Tuesday, July 19, 2011

Gold Negativity

Gold engenders such polarized reactions amongst peopel. Some are in the 'gold bug' camp and can think the world would be a utopia with a gold standard, let alone making them rich. Others don't understand it and as a result, deride it's usefulness.

There are reactions to gold (and silver) that are  common to people that don't understand it. Often they repeat statements that they have heard without giving it too much thought.

Here are some of the more common negative misunderstandings:

1. Can't Afford it.

Most probably, the real reason behind this statement is another more pressing failure. That is, these people don't have savings. Most probably, if you do not have a savings mentality, you will not understand gold. After all, if you were saving as a habit, then why wouldn't you place those savings in a vehicle that preserves those savings, rather than mostly in paper that has someone elses obligations attached?

2. Can't Eat it.

This is a common statement. One notable commentator, who has experienced a crash in a currency first hand, simple puts this one to bed by saying; 'Yes, but you can use gold to buy food".

3. Can't Get it.

This underlies a lot of people's investment decisions. It becomes too hard to research something new or want to change your behaviour towards saving in gold and silver. It is far easier to just leave the money in your bank. It is always available (liquid) and no thinking required.

But it isn't that difficult to start a savings regime in precious metals, or to buy bullion. This blog has numerous options in the side columns as good, credible options.

4. Can't Get a Return.

Gold and silver are metals. Hunks of stuff from the earth that don't earn interest. Correct. But consider this. The inflation rate in New Zealand was reported yesterday at 5.3%. This means that money in your bank has lost a minimum of 5% of it's purchasing power in the last 12 months. Gold has maintained it's purchasing power and silver is up over 100% since last July.

5. Can't Store It

This usually means that you think it is too dangerous to store in your house. While it can be useful to have some on hand in small quantitites, it is better to have bullion stored in a vault outside your country of domicile, for example, in Switzerland.

6. Can't Use It.

Don't listen to Ben Bernanke. Gold is money. It is very liquid and will be tradable for what you need at any time.

Mark Faber recently said that he often listens to his Jewish friends about what they are doing with their money. In his opinion, the Jews have been the most successful in history with making and preserving wealth. He states that most of these friends have over 80% of their wealth in gold and silver and related stocks.

They don't think of the word 'cannot', they act on good information and historical precedent.

Gold in New Zealand dollars: $1897.94 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $48.00 per oz
Previous all time high: $59.19
per oz

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001

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