A Gold Investing "Cheat Sheet" for 2014

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Gold investing in 2014: With gold trading at roughly $1,300 an ounce, many investors are asking themselves if now is the time to buy gold.

I think that's the wrong question.

What they should be asking themselves is if they can afford not to buy it right now.

The case for owning gold has never been more clear…

  1. Central banks are trillions of dollars in the hole, so they are buying gold as a means of supporting their currencies. According to the World Gold Council, in 2013 net purchases totaled 369 tonnes. That represents 12 consecutive quarters in which the central bankers have reported net inflows, according to the World Gold Council.
  2. The world is a complicated place, and it's only getting more complicated. As we face war, terrorism, and other ugliness, the need to hedge value is beginning to supersede the need to hedge price. Gold is one of the few assets with that capability – it's physical, it's been around a long time, and it's almost universally recognized as being valuable, even though the markets don't always reflect that.
  3. Gold InvestingConsumers in India and China (who jointly represent three out of every five people alive today) generally believe gold is going to increase in price over time – yet very few actually own it, according to the World Gold Council and U.S. Global Investors. As the economic development in these two countries continues at a rapid pace, overall demand will increase, even if it falls off in developed countries like the United States and in the European Union. Already the statistics are proving this point. Consumer demand in China rose 32% in 2013 to a record 1,066 tonnes, while in India, demand rose 13% to 975 tonnes.
  4. Gold is increasingly used as a marginable asset, so it's tied inextricably to the worldwide explosion in derivatives and debt-driven trading. If there's one thing we've learned from the financial crisis, it's that debt – like it or not – drives markets. And the more debt there is, the more margin that's going to be required in the years ahead. Recent price-fixing allegations seem to confirm this.
  5. Best of all, gold is amongst the most hated trades out there right now. In fact, the U.S. Commodity Futures Trading Commission's Commitment of Traders reports suggest the crowd is almost universally against it. Given that "the crowd" is almost universally wrong, there's a lot to be gained from wading in now, even if you have to hold your nose when you do it.

Of course, I am not suggesting that you invest exclusively in gold. Stocks have clearly outperformed gold over the last 125 years. But I am suggesting you buy it as part of an intelligently planned investment strategy.

As for how much gold? That's a very different question – and one I urge you to think about in detail today, because it's going to make a big difference in your overall portfolio performance in 2014. But it's not difficult.

In fact, I have a two-part "cheat sheet" that will help you figure it out to the exact dollar. It's normally reserved for paid-up members of my Money Map Report, but I'm sharing it with you today to help answer the question that's on so many investors' minds. Take a look…

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About the Author

Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs The Geiger Index, a reliable, emotion-free guide to making big money and avoiding losses, and Strike Force, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.

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  1. H. Craig Bradley | May 31, 2014

    TIDES OF WAR

    Homer Lea wrote in his seminal Military history book " Day of the Saxon" (1913) that a continental power will trump a naval power. Japan is solely a naval power and can not prevail against China, which is fast evolving into both a Continental and Naval power. That's what this is all about. Look at Hagel's facial expression. He is demoralized. U.S. influence in Asia and the S. China Sea is on the way OUT. Japan needs to cosy-up a bit w/ China.

  2. H. Craig Bradley | May 31, 2014

    Keep in mind gold prices are clearly manipulated in the short term, especially paper gold (ETF,s futures, etc.). In the long term, Keith is spot-on. Question is: Gold is primarily for central bank(ers) . Individuals can not yet directly transact in gold specie at most retail outlets in the U.S., nor can they use physical gold as collateral for a bank loan in the U.S. or even as a non-resident account holder in Hong Kong ( only Chinese Nationals)

  3. Jason V. Kennedy | June 2, 2014

    The US economic is improving and US Gov will raise interest rate soon. Gold is dropping likes crazy despite there is Ukraine's tension. Gold safe haven is over

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