Whatever gold chart you look at that is longer than a year shows you that the value of gold has gone up very fast. Almost too fast to feel comfortable with. The 5 year chart shows it rising from the $600's to a high of around $1,900 before settling in the $1,700 range the current price of gold is now.
What has made it go so high so fast? I think it is mostly fear.
An interesting article by Warren Buffet in Forbes details his view that he would rather invest in profitable businesses, real estate, or farms than gold. His thinking is that at the end of the day, gold is not used for much and demand for it comes from the belief that it will always be in more demand. Fear, in other words.
Gold really does have very few practical uses and other than being made into jewelry, what good is it? It is of little use other than to make things pretty and if the world is truly in chaos, will people really care about the jewelry they are wearing?
So, other than people's perception that gold will always be desired, what is propping it up and making it's value go up so much? It has to be fear that is driving the price up. Fear that paper money will become worthless or severely devalued, fear that real estate will continue it's loss of value, and fear that the stock market is too high and will see another big drop.
Fear and gold go hand in hand and Warren Buffet has made his case that he would rather invest in assets that actually produce something. I don't know whether he is right but I kind of feel the same way. I want to put my money in something that will hopefully grow and produce things which will create more value. But I don't want to miss out on the next upswing of gold prices (if there is one) either.
How do you feel? Is gold actually worth investing in at these levels and does the cost of gold depend on people's fear?
IS THE PRICE OF GOLD BASED ON FEAR?
TAKING GOLD COINS THROUGH AIRPORT SECURITY
I am in the process of moving from one state to another and as it is too far to drive, everything is going with professional movers. This is the one time I am REALLY glad I don't have any gold bars because how would I ever get them from one place to the other?
All my valuable papers (passport, will, car title, etc) will go with me on the airplane. I don't want to take the chance that the movers would lose them because it would be a huge hassle to get them replaced. What I realized that all my gold coins that I store in my bank box were going to have to go with me on the plane as well and that made me a bit nervous.
I have about 15 gold coins that I inherited from my Uncle and a few I have bought on my own. With the cost of gold being so high now, that means I had to go through airport security with about $30,000 in coins. I was of course a little uneasy about carrying that much on me but I couldn't see any other alternative.
I put the gold coins in my computer bag and put it on the conveyer belt that runs through the x-ray machine. The person looking at my bag did spend longer checking it out than normal and then they told me they wanted to run it through a second time. After looking at it again they gave me the bag and told me everything was okay.
I was relieved they didn't ask to do a manual search through my bag because I didn't really want anyone to see the gold coins or know that I was carrying that much. I can't imagine what someone would do if they had to move gold bars from one location to another!
IF YOU WAIT, YOU MAY BE TOO LATE
Gold is on fire. With so much uncertainty in the economy, the stock market started going down in July 2011 and gold started going up. That is why so many people consider gold an insurance policy: when things get bad, gold usually goes up.
During gold's rapid accent in the last 10 years it might have been hard to get on board if you were looking for a good entry point. Only 2008 saw any length of time where the price went down for an extended period. All other years it has seed a steady rise up.
Somewhere in the middle of 2011 I told myself that if gold went down below $1500 I would buy some. It might have gone down briefly below that amount but if it did, I missed it. And now the current price of gold sits at almost $1,900 with $2,000 surely not far behind.
What should I do now? I'm sure I'm not the only one asking that question. Can gold continue to keep going up making all time highs? And if I were to buy gold, how should I buy it: gold coins, gold bars, gold ETF's, gold mining stocks?
I used to think that gold mining stocks mirrored gold's movement but I was very wrong. I have some shares of Kirnross Gold Co. (KGC) but that has gone nowhere for the last 5 years. I won't be buying any more gold mining stocks as I have proven to myself that they are not the same as buying gold.
I have a few gold coins but I don't want to deal with the added hassle so that means this time I will give a gold ETF a try. That is, when the cost of gold goes back down a bit to at least under $1,700. Which it probably won't do. Which will mean that I miss out again.
