The case for investing in gold

Many financial advisers are not very keen on investing in gold because they claim it has a fairly poor record compared to let’s say the S&P Average or the Dow Jones. Indeed a case can be made for this but there is another lesser know case for gold that make you really want to look at putting at least some money in gold. The reality is that the Dow and just about any metric or fund or stock has at some point a 10 year period where it lost money or at least lost to inflation and against gold.

Gold has never gone down over any 10 year period in history except for the early 80s when gold along with silver and other metals were artificially manipulated by the Hunt Brothers and other groups. Smart investors did not buy during that period though, if they were really smart they sold off gold and bought in back in the mid 80s.  Those investors did very well.

Now look I am certainly not advising you to put all of your money in gold or to take it all out of solid investments.  I am also against any real heavy numismatic investments in gold coins.  Yet to put 10-20% of a portfolio into gold or gold stocks or funds makes a lot of sense as a solid investment hedge.   Gold has gone up quite a bit in the past five years so many investors are a bit skiddish about buying it at a precieved high.  However there are a lot of factors in play right now that will most likely have a positive impact on Gold prices for a long time to come.

• The US Dollar continues to decline and the government seems to want it that way.   To understand this factor you need to grasp that gold could stay level in the global market and still go up in dollars, simply because the dollar declines.
• The economies of China and India and other nations are putting more demand on gold as a consumer level commodity.  As the middle class of these nations grow more demand for gold jewelry results in more demand for gold in the global market.
• Right now the demand for Gold is about 10% higher then the supply that is being produced.

All of these factors make gold an attractive alternative to conventional investments.  Of course you should consult with your financial advisors before you buy, I am just saying have a look at gold as one way to protect yourself against what looks like a coming recession and an ever falling dollar.

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