should i buy gold for investments?

Answer 1

Here's a tip on how to invest for Gold and other factors affecting your investment.


Methods of investing in gold
Main article: Methods of investing in gold
Investment in gold can be done directly through bullion ownership, or indirectly through certificates, accounts, spread betting, derivatives or shares.


Investment strategies

Fundamental analysis
Investors may base their investment decisions on fundamental analysis. These investors analyze the macroeconomic situation, which includes international economic indicators, such as GDP growth rates, inflation, interest rates, productivity, and energy prices. They would also analyze the total global gold supply versus demand. Over 2005 the World Gold Council estimated total global gold supply to be 3,859 tonnes and demand to be 3,754 tonnes, giving a surplus of 105 tonnes [9]. Others point out that total mine production is only about 2,500 tonnes each year, leaving a 1,300 tonne deficit that must be made up by central bank or private sales.[12]. While gold production is unlikely to change in the near future, supply and demand due to private ownership is highly liquid and subject to rapid changes. This makes gold very different from almost every other commodity.

Stock analyst Jim Jubak recently chose gold as one of his "stock" picks for the next 12 months giving it a price target of $870 per Troy ounce by July 2008. [13]


Gold versus stocks

The ratio of the Dow Jones Industrial Average index divided by the price of an ounce of gold. A surrogate index was used to generate all points before 1897. Note that this chart does not account for dividend reinvestment or tax consequences. Chart provided by www.sharelynx.comThe performance of Gold bullion is often compared to stocks. They are fundamentally different asset classes: gold is a store of value whereas stocks are a return on value (i.e. growth plus dividends). Stocks and bonds perform best in a stable political climate with strong property rights and little turmoil [Source: Investments (7th Ed) by Bodie, Kane and Marcus, P.570-571]. The attached graph shows the value of Dow Jones Industrial Average divided by the price of an ounce of gold. Since 1800, stocks have consistently gained value in comparison to gold due in part to the stability of the American political system. This appreciation has been cyclical with long periods of stock outperfomance followed by long periods of gold outperformance. The Dow Industrials bottomed out a ratio of 1:1 with gold during 1980 (the end of the 1970s bear market) and proceeded to post gains throughout the 1980s and 1990s. The ratio peaked on January 14th, 2000 a value of 41.3 and has fallen sharply since. William Anton III wrote in the 2004 issue of Jefferson Coin and Bullion "...downward movement in the Dow/gold ratio is unlikely to stop precisely at the mean trendline. The extreme distension of the the 90s will likely overshoot to the opposite extreme in the current cycle." Source: Source: [10] [11] [12] [13]


[edit] Technical analysis
As with stocks, gold investors may base their investment decision partly on, or solely on, technical analysis. Typically this involves analyzing chart patterns, moving averages, market trends and/or the economic cycle, in order to speculate on the future price.


Using leverage
Bullish investors may choose to leverage their position by borrowing money against their existing gold assets and then purchasing more gold on account with the loaned funds. In order to keep the cost of debt to a minimum, these individuals would normally seek a loan in the currency with the lowest LIBOR, which as of April 2006 was the Japanese yen. This technique is referred to as a "yen-gold carry trade". Leverage may increase investment gains but increases risk, as if the gold price decreases the investor may be subject to a margin call. Leverage is also an integral part of buying gold derivatives and unhedged gold mining company shares (see gold mining companies).


Gold's value versus money supply

For many years, the dollar was pegged to the gold standard.Historically increases in the supply of paper money or fiat currency through increased money supply would cause the demand for gold to increase. There was a time when gold was money and vice versa. If citizens felt that there may be insufficient gold to cover the paper money in circulation, they would queue up at the bank to change their paper currency back into gold.

However, since the gold standard was ended on August 15, 1971, governments have been free to print as much money as they choose, without fear that their populations will come knocking on the central bank's door demanding to change their paper money back into gold.

In January 1959 US M3 money supply was $288.8 billion [14], and the official gold reserves of the United States was then 17,335.1 tonnes, or 557,336,000 ounces [15] (there are 32,150.7 troy ounces in a tonne). That means that in 1959, there were $518 in circulation for every ounce of gold reserves held by the USA. Although the actual ration of dollars to gold was $518 per ounce, the actual price, as fixed under the gold standard, was only $35 an ounce.

By August 2005, the US M3 money supply had risen to $9,873.9 billion, whilst at the same time the Official Gold Holdings of the United States had fallen to just 8,133.5 tonnes, or 261.50 million Troy Ounces [16]. This means that today, in 2005, there are $37,831 in circulation for every troy ounce of gold held by the United States.

However, this increase of 75 times in the ratio of central bank gold holdings to debt does not allow for the fact that the gold standard was abandoned in 1971 and gold holdings have been deliberately and considerably reduced. Another far less dramatic way of looking at the same figures is this: In 1959 US government debt valued in gold was 8 billion Troy ounces, in 2005 US government debt was 20 billion ounces gold - an increase of only 2.5 times.

The above numbers show the falling influence of gold in today's monetary system. Gold bugs believe, or hope, that one day gold's importance will return as the printing of paper money gets out of control and before we end in a hyper-inflationary fiat money collapse.

