moving the ounzes from the resource to reserve category), are the rocket fuel for the share price. Typical valuations range from us$ 10/oz Gold at exploration debut to 100 $/oz at bankable feasability study stage and even higher as production gets under way in a 7 year process.
However the process is reversable, particularly with a downward maniuplated gold price, as argued by Gata and more recently in the Sprott report.
But this is one of the very factors that produce the 10 and 100 baggers, the fact that the JM share prices can lose most of their value in a PM bear market.
The few survivors plus the next generation of new juniors relaunch at the beginning of the next bull market.
Facit: Timing (and DD) are very important keys to success in the JM market.
6)Defense Mechanisms
Caterpillars, pupae, and butterflies have developed various ways to discourage predators, such as bright warning colours or eye shaped patterns.
Similarly small (JM) companies often try to develop poison pill or other defense mechanisms against take over by a major.
So now let's leave butterflies for a moment and have a closer look at another aspect of mining companies.
Proximity or Area Plays
A classic form for junior mining stock speculation is to piggy back onto an exisiting successful mine or major prospect discovery. Claims are staked all round the hot property and sometimes promoters attempt to run up the stock with claims that they are just about to make the big strike.
Most large mining areas are usually shared between many companies. For example Newmont is only one of several companies with land positions and gold mines in the Carlin Trend.
Occasionally a junior manages to gain control of a whole district, area or very large mine, by various methods, including staking claims, joint ventures, or takeovers or buyouts.
This is a classic route for a junior to grow into a major, and in so doing increase its market cap by a factor of several times.
Historical examples with reference to diamonds, nickel, gold, and copper include:
On Nov. 5th 1991 the JV had to go public with a news release on the finds. Yellowknife went wild. Helicopters were buzzing in from all over the country. By spring 1992 de Beers alone was operating 26 helicopters for staking. Chuck had claimed 1 million acres, all prime targets. De Beers soon surpassed that and claimed 10 mill acres, all on the off chance something might be there. END
Summary
PM companies and in particular Juniors are among the most attractive stocks to invest in, when the market fundamentals are favourable, as currently in a secular gold and silver bull market.
Many of the JM stocks do not survive from one PM bull market to the next. Some fail financially, others leave the sector, some return, others are taken over.
A small minority survive to become majors.
The winners often increase in market cap by multiple factors of 10 or more.
What criteria can we use to try and spot the winners in the JM gold market?
Your antenna should be sniffing through the darkness for the following pheromones.
Search for companies with:
1. good (track record) management
2. no debt
3. well financed
4. unhedged, (ie no forward sales of Gold through futures or derivatives)
5. good portfolio of properties, (exploration and/or production)
6. in politically stable countries
7. focused on environmental issues
8. plans for enhancing local employment, access roads, electric power structures
9. area plays
Most important of all Do Your Own Due Dilligence: Study the official company filings on all news releases, feasability studies, of their principle projects to ensure they are economically, environmentally, and otherwise viable, without hedging of the gold price.
Few people that have analyzed the current level of federal spending and the entailing deficits that are projected for the foreseeable future, would argue that inflation is a necessary consequence of the ballooning national debt that is being accumulated. Whether this inflationary trend might repeat the gloomy days of the 1970's is unclear or whether it might even exceed them is unknown. What is certain is that individuals that do not adequately prepare for this could see their savings lose even more value.
While there is no sure fire way to escape every economic scenario, investors have traditionally turned to gold as the primary hedge against inflation. During the last several years in the midst of the stock market unpredictability stemming from the tech bust of the late of 2000, followed by the terrorists' attacks of 2001, and finally the banking and real estate crisis, stocks have declined astronomically. In turn, gold has rise in value from approximately 300 dollars an ounce to over 1000 dollars at present. Whether this simply reflects inflationary pressure or simply the security that gold represents, the results are impressive.
The problem of course is that spending a $1000 for an ounce of gold is not the most realistic course for most families. There is little doubt that even if gold were to fall in value, it will never fall to zero. The same cannot be said for stocks or bonds. Nevertheless the investment cost is still considerable. This brings us to silver.
