Why Buy Gold?

By Al Thomas

Today everyone is talking about buying gold, but not many are doing much about it because they don’t know how or even why they should…

Is there a good reason to buy gold?

Maybe you will want to buy a “good” stock and put it away. Of course, that is what your broker will tell you.

The Chairman of the Federal Reserve, Ben Bernanke, is trying to stimulate the economy by printing trillions of dollars. The idea is to get people to borrow money and spend more. He must have already forgotten that is how we got into this mess – borrowing too much and spending too much.

Let’s have a lesson in Home Economics. Pay attention guys as this is not just for the girls. Your teacher has instructed how to make a pot of soup. Ten guests are coming.

Wait, now 20 guests are coming. Make another pot of soup. Don’t have the makings or the time. Instead the cook adds twice as much water. Is the soup the same? Of course not.

Let’s say The Federal Reserve has 100 billion dollars circulating in the U.S. It cost a dollar to buy a bowl of soup. Then Dr. Bernanke prints another 100 billion dollars to circulate in the U.S. It now takes $2.00 to buy the same bowl of soup. Your dollar has half its purchasing power.

That’s called inflation. That is what the Federal Reserve is doing to your currency right now. Every stimulus package dilutes purchasing power like water in the soup for every person in the country.

Is there any way to buy wealth protection? Is there insurance against the failure of the dollar? The best and least complicated is to own gold as no matter how much fake new money is printed the price of gold goes up to offset the loss of purchasing power. At one time gold was $20/ounce; now its $1,000 and some say it will go to $2,000..

Gold may be purchased 3 ways – as gold bars, officially minted gold coins and as an equity stock, GLD, an Exchange Traded Fund.

Having the physical gold in your hand is best as it may be difficult to exchange a stock certificate for the metal when it is needed.

Gold bars are very acceptable, but when it is time to cash them the buyer may require an assay which is both expensive and time consuming.

Gold coins are immediately negotiable and their value is published daily. Any dealer will buy as will individuals. They may also be used in transactions of all types. Without along explanation it is best to buy coins that have a stated amount on the face. Most coins have 1 ounce of gold. There are 1/10th ounce coins available, but these carry a higher premium.

If you understand how the dollar is losing its purchasing power a shrewd person will want to have some form of his wealth protected by gold.

Al Thomas’ book, “If It Doesn’t Go Up, Don’t Buy It!” has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he’s the man that Wall Street does not want you to know. Copyright 2009 Williamsburg Investment Co. All rights reserved.

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