The Rush is On

Let’s assume that you are contemplating investing in gold.

According to Wikipedia, of all the precious metals, gold is the most popular as an investment.[1] Investors generally buy gold as a hedge or safe haven against any economic, political, social, or fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest). The gold market is also subject to speculation like most commodities, especially through the use of futures contracts and derivatives. Gold is also money, although it is treated by some investors as a commodity.

You probably have heard or seen a lot of news about gold recently. That is the primary reason I decided to touch on the subject of investing in gold. Let’s examine the definition provided by Wikipedia. “Investors generally buy gold as a hedge or safe haven against any economic, political, social, or fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest)”. Have we seen an economic crisis recently say beginning in 2008? What political event is scheduled to take place in November? Has the national debt increased or decreased over the past 3 years? What are U.S. troops doing in Afghanistan these days? Anything going on in let’s say Venezuela or North Korea? Is gold a risky investment according to the information we have seen thus far? It definitely would appear to be.

“The gold market is also subject to speculation like most commodities, especially through the use of futures contracts and derivatives.” Speculation is how I lost $90 at the craps table in Vegas last year. The free drinks were cold and so were the tables. I learned not to speculate especially with my hard-earned money.

Is India going to produce more gold and introduce it into the market this year? How about Australia? Supply and demand can change over night without your permission, or knowledge for that matter. What control do you have over the market? How can you influence the gold market in your favor?

What about this word “derivatives”? Where have we heard about those recently? Weren’t they involved in the financial meltdown in some way? What will happen if China enters the gold derivatives market? Let’s see, we had the Dot Com bubble until 2001 then it busted and led to recession. We had the housing bubble until 2007 and we are still trying to determine if we are in a recession or a depression from that bust. Are we creating our next economic bubble? Fool me once, shame on you. Fool me twice, shame on me.

Investing in gold has a sexy appeal on the surface but do you really want to gamble with your money? How can you recoup it once it’s gone? Will you have time to make up lost ground? How comfortable do you really feel about investing in gold? Doesn’t putting your money in high return – low risk investments sound like a better way to go?

So if the stock market and the gold market are extremely volatile, where should you put your money if you want it to grow?

Tune in next time for more clues.