Silver might be thought as a poor's man gold, but its value should not be underestimated. At $15-$20 an ounce silver coins are affordable for almost anyone and the lower price while limiting the huge upsurge seen in gold, can likewise guard against the probability that its price will similarly swing in value. Different formulas have mapped the relationship between gold and silver, and it seems at present that silver is undervalued to some extent. This may provide an opportunity to invest. If the 1970's are any indication, inflationary trends do raise the price of silver. At its peak, silver was valued at $50 an ounce.
The other benefit to silver as well as other precious metals is the simple fact that you have something tangible in your possession. Silver is easily liquidated and easily purchased. The variability of stocks and makes having some silver in your portfolio something to consider especially in an era when paper stocks are increasingly worth less than the paper and ink to print them.
Jacob Lumbroso is a world traveler and an enthusiast for foreign languages, history, and foreign cultures. He writes articles on history and languages and has a website on Cheap Electric Guitars to learn various languages Buy Electric Guitar.
It's no secret that the economy isn't doing well, the U.S. dollar is weakening, and that the U.S. government has been spending ridiculous amounts of money to keep the economy afloat, not to mention the Fed printing money at record amounts.
Furthermore, the stock market took a big hit back in 2008, and gold and silver prices have been on the rise. In fact, gold and silver have been by far outperforming the stock market for the last few years.
But what most people are unaware of is that we are in the midst of a commodities cycle that started back in 2000. Prior to this commodities cycle, we were in a cycle in which real estate and paper assets were the hot asset class; however, at this point and time the hot assets will be commodities, in particular gold and silver.
The last precious metals bull market was from 1966 to 1980, although the full effect of that precious metals bull market was not felt until the late 70s and peaked in 1980. But if you truly believe that history repeats itself then you will begin to see that it's really gold and silver's time to shine.
According to the S&P/Case-Shiller Home Price Index (S&P/CSI), in 1971 a median-price, single family home in the U.S. was $20,663. That same year silver's average price was $1.39 per ounce. Thus, it required 14,823 ounces of silver to buy a median-price, single family home in the U.S.
At the end of the precious metals bull run in January 1980, just nine years later, that same home cost $42,747, and silver was just over $52.50 per ounce, so it required roughly 814 ounces of silver to buy the same home. The house had increased in price 2 times, or 100 percent.
However, the currency supply had grown 2.45 times, or 145 percent. Inflation raged all through the 1970s, and the result was that though real estate increased significantly in price, it's true value barely kept up with inflation and may have actually fallen a little.
On the other hand, silver had increased 3,641 percent, outpacing inflation by more than 15 times.
But here's a really cool scenario. If you had sold a house in 1971 for $20,663 and purchased silver, by January 1980 your investment would have outpaced real estate by a factor of 17, growing to $770,796.
If you then sold your silver, you could buy 18 median-price, single family homes, all cash, at the 1980 price of $42,747 per house and benefit from 100 percent of the cash flows from those properties, or, if you were feeling really adventurous, you could put 20 percent down and buy 90 homes for the same price.
Today, we find ourselves in a similar situation, only better. Real estate has become much more overvalued and silver has become extremely undervalued.
Measured against silver, the median price, single family home in the U.S. hit its peak in 2002, at a price of 38,123 ounces of silver, some two and a half times higher than at the beginning of the last precious metals bull market in 1971.
When silver hit its peak of $52.50 in 1980, it was not rare. Today, identifiable aboveground silver stockpiles have been drawn down to a tiny fraction of their size in 1980.
Taking into account economic bubbles and the bursting of economic bubbles, the history and the current fundamentals of gold and silver, and the history of financial cycles, it wouldn't be unreasonable to think that less than 500 ounces of silver would be able to buy a median-price, single family home sometime in the future.
Currently 500 ounces of silver is selling for around $8000, and a median-price, single family home is selling for around $175,000. Wouldn't you just love to buy a home outright, for just $8,000? Or put 20 percent down and buy 5 homes?
Well, if you wait until silver is once again overvalued and real estate is once again undervalued, you might just be able to do so. Remember, in 1980 it only took 814 ounces of silver to purchase the average home, and silver wasn't rare then.