GOLD $1,500 PSYCHOLOGICAL BARRIER
There are psychological barriers in stocks and metals and we might be seeing one right now with gold. If you look at the chart below you will see that gold had a tough time trying to get over the $1,000 mark and briefly touched it (or almost touched it) 4 times before breaking through on the 5th try. Will we see the same thing at the $1,500 level?
The $1,500 psychological gold barrier is just that: it is all in people's heads. There is really nothing different between gold being priced at that amount or any other amount. But it seems to be human nature to put an extra emphasis on nice round numbers and give them more significance than they deserve.
Whenever the stock market or gold reaches a "milestone" number, there is extra news coverage and more people become aware that it is happening. However, these numbers like 1,000 and 1,500 for gold and 10,000 for stocks don't necessarily mean more buyers come on board. Much the opposite, the publicity probably spurs more selling than buying as people decide to get out at the top. This makes breaking through these barriers that much more difficult.
WHEN YOU TAKE AWAY THE DEMAND, GOLD IS WORTHLESS
What makes gold valuable and why do people want it? Can we eat it? Can we wear it? Can we build things with it? No, no, and no.
The only reasons gold is valuable are that there is a limited amount of it and people think it is pretty. They want it because they enjoy wearing jewelry that is made out of it and that is what 99% of gold is used for. The key is that people WANT gold but they don't NEED gold.
If people stopped wanting it, the cost of gold would plummet which is simple supply and demand. So, under what set of circumstances could we have a situation where people stopped wanting it?
We saw a glimpse of one last month with the earthquake in Japan. Entire towns were swept away and anyone who lived had nothing. They needed shelter, food, clothing, water, and all the other basic minimums of life that were destroyed in the earthquake. They needed blankets and food....not gold. Do you think anyone standing there in those deserted shells of towns could have gotten anything for a bar of gold? Probably not.
Now you might say that anyone who had gold either on them, in the bank, or in gold stocks could have gotten out of that devastated area and travelled back to civilization and started their life over. If you have money (which gold still is) you have a better chance of starting over. But the key there is that they needed to get back to CIVILIZATION where everything was normal (or mostly normal). Back in civilization people still WANT gold.
People don't NEED gold and they never will to live and survive. So if we ever get to the point in the world where we are all just fighting to stay alive, gold will be absolutely worthless because there will be no demand for it. Water, food, clothes, and shelter will be worth more than gold and those things would be hoarded and traded. That is pretty much an Armageddon scenario I am talking about but it illustrates that if you take the demand for gold away, how it is really worth nothing at all.
THE PRICE OF GOLD CAN GO DOWN (REALLY!)
It might be true that gold has been a phenomenal investment over the last 7 years or so. As you can see in the chart below (from goldprice.org) the cost of gold has gone up dramatically starting at about 2005 to the present. But how about the 14 years prior to that?
In the 14 years from 1991 to 2005, you can also see in the chart that gold went almost nowhere. At many points in that time span, any investor in gold would have lost money because the price went down about 6 of those years.
So while gold is soaring now, it hasn't always been that way and anyone that has put money in it and held for 20, 30, or 40 years hasn't really done as well as the experts would have you believe. You hear ads all the time on the radio and see them on television: gold is going to $2000 per ounce or even $4000 and ounce and you better get in right now! But this is all hype and speculation made a bit more believable because of the recent run up.
But investors should know that gold can go down and has gone down in its history. Advertisers want you to believe that gold only goes up and you better jump on the bandwagon to protect yourself from inflation and anything else that is bad out there. Of course these peddlers of gold coins and gold bars will profit if you go to them and that is why they are advertising to get your business.
I am not saying that gold will go down from here: I am just saying that it CAN go down and sometimes it is hard to remember that through all the hype. The longer you have held the gold you have now, the worse the investment has been for you. Only those people that have bought gold in the last 7 or so years have done exceptionally well. Also remember that you should have balance in your portfolio and that means a variety of different investment types and industries you are betting on. Don't put everything in gold unless you really want to gamble.
