Hi Ken and Daria,
I Love your newsletter. The one today has really got me thinking and I don't have any idea how to buy gold. Can you give me tips?
Eoline Underhill
P. S. Glenn Beckn on Fox News was talking about this same exact thing last night!!!
Gold Hits Record Highs--What to do Now
Advertisement
Survey Says
Advertisement
Because Ken and I have owned gold through the SPDR Gold Trust (GLD) for a long time, we've made money in gold's record run and will continue to do so for the foreseeable future. So, we are happy about the rise in prices.
But there is a very important story that the continued rise in gold prices is telling us so I want to be sure you hear it.
The record price for gold futures comes with a cratering U.S. dollar.
Although later denied, an article in the UK Independent reported that China and some Middle Eastern nations have been in talks to consider abandoning the pricing of oil in U.S. dollars and using a new basket of currencies, sans the dollar, for oil purchases.
Just the idea of losing our position as the safe haven currency to the world was enough to cause a sale of dollars worldwide.
Since there really is no other paper currency that can be trusted as a safe haven, gold wins by default.
It is solid and its supply is finite; ergo, it is VALUABLE.
The more historic rationale behind the current and ongoing strength of gold may, at the moment, the hidden, but, still holds true.
Gold is a hedge against inflation. We talked recently about needing to prepare for coming inflation. The U.S.'s continued over-spending and printing of worthless paper will reap a mess of unintended consequences and real pain for those of us who live our daily lives in dollars.
The profligate spending of our government through bailouts, wars, welfare, health care plans and crap-I mean cap--and trade has brought the dollar to the very tipping point of complete and utter insolvency.
Like Wiley Coyote, we have already one foot suspended in the air as the ground crumbles beneath the other.
How can Mother Government keep from pitching us over the side?
By wiping out the unsustainable, un-payable debt with raging hyper-inflation which will make our financial obligations, based in today's dollar value, ever so much cheaper.
The less each dollar is worth, the smaller the debt becomes.
Here's how it works:
A sweater with a price tag of $500 seems expensive when you think of buying it right now.
Leaving that $500 sweater on the shelf for the moment, a new batch of sweaters comes into the store with the new inflation-adjusted price of $1000.
The next time you need to buy a sweater, you’ll buy the $500 one because it's now a “bargain.”
That's sort of how the government plans on dealing with the debt. What you can't pay... inflate away.
This is the bigger story behind the price of gold. When all this paper we carry around with us worth almost nothing, we'll need something “real” to pay for what we need from this global economy.
Owning gold will be the answer.
If you haven't heeded our past calls to buy gold over the last year, don't jump in with both feet now at record prices!
There will be pulled backs in gold prices. Nothing goes straight up in the investing world.
Start buying on pullbacks and do it in increments, not with a lump sum.
We're headed for $2000 per ounce gold by 2012. You need to be there.
Here are four rules you should follow when buying gold.
Explore Dolans.com
October 9, 2009 9:10 AM
October 23, 2009 1:00 PM
updated: October 23, 2009 1:05 PM
Hi Ken and Daria,
I love your newsletter. It helps me a lot and makes my expenses smaller.Im from the Philippines. rbejoc_1@yahoo.com
May 21, 2010 11:02 AM
Nice simple explanation. Paper currency losing value has been a problem ever since the Chinese invented it hundreds of years ago! Pegging a currency to a standard like gold or silver is the only way to prevent this, a lesson we forgot in the 70's.
So how does one own gold? That's the opening line of the article...the easiest, simplest way is to buy shares of "GLD", which is an exchange-traded fund which mimics the price of gold bullion. One share = 1/10 ounce.
Not that there's anything wrong with buying the real stuff, but you'll have to pay a premium to someone for the solid metal. Whether that's a profit and shipping for a company to sell you a simple gold ingot, jewelry store markup for a necklace or ring, or the "collectible" value added to gold coins, you can't go to K-Mart and plunk down $1200 for your ounce of the yellow stuff. Then there's the problem of storing it, the risk of theft or loss, the changing collector's premium, and the lack of liquidity (you can't spend the gold directly either).
I have a few coins, but after the value crept into five figures, I got nervous and spent money on a safety deposit box. For the rest of my gold investments, buying the ETF was the way to go.
It's much more speculative, but there are funds that try to double the price changes in gold...the exchange-traded investments UGL and DGP go up 2x the change in GLD each day...but also DOWN 2x when the price falls as it did after the recent peak. There are investments which bet against gold, too, they are called DGZ (x1 on the short side) and DZZ or GLL (x2). To make it more complex still, you can bet on a basket of gold mining stocks instead of the metal itself with "GDX".
Those "doubler" investments are terrible long term investments, by the way...their need to rebalance every day mutes the long term benefits. You'd think that the double-longs have done twice as well as GLD long term, but they haven't.
My question for the Dolans is why are there TWO each of the double long and short gold investments (and maybe more)? I don't see why there would need to be a UGL and a DGP (and their mirrors GLL and DZZ). Is it just companies competing for the same investors, or is there some meaningful difference in the strategy of these instruments? I see that some are ETFs (F for "fund") and some are ETNs (notes). Does that mean anything to me the investor?
May 21, 2010 11:02 AM
updated: September 25, 2010 4:14 PM
I put 5% of my portfolio in the gold ETF (GLD)- the maximum allowed by my advisors, It has now doubled, but I believe I should have more as a hedge. I share you view that one should focus one's investments on gold to counteract inflation.
Please advise on whether a future purchase/s should be in solid gold and if so how to buy it and where to store it.
Thanks
Jenepher Moseley
May 28, 2010 12:48 PM
Please advise me as to the best method of purchasing gold and where to make the buy. Thanks for your assistance.
May 28, 2010 12:50 PM
Please advise me as best avenues to purchase gold. Thanks for your assistance.
May 29, 2010 5:38 PM
I BOUGHT SOUTH AFRICAN KRUGERRAND @ $444 PER. OVER 25 YEARS AGO. THE PRICE HAS NEVER GONE ABOVE THAT UNTIL RECENTLY. IT WAS A TERRIBLE INVESTMENT AND I WOULD HAVE BEEN FAR BETTER TO HAVE PUT THAT MONEY INTO A STOCK SUCH AS IBM, WAL MART, GE,AND/OR MANY OTHER UP AND COMING COMPANIES.
WHY WERE YOU NOT ADVISING THE PURCHASE OF GOLD WHEN IT WAS SELLING FOR $200 MORE OR LESS, NOT NOW WHEN IT IS AT IT'S HIGH?
WE AMERICANS DO NOT HAVE TO FEAR FLEEING INTO ANOTHER COUNTRY CARRYING OUR GOLD AND JEWELERY AS OTHER COUNTRIES .
July 22, 2010 6:41 PM
LOVE THE NEWSLETTER, PLEASE ADVISE AS TO THE BEST WAY TO GO ABOUT BUYING GOLD. THANK'S
September 25, 2010 4:07 PM
updated: September 25, 2010 4:09 PM
I am a holder of GLD and it has nearly doubled since I invested 5% of my portfolio. I would like to increase my holding on the widely held assumption that gold still has a considerable rise ahead of it.
That makes sense in the context of gold's limited supply. However, for the same reason, I am now reading that GLD, whose share price is based on the value of gold and holds the equivalent in bullion of the total amount of shareholders original purchases, may run out of its ability to meet requests by shareholders to liquidate their holdings if this becomes an urgent widespread priority.
Can you advise as to the danger of this happening. I am very happy with my holdings so far.
View unverified member's comment - posted by Deeg
RSS