If indeed the day comes that you can buy a median-price, single family home in the U.S. for just 500 ounces of silver, then that means that if you owned a home outright, sold it now, and bought silver, then, when silver peaks against real estate, bought similar homes in the same neighborhood (barring tax losses), you could buy 23 of them outright, or 115 of them at 20 percent down.
I know these figures sound silly, but believe it or not, they are not improbable. It's just a repeat of the 1970s precious metals bull market---it's history repeating itself.
Brittany has been writing articles for nearly 1 year. Come visit her latest website about skirting for mobile homes and other materials for mobile homes.
Many people who have been looking for new areas in which to invest have turned to silver coins. Gold and silver both offer several advantages over other investments, and have been traded heavily over the past decade (not to mention the last couple thousand years). In this article, we'll go over some of the benefits of trading in silver and gold, as well as why people have been using it not only as an investment opportunity, but as a place to keep their assets secure.
Gold and silver coins are a popular investment because they steadily appreciate in value. While the stock market and housing crash have pushed the value of the United States dollar bill down over forty percent over the course of the last decade, the value of precious metals has continued to increase. This is because gold and silver retain their value regardless of the economic state of any country in particular. Investing in gold and silver has proven to give steady returns, making precious metals (including platinum and palladium) a secure way to grow financially.
Silver and gold are also a great way to increase your financial stability. If you have investments in things like the stock market, a sudden crash due to disaster, terrorist attack, or a multitude of other factors could cause your savings to be wiped out. Investing in gold is a popular way for people to secure their assets during times of political trouble, war, and economic instability. Gold and silver coins are so stable that the United States government chose to back up their currency with them, thus creating the gold standard. Taking advantage of the stability of gold and silver (not to mention the other precious metals) is a great way to make sure you do not lose your savings in the event of economic disaster.
Essentially, if you are looking for either a safe place to put your money to avoid depreciation (and even make a little money while you're at it) or a great way to invest your extra funds, then gold and silver coins are an excellent solution. By investing in gold and silver you'll have a secure source of income as well as a stable place for assets, regardless of many of the economy-changing events that may happen in the future. If you want to take advantage of this opportunity, however, then time is of the essence. Economists predict the prices will continue to rise for months, even years, but the sooner you take advantage of this chance, the better.
Michael MacDonald is an online publisher providing great tips on silver coins. To learn more about this topic, visit http://www.YourGoldGuy.com today!
I can tell you right now that this article is going to be very different from any other articles that you have read so far. And the difference is dear reader, that I'm not trying to sell you anything.
You see, most of the articles on investing in gold is simply horribly written or way out of touch. I have to question the credibility and whats-in-it-for-them of most information on gold articles on the Net.
Simply, gold is a medium of exchange that has been used by humans for 1000s of years. So what is so valuable about a lump of yellow metal that doesn't pay dividends or interest?
The answer of course is that gold is a scarce commodity that cannot be multiplied by the printing presses 24/7. As Jim Rogers was telling us about the upcoming commodity bull market back in 1998, most commodities including Gold and Silver, are not that easy to mine anymore. All the easy stuff has already been dug up. Some Gold mines consider it good if they can get 20-30 grams per ton!
And not only that, many times the kind of rock that the gold is found in can determine the cost of mining. There are also many other variables for new mines to face, such as huge start up costs, transportation distance, anti-mining stances of governments and so on.
In short, precious metals such as Gold and Silver isn't easy to dig up anymore. And besides, one of the biggest paradoxes I've heard of is this, that "We go deep into the dirt to dig up the Gold. And then we bury the Gold in safe deposit boxes."
So if Gold and Silver are pretty scarce and the governments all around the world are cranking up their printing presses to get their country out of the fiscal and economic messes, then Gold and Silver is going to keep on going up. This is the major reason why investing in gold and Silver in inflationary periods is a very good idea.
And that is because there will be more paper or fiat money chasing after the real stuff, commodities. I hope that makes a little more sense to you.
But I am getting a little ahead of myself here. Why is it different this time? Well, in 2008 the housing lottery finally went kaput because of the owners that defaulted on their Subprime mortgages. And that is deflationary (declining home prices), which the politicians will never... EVER! Allow to happen.