THE VALUE OF GOLD AND SILVER COINS
I have a short video you can see below of a gold coin and 6 Carson City silver dollars I got from my Mom's house. In the video I show how much they are going for on Ebay which is a pretty fair judgement of what I can get for them.
My belief is that the Grant Wood American Arts gold medallion is worth around $1,100 and I think the value is based on the current cost of gold. In other words, the value of it is dependant on the price of gold and NOT on the rarity of the coin or the collector's value.
I think it is a different situation for my 6 Carson City silver dollars. I believe those are collectors items as they are a piece of history. Some of the value comes from the silver but most of the value comes from the fact that there are only so many of them and collectors want them.
I am wanting to obtain gold and silver as insurance against more bad things happening with our country and economy. If hyperinflation or something really bad happens, my thinking is that gold will maintain its value but those 6 Carson City dollars will not because they are only valuable for their historic value and not the actual value of the silver in the coin. If I am wrong about any of this please let me know.
IS OWNING GOLD STOCKS THE SAME AS OWNING REAL GOLD?
This is a crazy world here in 2010 and it is extremely difficult to know what to do with your money. Uncertainty is everywhere from terrorism to company bankruptcies to out of control government spending like never before. If you are lucky enough to have money saved, what should you be doing with it with interest rates so low and the world in such chaos.
The current cost of gold remains over $1,000 and it is a bit scary buying at this level but if you do decide to buy here, what are your options and what are the differences?
Buying gold coins or bars is the best way to buy gold if you want to actually own it. Of course, if you do buy it this way, you then have the problem of where to store it and how to protect it. I know someone who is buying gold and burying it in their back yard. Others keep it in safe in deposit boxes and other such places that put it under lock and key. Wherever and however you decide to store it, you are faced with that additional burden that can be a big problem if you own a lot.
For years, many people have been content to invest in gold by buying stocks of companies that mine it. If the price of gold goes up, usually so do the prices of these gold company stocks. During the big stock market meltdown a couple years ago for instance, most gold stocks performed much better than most other stocks that were in different businesses.
Right now though, it seems like a more shaky time than ever with the economy and our government as well as big businesses piling up the debt. If things continue to deteriorate and/or there is a successful terrorist attack, what will that do to our way of life? Will owning gold stocks be just as good if this happens as owning the actual gold itself?
When you invest in stocks, all you really have is a piece of paper to show for it. Others may argue that point but in my opinion all you have is paper. If things with the economy get really bad, won't all companies suffer including companies that mine gold? Even though they may be in an industry that is doing well, won't the overall crumbling economy impact their ability to do business? Won't it be harder for them to get loans and rely on contractors? It seems that if things get really bad, you might want to own real gold as opposed to just a promise on paper.
I think that there is enough uncertainty and mismanagement of our countries finances that owning real gold bars and coins is the way to go rather than buying gold stocks. If we do climb our way out of this debacle it probably won't matter but if things continue to deteriorate, owning real gold is what I would feel most comfortable with. What do you think?
IS GOLD OR STOCKS THE RIGHT PLAY IN 2010?
Many investors have a dilemma right now of whether to invest in stocks or in gold. The cost of gold is hovering around an all time high and that should make any one who invests in gold a bit nervous. Right now the stock market is also rallying and has surged past 10,000. Anyone who has bought stocks this year has probably done very well.
People love gold when things get uncertain and these times sure qualify as that. Gold has done quite well during the past 2 to 3 years and held its own but now you have to wonder whether it is about topped out. Investing in something that is near or at a high has to make any real investor think twice. Althought the financial problems of the world are by no means over, that is no guarantee that gold will continue to go up.
Stocks have also made a big comeback from their lows in the 6000's and one has to wonder whether things may cool down for a bit. If you decided to just hang on to all your stocks during this rocky 3 year period, you are still down from the Dow's high point of 14,000 but you have most likely gotten a good chunk back. Is it too late now to put more money back in?
