Thursday, March 17, 2005


How Do I Own Gold?

I have had some emails about my Gold rants that say in essence, "OK, you have scared me, now what do I do?" I will tell you what I do. I buy a little insurance as often as I can. I walk in with cash to Affordable Jewelry & Precious Metals Inc. in Portland, Oregon and buy American Eagle gold coins. I don't care if you use this company. I don't make a thing if you do. You can buy a 1 oz coin, 1/2 oz coin, 1/4 oz coin or a 1/10 gold coin. Todays closing price was $447.00 at $460.00. The closing cash price of Gold was $438.80. If you bought a gold coin this afternoon you would have paid $460. The difference between $438.8 and $460 ($21.20 or 4.61%) is the commission to the coin dealer.

If you owned a Gold coin and you sold it this afternoon you would sell it for $447. If I recall correctly, when I started buying, the sell price or bid was equal to the price of Gold. It appears to have changed. Now, you may find that some dealers charge less than 4.61%, I don't know. AJ & PT was convenient for me and their web site has quotes that are updated throughout the day.

Owning Gold Coins is not for speculation, this is insurance! I would guess that most financial planners would recommend 5% of ones investible assets to be in Gold. I believe gold will sell between $1500 to $5000 per ounce. I believe the DJIA and Gold will trade at the same level. I don't know when and I don't know what the US will look like. I expect prices of everything to be up 3 to 10 times in dollars. The ATM's may be shut down and the only money you have is your gold. This is insurance only.

I buy shares in Gold mining companies for speculation. There is huge leverage in the mining industry. The price of Gold can go up 20 fold, but not your costs. The earnings can explode and in a fever, other speculators will pay rediculous prices for the shares. Do your homework, but absolutely do NOT buy any hedger like American Barrick. IMO, they will be bankrupt when the derivatives that they have sold against their reserves are called. With both the coins and shares, put them away in the famous "lockbox" (I didn't say safety deposit box!) and forget about them until the fever rises. There is no fever like Gold fever!

The Asian and Indian people fully understand how Gold is used for protection. You would think we would, also. We were warned by our Founding Fathers to protect our currency with metal backing. We have experienced our currencies being worthless; the Continental and the Confederate currency. Yet, owning gold seems such a foreign thing to do. Always glad to answer any questions.

Mover Mike

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