The US Federal Reserve ceased publishing M3 data on 23 March 2006, with the last published data indicating a year-on-year growth rate of 8.23%. Central banks may see this as a reason to limit further increases in their reserves of dollars, and thus alternatives such as gold or the euro might be considered. Jon Nadler, an analyst at Kitco Bullion Dealers, said gold was still benefiting from August 30, 2006 release of the minutes to the last rate-setting meeting of the US Federal Reserve. The minutes to the August 8, 2006 meeting, at which the Federal Open Market Committee kept short-term interest rates unchanged for the first time since 2004, supported the view that US borrowing costs have peaked.[17]


Supply
At the end of 2001, it was estimated that all the gold ever mined totaled 145,000 tonnes [18], which would form a cube with 19.58 meter edges. Global gold mine production is between 2,500 to 3,000 tonnes per year, which would mean that about 155,000 tonnes of gold would have been mined as of 2006, with a total value of $3.2 trillion at June 2006 prices.


Bulls versus bears
Many analysts such as Henry Blodgett in his "Wall Street Self-defense manual" argue that gold's role in the world's monetary system has ended, and that it will never again represent the store of value that it once was. The gold price peaked at around $850/oz t ($27,300,000 per tonne) in 1980, and in real terms is still well below that. However, since April 2001 the gold price has more than doubled in value against the US dollar (as seen here), prompting speculation to circulate that this long secular bear market (or the Great Commodities Depression) has ended and a bull market has returned [19] [20].


Taxation
Gold maintains a special position in the market with many tax regimes. For example, in the European Union the trading of recognised gold coins and bullion products is free of VAT. Silver, and other precious metals or commodities, do not have the same allowance. Other taxes such as capital gains tax may still apply for individuals, according to their jurisdiction [21]. There is no capital gains tax in Switzerland.[citation needed]

Answer 2

"the gold prices are rising constantly" There you go...... the above statement is that of fools, no matter what the investment (substitute tulips or anything else with the word "gold"). No investment goes "up" all the time. Gold dropped by 50% in the 1980's and took 25+ years to breakeven. Here's what you need to know; A. Read some books on basic investing (not gold investing... basic investing). B. If you still feel that Gold is something to buy... don't buy more than 3% of your entire portfolio. (don't put all you eggs in one basket) C. Buying coins or bullion is an expensive/ridiculous way to buy gold. Use an ETF like "GLD". That's what professional traders use. Read about ETF's. Learn about them. Re-think your approach to investing. Asking strangers whose qualifications and motives can never be known is not a strategy. It certainly isn't based on reality.

Answer 3

Oh Wow...The one answer here that is so long, probably tells it all...EXCEPT

Gold investing, is very risky and the market is very volatile (means it goes up and down like crazy)

I will say this...IF YOU BELEIVE IN GOLD...don.t put all your money in it, it should be a SMAQLL part of your investments.

That being said...If you feel that there is going to be a HUGE money crises that makes money wothless...Buy 99.99% pure gold coins for emergency currency

If you just beleive,that gold is going up in value, Buy a no-load Precious Metals Mutual Fund, that will add leverage to the price of gold and go up in value faster than gold's advance.

BUT REMEMBER< THESE MARKETS ARE RISKY AND SHOULD HAVE A SMALL PART OF YOUR INVESTMENT MONEY

Answer 4

So..
Penny stocks, also known as cent stocks in some countries, are common shares of small public companies that trade at low prices per share. They are notoriously risky but if you follow a special method I've learned you can earn good money at almost no risk. This is the site I use: http://pennystocks.toptips.org

I definitely recommend subscribing to this site in particular. Very good research, quality stocks. I was a bit weary of penny stocks from all the bad hype they receive but this guy is pretty legit. He's put my mind at ease with a lot of the fears I've had. I especially like that he doesn't send out announcements left and right. I've signed up for other websites that fill my in-box with one company after the other. I don't know where to even start with so many choices in front of me! Nathan sends me one idea a week and that's all I need. Working so many hours during the week leaves me with very little time when I get home to start doing tons of penny stock research. I'm always eager to see what Nathan's next suggestion is each Friday and I love having time on the weekend to do my research.

As said above if you want to make money with penny stocks you have to follow some proven methods. This one in my opinion is the best: http://pennystocks.toptips.org

Answer 5

If you are talking about a financial investment, maybe.

If you are talking about having gold on hand when civilization collapses, I'd say no. If I have food and you have gold, and money is no good, you won't get my food. You can't boil gold coins long enough to make them edible.

As a hedge against societal collapse, invest in non-perishable food, survival gear, simple agricultural tools, firearms, and ammunition.

As Machiavelli said long ago, "Gold can not always buy men and iron (meaning military force), but men and iron can always get you gold."

Doc

Answer 6

Gold is a steady investment strategy. It will not have the same long term returns as you might get on the stock market, but it will not be the roller coaster ride the stock market can be. And if nothing else, you can always have your Gold, even if it's worth $1 an ounce!

Answer 7

Yes you should go for it. But rather than buying gold in physical form I suggest you to invest your money in gold karat bars as they offers you good and hassle free profit.
I am also doing same with the help of GoldKaratBarsMiami.

Answer 8

yes