And why not you ask? Well, if the housing market is allowed to continue in a downward spiral, then everyone is going to drop their keys in the mailbox and walk away from their homes because they have negative equity in the home and can't afford to keep paying the mortgage on a money loser.
And if THAT happens, banks start to go bankrupt and then the economy goes straight to hell in a hand-basket. And then more and more people lose their jobs and it just keeps getting worst. This is what happened during the Great Depression.
So ask anyone over the age of 75 what it was like back then and they will tell you that everyone lived on their wits alone. It was a horrible, horrible time.
And if the depression is allowed to happen, people are going to blame the politicians that are currently in power for that predicament. And THAT is why politicians will never allow a depression to happen. They will want to inflate the housing market. And the way to do that is to "Crank Up" the printing presses. And that is what most of the governments all around the world is doing today. Massive inflation is preferable to the pain of a depression.
Go figure.
Eventually, Gold and Silver is going to go higher and further than anybody expects. Some of you may still remember the late 1970s and early 1980s of hyperinflation. Interest rates were up as high as 20% annually. Foods and gasoline prices changed every week and sometimes every day.
This is going to be a very uncomfortable period of time for those who didn't prepare for the coming massive inflation. But those that do their homework and study the various ways to invest in commodities and investing in gold and silver are going to come out OK.
One more detail about investing in Gold, It is a very good investment vehicle during inflationary times such as now or even back in the 1980s. But a horrible investment during deflationary times such as the Great Depression during the 1929-1944.
You can read more resources at http://www.squidoo.com/Investing-Gold to protect yourself and your family's financial future.
Have you ever thought about investing in precious metals like gold and silver? Do you know that gold prices are soaring higher and higher for the last many months? If these soaring gold prices make you feel like investing in gold, then you need to know that there is another precious metal that can give three times more gain in the future as compared to gold. IF you invest in that metal and in gold took, you can reap a windfall!
So, you are interested in gold investing! Than read on! There is another metal, I told you about. This metal can give three times more return as compared to gold. Guess what is that precious metal? Platinum? No, it is silver also known as the while metal. Gold and silver have always been considered to be things of beauty in human history. Silver less so but still those women who could not afford gold, would always wear silver.
What's so special about gold and silver. Gold has been ingrained in the human psychy as the thing of beauty as the ultimate wealth. Throughout human history, people have been hoarding gold. The same phenomenon has not taken hold of different countries. Dollar has become weak due to the recent financial crisis that the world experienced. Countries like China, Russia and India want to hedge their international currency reserves most of them being in US Dollar. So, they want the ultimate currency, "gold."
This way these countries think they would be safe in case of a major Dollar devaluation that might take place in the unforseen future. Silver is also being bought as both gold and silver have been used to mint coins from times immemorial. This trend of buying huge quantities of gold and silver is driving their prices sky high. Remember the time in 19th century when the world was on the gold standard. Countries would keep gold and silver as international reserves. We might be headed back to that time!You never know.
No one knows the future. No one could predict the birth of the present currency markets that took place in 1973. No one knows the future of currency markets! Now, gold and silver respond to almost the same fundamentals. When gold prices go up, silver prices will invariably follow. Silver or the while metal is experiencing many other forces that can force the prices of this white metal to rocket even faster than gold even beyond those driving megatrends the while metal shares with gold.
Now, there is a huge imbalance between the supply and demand of silver. Silver is widely used in the electronics industry, photography, soldering metal pipes, plastic industry, coin minting, laptops, digital cameras, dishwashers and even refrigerators. What this shows is the supply of silver is even more limited as compared to gold. The best way to profit from investing in this gold and silver rush that is going to happen in 2010 and beyond is to purchase gold and silver calls or trade gold and silver futures.
Trading futures is a what you need right now. One of the best ways to trade commodities is to learn futures trading. Position yourself for the coming gold and silver rush by starting paper trading gold and silver futures contracts Another method to invest in the upcoming gold and silver rush is to invest in gold and silver mining companies by buying their stocks. Investing in gold and silver mining companies had made a lot of people rich in 1970s to 1980s. The same can happen in the coming decade.