Investors always face tough decisions of where to put their money so that it will give them the best returns. If your choice is between buying gold and picking the best stocks to buy right now, it is indeed a close call. The pundits always have their opinions but you never really know how committed to them they are and whether they have any of their own money invested. Choosing between gold and stocks in 2010 is going to be a difficult call and so maybe it is best to hedge your bets and put some money in each.
DOES THE COST OF GOLD MAKE IT A GOOD INVESTMENT?
Somewhere toward the end of 2008 gold was dipping towards 700 and if you bought it then, you are quite happy right now. After reaching that low point, it has steadily gone up to where it is now in the mid 900's.
However, it has not gone up since it previously reached it's high near the beginning of 2008 and so for over a year and a half it has not made any money for you. The cost of gold is near an all time high and that makes one wonder whether it is smart to buy gold right here.
Right now there are not many places to invest your money and expect to do well. Savings bonds, bank CD's, and US Treasuries all pay next to nothing in interest. This means if you want to make money you have to take a risk.
Unfortunately stocks aren't doing much better although they have climbed back from their lows in the 6000's up to where the Dow is now at about 9,500. You can put money in stocks right here but most everyone agrees the tough times are not over and so how much upside potential there is in stocks is debatable. It seems there is as much downside risk in stocks as there is upside potential.
Current gold prices make investing in gold an iffy proposition as well. Gold might break up above 1000 and continue to go up but then it could do just the opposite just as easily. Right now, with the US government handing out so much money and going into more debt than ever before, the state of the economy and our future is extremely uncertain.
If you want to make money with the current price of gold, it seems you are taking a risk just like you would be if you bought into stocks. Gold prices, stock prices, and other investment vehicles are very uncertain right now. It seems the only thing that is certain is that you will not be able to make any money safely for a very long period to come without taking some risk.
WHERE TO BUY GOLD ONLINE
If you want to invest in gold bars and coins you need to do a lot of research first so that you know what you are getting into and are familiar with how the system works. Gold dealers sell bars in different weights and there are a lot of varieties of coins as well. It can be very confusing for the beginner gold investor as you can't just run down to the local gold store and learn.
GovMint.com has been in business for over 20 years and is the industry leader with the most extensive collection of coins and currency from around the world. They feature both modern and ancient coins in a variety of precious metals, rare and historic coins and currency, as well as modern day collectibles. With their proven track record of excellence, GovMint.com is affiliated with the top trade organizations in the numismatic industry.
Anyone wondering where to buy gold should know that GovMint.com is committed to the highest standards of quality, service and value. Whether you are an experienced collector or a first time purchaser, you'll shop with confidence knowing all of our products are backed by a 30-day money-back guarantee. GovMint.com is THE place to go on the web to buy gold.
WHAT IS THE PRICE OF GOLD OVER TIME?
The price of gold over time is a good thing to study. One thing that will jump out at you is that gold has never gone to zero. The current price of gold has always been determined by supply and demand. So, when the economy is down along with stocks, demand for gold is usually steady and gold will retain it's value.
There is a very large amount of stored gold with affects the supply. Investors will usually buy gold as a hedge against uncertainty in the economic or political theater. Any world crises will undoubtedly affect the price of gold along with the demand for it.
One must assume that there is a finite amount of gold in the ground and that is one of the reasons the price of gold over time has remained stable. Production of gold continues on with new findings happening all the time but this will not last forever. Besides people hoarding gold it is also used for jewelry and dental work so it does have real uses along with just being pretty.
BUY GOLD STOCK FOR DUMMIES
Gold stocks have been going down with the rest of the market now for a long time. Is now perhaps the right time to start buying gold again?
People have been selling gold for one reason because they have had to liquidate all their good investments to pay off their bad ones. Many hedge funds have been selling gold for that very reason. But now that things have settled down a bit, perhaps gold will turn around and start going up. Gold cannot keep going down like the financial stocks can because gold is not in trouble like the rest of the market is.
Nothing is wrong with gold like it is with the financial stocks and all the retail stocks that are getting hit hard in this beginning of a recession. Gold is traditionally a safe place to put your money in tough times and right now should be no different. Buying gold in the form of gold stocks is much the same as actually owning the gold yourself. If the current price of gold goes up, so will the value of your gold stocks in all liklihood.
