What You Need To Know
Before You Buy Your First Ounce of Gold

 

 

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 you are simply out to capitalize on price movement, then bullion coins will serve your purposes, though at the present profit-oriented investors might also be well-served by delving into higher-grade, semi-numismatic U.S. $20 gold pieces. These appear to be in the beginning stages of a bull market. 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. 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. Our client representatives are seasoned professionals and 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.

Q. When should I buy?

A. 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 are diversified and protected against the uncertainties ahead. If you do not own gold, and you feel you need to, the best time to start is now. It is better to be a day early than an hour late.

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

A. Those of you who have read The ABCs of Gold Investing: Protecting Your Wealth Through Private Gold Ownership know that I believe that gold's baseline, essential quality is that it is 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 discovered in the Pacific Rim in 1997, in Argentina and Brazil in 1998, in Turkey in 2002, and in the MidEast now. When crunch time came in each of those situations, those who owned the metal understood what we mean when we say "gold is bedrock." Over the years, we haven't strayed very far from this fundamental philosophy. In everything we do -- this newsletter, our highly-regarded website and 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 Americans, who agree with us on gold's utility in this respect.

Q. What percentage of my assets should I invest in gold?

A. 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. With yields running just over 1% and stocks and bond still suspect with a large segment of the investing public, gold looks very good. Many, including even the die-hard stock investors, see gold as the most undervalued primary asset group in the standard portfolio mix. As a result, gold is getting a lot of attention. Over the past 12 months, the gold price has risen about 20%. That looks fairly substantive in a 1% to 2% world.

Q. Can you give us a profile of the typical gold investor?

A. Traditionally, wealthy and aristocratic European and Asian families have kept a strong percentage of their assets in gold as a protective factor. That same philosophy has caught hold in the United States over the years, particularly in the upper middle class, and there are a number of investors who add gold to their portfolio on an on-going basis. They do this not so much because they feel that the price is going to go up, but because they want to insure their portfolios from destruction related to currency debasement. Our clientele pretty much make up a cross section of America , but the heavy buying is concentrated in the professions and among people who own their own businesses along with inherited wealth. In recent years, we have seen an increase in the number of baby boomers who own gold, as their asset structure grows and they feel the need to shelter their portfolios with gold ownership.

Q. Argentina, Brazil, the Pacific Rim, Turkey. Currency debasement in those countries is one thing, but do you really believe that a breakdown of that magnitude is possible in the United States?

A. In a certain sense, we have already experienced a slow-motion currency debasement in the United States , although not on the level of those countries mentioned. In fact, the dollar has been constantly and consistently debased since 1971. Now, it appears that the Bush administration's policy in concert with the Federal Reserve is to put that debasement on a faster track. When you hear the Bush administration criticize China and Japan for their currency policies, what they are really attempting to do is garner those countries' blessing in allowing debasement of the dollar. In the early 1970s, gold reacted violently to the upside once the debasement became commonly understood. It could react similarly in the first decade of the 21st century as many of the same policies that fueled gold then are being pushed again now. There could be a "make-up" rally in gold just as their was between 1972 and 1979. Once the dam breaks, I believe people will be surprised at the magnitude of the upside.

Q. "Who you do business with is one of the most important aspects of gold investing."

A. A solid, professional gold firm can go a long way in helping the investor shortcut the learning curve. A good gold firm can help you avoid some the problems and pitfalls encountered along the way -- provide some direction. With what's going in the world economy now, it is important for the investor to get positioned in the gold market as quickly as possible and in a way that is going to most efficiently protect the overall portfolio against the mounting list of economic dangers -- inflation, deflation, stock market weakness, dollar debasement and so forth. It is very important to pick the right firm -- one that is highly professional, doesn't have an ax to grind and can help you choose the right gold product mix to hedge your portfolio. Unbiased, objective advice from one's gold advisor is key to this process. So are market information and education. Pricing, product selection, fulfilment and on-going support also rely on that relationship. Picking a gold firm will be one of the most important decisions you make on the road to gold ownership.

Q. Can you briefly describe what you believe to be the biggest mistake investors make when starting out as gold owners?

A. The biggest trap investors fall into is buying a gold investment that bears little or no relationship to his or her objectives. Take safe haven investors for example. That group makes up 90% of our clientele, and probably a good 75% of the current physical gold market. Most often the safe-haven investor simply wants to add gold coins to his or her portfolio mix, but too often this same investor ends up instead with a leveraged gold position or a handful of exotic rare coins (oftentimes costing five or six figures). These have little to do with safe-haven investing, and most investors would be well served to avoid them -- except as a sideline.

Q. What is your view of gold stocks?

A. Many of our clients own gold stocks and we believe they have a place in the portfolio. However, it should be emphasized that gold stocks are not a substitute for real gold ownership. Instead, stocks should be viewed as an addition to the portfolio after one has truly diversified with gold itself. Gold stocks could actually act opposite the intent of the investor, as some justifiably disgruntled mine company shareholders learned in the recent past. We cover some the differences between gold stock ownership and metal ownership in The Differences between Owning Stocks and Owning Metal (Please see link below)so I won't go into the details here. Suffice it to say that gold stocks are stocks first and metal second. There is no such ambiguity involved in actual gold ownership.

Q. What about gold futures' contracts?

A. Futures' contracts are generally considered one of the most speculative arenas in the investment marketplace. The investor's exposure to the market is leveraged and the moves both up and down are greatly exaggerated. Something like 9 out of 10 investors who enter the futures market come away losers. For someone looking to hedge their portfolios against economic and financial risk, this is a poor substitute for owning the metal itself.

Q. What is the best approach for the safe-haven investor?

A. If you want to protect yourself against inflation, deflation, stock market weakness and potential currency problems -- in other words, if you want to hedge financial uncertainties, there is only one portfolio item that will serve you in all seasons and under most circumstances -- gold coins. Once you've decided that gold ownership is something you would like to pursue, the next step is to find professional guidance to help you actually diversify your portfolio. That's where USAGOLD ~ Centennial Precious Metals comes into the picture. We've been helping investors just like you for over thirty years. Competitive pricing, client service and on-going support are all hallmarks of the firm. We invite your inquiry.

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Mycket välkommen att kontakta mig. Jag ser fram emot att höra från dig.   Hans Olof Savasen Investeringsrådgivare Spain – Monaco - Sweden

http://www.mirolcentre.com/mirol/              

gold@mirolcentre.com                                 

 

    ett företag i ”Savasen”-gruppen.

 

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