I give you one example, how things exploded in 1970s when the gold and silver boom suddenly started. Silver prices in 1970 went from just $1.29 per ounce to it's peak of $49.45 per ounce in 1980 in just ten years giving a whooping gain of 3,773%. Now compare that with the measly 12-15% return on Dow or S&P 500 Index. You may be thinking that this is distant memory. Those days of gold and silver are gone! But,this time people are sure, even better days lie ahead for those who will invest in gold and silver.
Take another example of a junior silver mining company, the Lion Mines. It's stock was trading at $0.07 in 1976! Yeah, that's just 7 cents. Within a short span of 41/2 years, it's stock price had reached a whooping $380 per share. Can you imagine that! If you had just invested $184 in the shares of Lion Mines Company, you could have easily made a million dollar in just under 41/2 years. This time, again a boom is lying around the corner in the silver market. Don't wait!
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So what is a better investment gold or silver? Many people might say gold but to tell you the truth silver can rise ten times higher as compared to gold. Many analysts are of the opinion that silver prices can rise as high as $400/oz in the next few months. First, let's discuss some historical performance of gold vs silver. Between 1970 and 1980, gold prices increased from the Bretton Woods fixed price of $35 per ounce to an unprecedented $850/oz. This was an increase of 2,329% in ten years.
Now, during the same period starting from 1970 and ending at 1980, silver prices jumped from a mere $1.50/oz to almost over $50/oz. This was an increase of 3,233% over a period of ten years. So, just compare buying a few ounces of gold as compared to silver and their returns over a period of just ten years.
Now, let me explain why this unprecedented rise in silver prices might happen. You see as compared to gold, silver has far more industrial applications. As the global economy starts to expand again in this year, the demand for many industrial products will grow. Silver like gold is available only in limited quantity. So you can well imagine what happens when the demand rises but supply does not!
The most important application of silver is as an electricity conductor. Silver wires are used as high tension cables. You will be surprised to know that silver is also used in a number of household appliances like refrigerators, washing machines, wall switches, fuses and so on.
Silver is used extensively in photography. This use might decrease as digital photography replaces traditional photography. But this will be replaced by new uses of silver in other industries. Now, take a look at your computer, every computer, server, monitor, cell phone and switch has silver. Lasers, satellites, high-tech weaponry and robotics, all require silver. Digital technology and telecommunications need silver.
A new double layer of silver on glass is sweeping the window market, as it reflects away almost 95% of the hot rays of the sun. A new electronic application for "smart tags" that are replacing bar codes could use significant quantities of silver. Silver is heavily used in chemical industry. Silver is a great reflector and as said before is used widely in mirrors and glass coatings.
Batteries use silver. Silver is used in soldering, pharmaceuticals, catheters and many other areas. So, you can well imagine as the global economy starts to expand again and the demand for these products and services increase, you will see a skyrocketing of silver prices.
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Gold prices reached an amazing high of $1200 per ounce in the last few months. Although after that there was a retracement but it is expected that this bull run in the gold market will continue. But there is a metal that has even better prospects as an investment right now as compared to gold.
I am talking about silver. You see, silver like gold has always been considered a precious metal in human history. Kings used to hoard both gold and silver as a measure of their wealth in ancient times. In modern times, gold is still being used as the ultimate store of wealth with silver being the second best.
However, silver has far more industrial applications as compared to gold. Silver is being used extensivley in the electronic industry, batteries,solar panels, TV, water, medical applications plus a host of other industries. With the global economy finally out of the recession this year, demand for silver in these industries will skyrocket.
Now the supply of silver is limited. What this means is that silver price is going to rocket when the demand is going to increase. There is a limit to oil price increase. When the oil price becomes too high, consumers stop using private transport and switch to public transport. Gold has not many industrial applications. So high gold prices don't have much impact on the global economy.
On the other hand, silver has a large industrial demand. Now an important question that comes to our mind is that is this rise in silver prices speculative or due to the real fundamentals. As said before, high silver demand is going to drive this price rise.
This is the best time to invest in silver stocks and silver ETFs. Right now most of them are underpriced but as soon as the word gets out that silver is about to make a rally, the situaltion is going to change.
One of the best Silver ETFs is the ETF with the NYSE ticker symbol SLV. There might be others too. You do the research, pick the best ones and invest in them as the silver bull market is about to start.
