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 Precious Metals Blog Bookmark and Share

Monday, December 24, 2007
Gold vs. Money Markets and U.S. Dollars
 

Having been in the investment arena for 29 years the philosophy incorporated at Gold IRA’s and Rarities is in the systematic accumulation of Precious Metals and select certified rare coins.

Gold, Silver and Platinum have long been stores of wealth for people although “Gold is not a mainstream investment yet, because it’s seen as difficult to understand,” financial gurus tell Reuters.

Yet every day it becomes easier for people on the street to understand that paper dollars are becoming worth less … as our food, health care, gas, oil, gold, silver and most other tangible assets are all costing more.

“The relatively subdued interest of the investing public, if not the investment newsletters and columnists, is in fact good news for those long the metal. It means there are a lot of people left to buy the stuff, which is not the case at bull market peaks. So even at about $800 the ounce, the real gold bull market has not begun,” reports London Financial Times.

The approach of systematic accumulation is well worth looking into, if one was to analyze simple raw Gold bullion accumulated over the past twenty four years you would find that investing $5,000.00 per year or $120,000.00 total today it would be worth approximately $340,000.00 without leverage, without failing stocks, without the worries associated with stocks, banking crisis, large financial institution disasters, geopolitical strife, Corporate mismanagement and fraud like Enron or the Dot Com debacles and of course the steadily declining value of the U.S. Dollar.

Even investing $416.00 per month or a total of $124,808.00 into a top tier high yielding Money Market account with a 5.5% average yield over the 24 years, even compounded daily would only be worth $267,132.77 maximum in the same time frame. As an example if you went into the Vanguard® Prime Money Market Fund it is only yielding 5.23% as of this writing. Plus in order to get this yield you must roll it over (fees) every year, if you wish to lock it in for 10 years the yield drops to only 3.75%.

Headlines report: “Gold at 28-year high”, yet often fail to mention, that after discounting prices for inflation, gold must rise above $2,150/oz., nearly three times the current price, to reach the previous 1980 price peak.

Ambrose Evans-Pritchard, International Business Editor for The London Telegraph reports correctly; “In today’s terms, $850 gold would be equivalent to $2,000 an ounce, suggesting that the current six-year bull market in precious metals may have much further to run.”

“Global commodity companies believe that gold prices will rise for years to come, eventually reaching at least $2,000 and it will probably go even higher. Investment experts say gold is the best commodity to invest in because it has stood the test of time,” reports Nandita Jain of Commodity Online.

So gold is now about one third of the way toward reaching a true new high. Using the official government CPI inflation adjuster, $800/oz. gold in 1980 equates to $316/oz. gold today in 1980 dollars. So rather than being near a market top, gold remains the buy of a generation.

“A financial crisis will likely send the U.S. dollar into a free fall of as much as 90 percent and gold soaring to $2,000 an ounce,” said Gerald Celente, Trends Research Institute Director. “We are going to see economic times the likes of which no living person has seen, a panic of 2008,” reports UPI.

Many analysts have jumped onto the $1,000+/oz. gold bandwagon since 2001; most of whom were not considered “gold bugs” in the past, like Citibank and JP Morgan & Co.

Forty-five prominent analysts, authors and gold experts already on the record forecasting four-digit gold prices to arrive in the years ahead. Their combined gold price expectation is $2,090/oz. gold!

Here are just five sample quotes from our 2007 “Future of Gold” financial journal. These professionals offer dozens of good reasons for owning gold today, which experts agree will drive gold prices sky high over the next 5-10 years.

·        “We would be very surprised if the gold price did not blast right through the old highs, and we reaffirm our old targets for gold of $3,000 to $5,000 an ounce (Plus silver over $100 an ounce) ... gold is not merely a colorful trinket but a monetary asset, and when mass fear strikes at the heart of paper money, the stampede to gold will be awesome.” -JAMES DINES, Editor, The Dines Letter, MW, 11-5-07

·        “Gold will hit $850-$870 by the end of 2007 and $2,000 gold is achievable in this move, given the huge demand from ETFs and soon pensions and insurance companies will be buying gold as a new alternative asset class.” ROB LUTTS, President, Cabot Money Management -CNBC, 11-2-07

·        “When FEAR combines with full blown Greed, there is no longer any more talk of correction as prices begin to jump 5% to 10% in one day and people line up to buy bullion as signs pop up everywhere, “WE buy and sell gold”. Once both fear and greed take over the market and the short squeezes begin in earnest, there is no way of predicting how high the high. $2,200 gold and $100 silver seems the barest minimum targets, maybe $5,000 or even $10,000.” AUBIE BALTIN, CFA, CTA, CFP, PhD -FiendBear, 9-24-07

·        “Market ructions, the sub-prime conflagration and a collapse of the dollar could send gold prices to more than $3,400 an ounce within the next three years. This is not a sub-prime crisis. Sub-prime has merely exposed the bigger scam of structured finance; a scam that is about pretending that bad credit is good credit.” CHRISTOPHER WOOD, Chief strategist, CLSA -London Times, 9-19-07

          “I’ve written in this column about inflation often over the last three years. I’ve said gold was going to $1,000. If the Fed cuts rates, then I’m going to have to admit I was wrong. Then gold isn’t going to $1,000. It’s going to $2,000.” DONALD LUSKIN, Chief investment officer, Trend Macrolytics -Smart Money, 9-7-07

Smart investors are diversifying out of dollars and into gold; a trend experts expect to continue for another 8-15 years. The real question is; can you afford NOT to own gold?

By converting as little as 5-10% of your assets into gold coins, you’re strapping on a golden parachute against the coming freefall of financial confidence in the dollar. Start putting yourself on a personal gold standard now... before this quiet bull market roars at Main Street USA. –CRS, DMB & JMC

 
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All of the provided information is believed to be accurate, however errors are possible. The opinions in the Commentary section do not necessarily reflect the opinions of GoldIRAS.com. Past performance of any investment is no guarantee of future performance. All investments have risk.
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