On Friday November 21, gold had a big day and some stocks like Kinross gold made jumps of more than 20%. Now on Monday November 24th, Kinross is up again for the second straight day. This is a good sign that gold will not keep going down forever like it seems the rest of the market is doing. Gold will always be gold and will retain it's value. This is why people have invested in gold for thousands of years in one form or another.
IF YOU NEED CASH SELL YOUR GOLD
How to make some extra cash in these troubled financial times? Now is the time to sell your unwanted gold jewelry and scraps and get a good price for them.
America’s most trusted gold refiner gives you twice as much cash for your broken or unused gold items, compared to other national advertisers. And they do it FAST!
The process is simple. Send them your unwanted gold, from necklaces and rings to watches and even gold navel rings. We test the gold for purity, and then we send you cash- within 24 hours!
It s all free to get your FREE gold kit sent to you and the postage is paid both ways. If you need extra cash right now risk free, fill out the form to get your free gold kit. Now is the time to sell your gold to get that money you need.
IS IT TIME TO INVEST IN GOLD?
The Dow has right now (October 9/2008) closed under 8,600 points which is a 5 year low and it makes me seriously wonder whether now is the time to buy gold. Even gold has come down in this market so far but that has to stop at some point. The current price of gold should start to rise sometime soon one would think.
Buying gold stocks is one of the easiest ways to get the benefit of "buying" gold without actually physically buying it. No one wants to run down to their local coin shop and start buying gold coins. All you have to do is pick a good gold stock an dyou will pretty much have the same investment.
In this stock market panic of 2008, people are obviously bailing out on stocks. That also has to end at some point but it still could be awhile before that happens. Buying gold in the meantime might be a good investment strategy as the value of gold has to start going back up real soon. When panic is in the air, and it certainly is now, you want to have as much of your assets in things that are stable. Gold has shown over the years that it is a stable investment and it is only a matter of time until there is a flow toward buying gold.
Will there be a gold panic and a rush to by gold in light of the turmoil in stocks? Probably not but the worse things get in the stock market the more likely it is that the demand for gold will rise. When that rush toward gold happens you want to make sure you have some of your assets in gold to profit from it.
WHY IS GOLD GOING DOWN EVERY DAY?
The stock market seems to be in free fall lately and many investors are in panic mode. Stocks are selling off and you can feel the panic. A 500 point drop in the Dow as we had yesterday is nothing to sneeze at and is a true indication that investors are very nervous.
It is times like these that you would think the price of gold should be going up. Most people own gold in their portfolios as hedge against down times in the stock market. Usually, when stocks go down, the current price of gold will tend to go up. That is why people own this type of investment.
In this situation in September 2008 however, gold continues to go down with the stock market. The safety gold is supposed to provide is failing. sO, Why is gold going down? Is it because the dollar is strengthening against other currencies. Typically, when the dollar is weak (and it has been very week in recent years), the price of gold goes up.
Another reason why gold is going down may be because of the activity of banks and hedge fund managers that are in trouble. Because they have made a lot of bad bets which has led to this weakened economy and stock market panic, many investors want their money now. These financial institutions may be having to sell their good investments such as gold in order to cover their losses. This continuing selling of gold will of course drive the current price of gold down.
Jim Jubak and Kinross Gold Co.
One of the ways to buy gold is to buy a gold stock. Jim Jubak of MSN Money has a portfolio which has done very well over time and in it right now one of his stock picks is gold stock Kinross Gold Co. (KGC).
He picked this stock in April of 2008 and with the currant price of gold at about $963, the stock is at the same price it was in April. It is sitting at $23.31 as of July 11 and his target is $24.00 per share by September of 2008.
That is not a whole lot of upside potential but with the stock market tanking like it is, this gold stock is probably safer than many other stocks in different industries.