There are a few silver mining companies that focus exclusively on the mining and refining of silver. Investing in the stocks of these silver mining companies can also be one of the options. Whatever, you decide this is the best time to invest in silver that you shouldn't miss!
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Just like stocks and shares, gold is a trade commodity and therefore the price is not fixed but related to demand and supply. It is often seen as a safe haven for capital, especially in times of fluctuating markets and crisis. Therefore during these unstable times, demand outstrips supply and the price of gold increases. After a peak of the gold price in the 1980's, supply was increased which bought the price of gold down to realistic levels. However following the worldwide credit crunch of 2009 / 2010 the price of gold has increased again to a near all-time high.
This has important implications for the man in the street particularly if you are wondering is gold a good investment? According to Stephen Leeb, Ph.D the only time gold investments under performs the stock market is in conditions of low inflation and high growth. With the world's finance ministers wary of what happened in the credit crunch, these conditions are unlikely to be allowed to happen again. Gold does not go out of fashion, even investing in gold and silver in the early 2000's and selling them at the recent high prices means you have quadrupled your money. Many experts also point out that these "so called"? highs are still below peaks in the 80s, giving plenty of room for profit taking.
Gold coin investing is also a separate market whose price is not only governed by the price of gold but the supply and demand of individual coins. Pre 1933 coins are becoming more and more sought after and an ideal investment opportunity, particularly when you think of today's demand for both the individual coins and the coins actual worth in gold. Investing in gold and silver coins is an ideal way to spread the risk of your investment portfolio and affords the investor the opportunity for a more relaxed investment. Consumer fashions, technology, weather and accidents don't affect the price of your gold coins investment as they would influence an airline stock for example, leaving the investor free of worry from the majority of external factors and not tied to The Wall Street Journal.
The gold and silver coin investment community is just that - a community. With a wealth of friendly information, tips, companies and internet sites available for the potential investor you do not have to be alone.
Get a professional answer to your question, why buy gold? Get full guidance and assistance with buying gold online at Wholesale Gold Group, your national precious metal gold dealer with an "A" rating from the BBB.
One would think, from the recent action in the financial markets, that all is well in the world once again. Let's see - the price crude oil has now plunged 20% from its recent record high of $145 a barrel. Stocks are rallying. The dollar has firmed.
Experts are now saying that the real estate market has bottomed. The commodity bubble has burst. Oil is on it's way down to $100 a barrel. And the year-long credit crisis, housing slump and economic slowdown will soon be a thing of the past. The future is so bright you gotta wear shades, right?
Not so fast.
Before you rush out and trade your precious gold and silver for depreciating paper dollars, take off those rose-colored glasses and examine the real facts behind the hype. Here are seven valid reasons to be investing in silver and gold bullion:
1. The Weak Economy Is NOT Improving
Retail sales for the month of July were disappointing.
Wal-Mart's 3% same-store sales growth came in below expectations. Yes, Costco's results were the one bright spot - up 10%. However, when you dig into the details, you'll discover that the reason for the strong growth was the increase in gasoline sales. Back those figures out and sales were up only 6%, less than consensus estimates! Notably weak were the sales results of teen retailers. This doesn't bode well for back-to-school sales in August. Looks like a lot of kids will be returning to school, wearing last year's garb!
2. The Employment Picture Is BLEAK
Jobless Claims rose to 455,000
That's up from 448,000 the week before. Look for that figure to go up as job cuts by U.S. employers soared last month. Layoff announcements are up 141% from a year ago, according to private placement firm, Challenger, Gray, and Christmas, Inc. That's on top of the gloomy news unemployment figures reported by the Labor Department last week. The U.S. Economy has now lost jobs for seven straight months and the unemployment rates is at a four-year high.
3. Financial Markets Are STILL Unstable
Freddie and Fannie are seeing red.
Both Freddie Mac and mortgage giant Fannie Mae missed earnings estimates by a wide margin, reported huge losses, and slashed their dividends. If that wasn't bad enough, Freddie Mac now has a negative equity position. Translation: shareholder would get absolutely nothing if Freddie were to pay down all of its debt and sell its assets. Fannie Mae's CEO predicts 'significant' losses in 2009 and will no longer purchase Alt-A mortgages, by year's end. These horrendous results increase the likelihood of a big government bailout.
