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Monday, February 2, 2009

What kind of gold should I buy?

Answer. We probably get that question more than any other -- pretty much on a daily basis. The answer, however, is not as straightforward as you might think. What you buy depends upon your goals. We usually answer the "What should I buy?" question with a question of our own: "Why are you interested in buying gold?"

If your goal is simply to capitalize on price movement, then bullion coins will serve your purposes. If you are interested in long-term asset preservation and you have additional concerns about capital and/or monetary controls -- a more complicated scenario -- then you might want to include the lower premium variety of pre-1933 European and American coins in the mix. These have been treated by the government since the 1930s as historical, collector items and, as a result, afford the privacy-minded investor with a greater degree of safety than gold bullion.

But what I just gave you is a rough sketch. To develop a more refined strategy, we recommend spending time with your representative here at USAGOLD-Centennial Precious Metals. He or she can help you match the type of gold you buy with your goals. All of our client representatives are seasoned professionals with substantial experience. They can help you zero in quickly on your needs, and make sure you are not going in a direction contrary to your goals and needs.

When should I buy?

The short answer is 'When you need it.' You cannot approach gold the way you approach equity investments. Timing is not really an issue. The real question is whether or not you feel the need to diversify your present portfolio with gold. If you feel the need, the best time to start is now. With rising competition for the limited gold supply from both nation states -- like China, Russia and South Africa (to name a few) -- and individuals across the globe, there is the chance that small investors can be crowded out of the market at some point down the road. It is better to be a day early than an hour late.

You frequently mention gold as insurance. What do you mean by that?

Those of you who have read my book, The ABCs of Gold Investing: Protecting Your Wealth Through Private Gold Ownership, know that gold's baseline, essential quality is its role as the only primary asset that is not someone else's liability.

The first chapter of that book ends with this: "No matter what happens in this country, with the dollar, with the stock and bond markets, the gold owner will find a friend in the yellow metal -- something to rely upon when the chips are down. In gold, investors will find a vehicle to protect their wealth. Gold is bedrock."

This is precisely what people have discovered during countless crisis situations over the centuries and in financial meltdowns in recent history like the Pacific Rim in 1997, in Argentina and Brazil in 1998, in Turkey in 2002, and in the MidEast now. When crunch time came, those who owned gold understood what we mean when we say "gold is bedrock."

Over the years, we haven't altered this fundamental philosophy about gold ownership. In everything we do at USAGOLD-Centennial Precious Metals -- from our highly-regarded website to private conversations with our clientele -- we constantly emphasize this same fundamental precept of gold ownership. Needless to say, there are millions of people around the globe, including many Europeans and Americans, who agree with us on gold's utility in this respect.

What percentage of my assets should I invest in gold?

Once again the answer is not cut and dried, but a general rule of thumb is 10% to 30%; and how high you go within that range depends upon your analysis of the current economic, financial and political situation.

Obviously, the individual with a low level of concern about the current economic situation will tend toward the 10% level. Those with lagging confidence in the way things are going will gravitate to the higher end of the range. In recent months, we have had a number of investors go substantially over the 30% figure based on their own reading of the economy and the various investment alternatives available.

In the current investment environment, with yields still running below the inflation rate and stocks and bonds still suspect, gold remains a healthy and viable alternative. Many, including even the die-hard stock investors, still see gold as the most undervalued primary asset group in the standard portfolio mix. As a result, gold is getting a lot of attention. Gold is still in the beginning stages of what many financial experts see as a long term bull market.


Ysabella said...

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