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The Best Reasons to Own Gold NOW

Whether you own gold or have been sitting on the sidelines, you must be wondering whether now is the time to buy more or to finally get in the game.

The answer is one of refreshing clarity in these uncertain times.

1. Gold prices are now at or below production costs.

With gold falling to its current levels, we are very near gold production costs ($1,000 – $1,100 an ounce) for many mining companies around the world.

You can now buy gold at or near the price it would cost a mining company to get it out of the ground. Buy now and you buy right.

And don't be afraid of further price dips. Here's the likely scenario: Any further falls in prices will cause miners to cease production and/or stop opening new mines.

Supply will have a harder time keeping up with demand. Prices will rise and you will sell right. Buy low, sell high and protect your portfolio from rapid fluctuation in the market value for your securities.

Your overall nest egg will be healthier by including gold, because you can wait out the market uncertainty in your stock and bond holdings.

2. You can buy more ounces of gold for your money now.

The dollar is stronger. So you get more ounces of gold for your money. The printing of U.S. currency by the government has devalued our dollar and will continue to do so.

When, as now, there is a small window of strength in the dollar we want to take this rare opportunity to buy gold. Now is that time.

Join the conversation. Click here to jump to comments…

  1. Charles ODonnell Jr | July 8, 2013

    I agree with you 110%. the way things are going ,the barter system may return instead of money. precious metals will be by far the saves way to go. with stocks and bonds trashing its no other way.

  2. Ayoola Rasaq | July 8, 2013

    Thank you so much

  3. Jordan | July 8, 2013

    Does the cost of paying the gold vendor to buy it, and the loss of total value once sold back, still justify buying the gold?

    • fallingman | July 8, 2013

      If you're buying bullion coins, the dealer spreads are pretty tight. The cost of entering and exiting the trade shouldn't enter into the calculation if you plan to hold for a long time and expect significant a significant price rise. Consider it about a 6% roundturn. It could be as low as 2-3% and as high as 8%.

      Say you bought one ounce gold coins at $407 and you can sell them for $1,200 today…real life example…do you really care that the dealer made $40-50? And don't forget the shipping charge.

      If so, forget it. What if the price ramps to $2,500? Would you be sorry you demurred over 2.5% of your gains? It all depends on your outlook and what you consider a fair price for the service.

      Now, numismatics are an entirely different animal. The bid /asked spread is large on most rare coins and you can really get taken to the cleaners. Rare coins aren't necessarily a bad investment, but you have to be an expert and the dealer markup represents a very large nut you have to crack before you make anything, and then there's his cut when you sell.

      There are a lot of con men out there intent on baiting you with deals on bullion coins and then switching you into rare coins where they make a killing and you get hosed. Unless you're a bona fide expert collector, avoid numismatics. Semi-numismatics, such as common date MS-60 Double Eagles, are fine. Just be careful.

  4. Harry | July 8, 2013

    You are 100% right, however, you do not take into consideration that unfortunately there are several "legal" criminals working on Wall Street who negociate paper representing gold(which in fact does not) overselling short(HFT) causes the man in the street to sell their paperctrs because of margincalls and consequently losing their savings and the legal criminals making their profits. Oh, Oh what a honest way to do business. We fortunetaly donot have this problem in Europe. We buy and sell "physical" gold.
    What I donot understand why Americans donot take actions against those Wall Street manipulators. And really strong actions.
    Best regards

  5. fallingman | July 8, 2013

    I agree that gold is a good buy down here somewhere, but your first reason listed is bogus.

    The cost of production, even if it has a marked effect on supply will not likely have a marked effect on price.

    Why? Because new supply adds only about 1.5% to total stockpiles of gold over the course of a year. Why? Because, unlike oil or grain…gold isn't used up. It's stored…or worn. The above ground supply doesn't diminish, so the additions from mine production each year are tiny.

    That's what makes gold perfect as money. It's supply can't be rapidly inflated, but that also means that whether the trickle of supply is slightly stronger or slightly weaker, it won't matter much to price.

    It's still a trickle.

    What matters is how much money they print over time. In other words, how fast will they debase the clownbuck and will the rate at which they debase it…the second derivative…increase? If they go whole hog, gold will skyrocket. If they just do enough to prop the system, the price of gold will gradually catch up to the increase in the stock of money over time, but don't expect any fall in annual production to boost the price. That dog won't hunt.

    There are enough really good reasons to buy gold without inventing any.

    By the way, the fact that falling mine supply won't help gold prices when they're down also means it won't hurt them when they're up. There's no way miners can increase supply materially no matter what the price shoots to.

  6. Warren Frank | July 9, 2013


  7. Elmer ILDEFONSO | July 13, 2013

    A very basic question: Buy physical gold (bullion or coins) is not like buying ETFs linked to gold?
    Thanks for your reply.

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