4. The Housing Market Has NOT Bottomed
Mortgage delinquencies are getting worse.
Mortgages that were issued during the 1st half of 2007 now have a delinquency rate of 0.91%. The delinquency rate for 2006 mortgages was 0.33%. These are prime mortgages, folks. It has been estimated that 65% of sub-prime loans originated in 2007 will end up in default. These figure suggests that housing foreclosures will remain at record highs.
5. Inflation Is WORSE Than It Appears
The inflation monster is alive and well.
The consumer price index (CPI) is up 5% through June. That is the biggest one-year increase since 1991. That figure is even worse than it appears. During the Reagan and Clinton terms, the way that rising inflation was measured was changed, in order to lower the official rate. If you calculate the CPI in the same manner that it was calculated in 1980, you would have to add 7% to whatever the published figure is. That would mean that the true rate of inflation is running 12%. No wonder the average guy in the street is hurting! Investors are betting that the drop in oil prices will tame the inflation monster. However, even with the recent correction oil prices are still up 61 percent from where they were a year ago.
6. The Fed Will NOT Raise Interest Rates To Combat Inflation
The Federal Reserve is stuck between a rock and a hard place.
As expected, the Federal Reserve held its fed funds target rate at 2%. The accompanying statement also reflected a rather dovish tone. The phrase 'diminished downside risks and increased inflation expectations' from the June 25th statement was nowhere to be found. Fed funds futures are now pricing in just a 52% chance of a rate hike during the next to FOMC meetings. That's a fall from a prediction that was as high as 80 percent last week! Pimco's Managing Director Bill Gross said that rate hike talks are 'comical:'
"We're in a recession. When has the Fed ever raised rates in a recession?" he said. "Unemployment is headed toward 6 percent, mortgage rates on home buyers are at 7 percent, and these guys want to raise rates?"
7. Global Tensions are HIGH
Georgia's Offensive Move Is Risky
War broke out on Thursday in the strategically important area of Georgia, over control of South Ossetia. The price of oil seemed to take the situation in stride, doing absolutely nothing at all. At risk, however, is an international pipeline that runsclose by, not to mention the possibility of the conflict setting off a wider war.
Gold and silver are now at their lowest level in six weeks, giving investors the perfect opportunity to buy. If you are still unconvinced that you should be investing in precious metals, just remember this: History has provided us with many examples of paper money whose value has been destroyed. But, gold and silver have survived war, inflation, deflation, recession and depression. Silver and gold bullion are truly a safe-haven for those smart enough to realize their true value.
There's no reason you should be losing sleep over the security of your money. You can protect your hard-earned savings from bank failures, financial catastrophes, and the devastating effects of high inflation with pure silver and gold bullion coins
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We all know that the credit crunch is having a major affect on currency. Even on a personal level the amount of disposable income many of us have on a monthly basis is increasing. For this reason many people who invest in things such as currency are looking for new, reliable and solid investments to make.
There are plenty of people that make their living (and a very decent living at that) buying, selling and trading items. However with things like the US Dollar and the Great British Pound losing their value people are starting to turn to something else to invest their cash in.
Of course traditionally people have brought, sold and traded in gold and in fact have made large sums of money doing just thing. However because people know that this metal is precious it is often snapped up by large companies meaning that smaller & personal investors do not get a look in. However that doesn't mean that investing in metal is a complete no go. Silver is a less known metal to invest in however is well worth your while if you want something solid to put your money into.
Silver is something that is expected to keep and possible increase its value. For example silver in paste form is used for over 90% of solar cells. This renewable energy form is on the increase as the world turns to new ways to power their homes and so silver will always be needed for these. For that reason alone silver is a sold investment.
You can buy silver in a number of forms - silver bar, silver bullion and silver rounds are just a few of the different ways it is available. If you buy a silver bar then each bar will be marked with its weight & purity so you know exactly what you are getting.
You only have to look for silver bullion on the net to see exactly how popular investing on silver bars is and why it is a worthwhile and solid investment.