If you are a stock investor, you might take a look at his Jubaks picks which have done so well over the last 5 years. He is a conservative investor and he thoroughly explains all his stock picks in a way that anyone can understand.
What Is Gold Farming?
Gold is valuable in real life and apparently it is also valuable in online games. The term "gold farming" is the the activity where an online player in an computer game tries to get (farm) as much gold or other valuable game items as he can. This is usually done by exploiting repetitive elements of the game's mechanics such as killing an important creature over and over to be rewarded with gold. First though, they would probably use a MMORPG leveling guide to learn how to gain levels quickly so they can farm faster.
There are estimates that say over 100,000 people in China are employed in gold farming "sweatshops". These Chinese gold farmers usually work long hours and their wages are very low. The in game gold and valuables they get have to then be sold for real money and have often been auctioned off on sites like Ebay. Ebay has started to crack down on this type of auction, however, and the gold farmers are having to find other ways to hawk their gold.
Now you know that the current price of gold can mean several different things: Real gold or online virtual gold!
Cash For Gold - How To Sell your Gold Jewelry
The current price of gold is so high that many people are trying to sell their old gold jewelry online. It seems you can buy and sell everything online and selling gold jewelry is no different.
If you want to sell your old gold that is laying around the house the best way to do it is through a company called Cash For Gold. The way it works is this:
1) First you request a FREE, INSURED Refiner’s Return Kit by completing the simple form the first page of the website.
2) When you get the kit in the mail, you place all your unwanted gold, silver or platinum jewelry in the secured envelope. Drop the pre-paid insured envelope at ANY convenient mail box at NO CHARGE!
3) They will then send you either a check or by using our system your payment will be deposited into your checking account within 24 HOURS!
This is a legitimate company that has been talked about on NBC America's Good Company morning show and written about in Forbes. If you go to the Cash For Gold website you can see several videos of how it works and see that they are the nation's largest buyer of gold. This is a great way to take advantage of the high current price of gold and do some cleaning around your house as well of your old unwanted jewelry.
How To Sell Gold
If you sell gold at the right time it can make you richer for sure. Now that the current price of gold is historically high, now might be the right time to sell gold. Investors who are wise may use gold as a hedge against unfortunate mishaps and bad times in the economy.
If you are looking for a place to sell your gold jewelry you should try Dollars4Gold. This is how it works:
"When you complete the form they will send you a package containing all the materials you will need to ship items to our refinery. Simply place items containing gold, silver, platinum or palladium into the packaging materials (which include a pre-paid return shipping envelope).
Deposit the envelope in any US Postal Service mailbox. Your package will be insured against loss or damage for up to $100.00 in value and you can track your package using the tracking number that will be provided to you.
When they receive your shipment they will analyze your valuables using non-destructive testing and assign a value to them based upon the weight and purity of your items and the current market price of the precious metal.
They will immediately forward a check to you. If you are satisfied with the payment, cash the check. If you are not satisfied, return the check to them and we will send you back your items. Your satisfaction is guaranteed!"
Give Dollars4Gold a try.
If you are interested in selling other kinds of gold you first you need to learn about the different purity levels of gold and the different forms in comes in. If you have coins and ingots of pure gold, you can most likely sell them in coin shops or jewelry stores. If you have jewelry and gold plated items, those can be worth money also. Shares of gold mining stocks and precious maetal shares are the most common way of owning larger amounts of gold.
Secondly, you need to know that the current price of gold changes everyday but the buyers of gold set their prices at the beginning of each day before they open for business. Gold at the end of the day will be worth no more or no less than it was valued at the beginning of the day.
To receive and instant payout for your gold, take it to stores which specialize in gold and can be found in the phone book under "precious metal dealers". You will usually be able to sell your gold scraps and gold jewelry to these types of dealers.
If you like, you can also sell your gold on Ebay or you can use Ebay to get an aproximation of what your gold is worth. Ebay is a free marketplace and you can sometimes get good prices for your gold jewerly there. Signing up is free and easy at Ebay.
If you own shares of a gold mining company, you would buy and sell them just like you would any other stock.
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