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Is Gold is becoming an alternative currency? There are signs it seems to be. The proof is there when financial markets, stocks and currencies devalue. It is more than evident that individuals, countries and institutions consider Gold as an alternative currency or at least a safe-haven asset class. Now even financial advisers are recommending a small position in Gold and Treasury Bonds, more evidence that investors go to Gold as a "flight to safety" or "safe haven investments" during times of economic uncertainty and distress.
So, you're interested in Gold, possibly Silver, Platinum and Palladium as well as commodities for investment, holding your wealth, hedging against inflation, and rounding out your portfolio. Funny thing is Gold does all these things. Let's start with a few basic myths and truths. Most of the currency in America used to be minted in gold and silver but things changed gradually to the point where we are today, there is no longer any gold or silver in our everyday use of fiat (printed currency). Most people don't even know that gold once backed currency or that gold no longer backs currency, though some have questioned what is the point of Fort Knox if we have the Federal Reserve?
It is true the whole world is now essentially off the Gold Standard. Today most nations back their wealth with debt and bonds. However, sometimes, like current times, countries are on the fringe of defaulting on their debt owed to other countries. In today's news, it's called a sovereign debt problem when it seems a country may not be able to pay off its debt. Historically, gold, silver and other metals have been used to back the wealth and currency of a nation. If the nation didn't have enough gold to cover their debt, they would become bad nations to lend to, however now debt is looked at as wealth as well as huge risk many bankers are willing to take as banking has evolved into a fractional banking system. A rather backwards perspective which runs our financial systems and banks if you asked me. Fractional means that the bank only needs to have up to 10% of actual money they take in from depositors such myself and everyone else who saved money in banks.
Richard Nixon officially took the USA off the gold system believe it or not, it's true the US government at one point confiscated and made it illegal to own gold until the early 1963 while moving silver out of our quarters, dimes and half dollar coins. Now we are stuck in between eras. From one of grave and frivolous economics adopted during the Great Depression and spending beyond to the one we are experiencing during the Great Recession. Instead of fixing things, the people in power convinced themselves that not fixing things and just continually improving upon a broken foundation is best. Well... look where we are today. We are experiencing another first along with the housing market crash, credit crisis, economic depression, consumer recession, man made ecological and financial disasters. We see more than enough news stories everyday.
So who can you trust? YOU! And your will power and growing knowledge of sound economics, being financially responsible and being independent. If you're realize, paying off debt, living without debt and living within your means should be the norm you're ready to begin looking at alternatives and hedge against risk and uncertainty. Due your own diligence when listening to verbal guarantees of your money's safety and any type of sales tactics to get you to put your hard earned cash in other people's control. Quick money is associated to high risk and that is the the trend now. Long gone are the days of owning a stock for years on end, now it's about the quick trade. So know your risk tolerance, financial situation and what you are comfortable with. Slow and steady is reserved for the sound in society, as is precious metals and core commodities. Invest in things we all need like food, water, energy, tech and industrials in the long run. So let the sales people tell what you want to hear but never forget what you want which is smart money not quick money, even if it how the markets operate in today's uncertainty.
To start in Gold, it's not recommended to trade or invest in ETFs, IRAs, or any form of investment you don't have control of, because that's why we're here and if you don't control your money others will take that risk for your. The goal is to be able to preserve your wealth, not let other people lose it for us. What any trader will not tell you is how much more they lose than gain, they are just better at hedging, balancing and keeping money flowing in arbitrage. Something that not all people need or even should know about.
Starting off with your own base or foundation of precious metals might interest you, whether a coin, a round or a bar, make sure it's a sound place you are making the purchase from. Visit an honest coin shop or bullion shop and purchase some bullion bars, rounds and even fairly price numismatic coins on the precious metal price dips. Avoid the TV advertised places, endorsed by talking media heads that are there to make that quick buck off you. The price for bars and rounds fluctuate following the price the precious metal is being traded for on the Comex and London Fix. By watching the precious metals prices and buying on the price dips, it will be easier to recover equity and gain value, but most of all you own it, it's in your hands. Same concept goes into why NOT to buy from an IRA or 3rd party custodian when starting unless you need to roll it over to avoid taxation (which has its own benefits). So the best practice is to buy the lowest premium bullion bars or rounds, but others like to collect historical pre-1933 gold and silver coinage which have a high collector's premium. Either way, just be sure to do your research and don't get taken advantage of.
Once you've established your base of bullion you control, that is coins, bar and rounds in your personal possession that no one could steal from you without prying from your cold dead hands, it may be time to consider precious metal ETFs and mining stocks if you've got more money you want to invest. You can even short Gold and Silver on the stock exchange, so be aware prices do go up and down but precious metals have an intrinsic value. You can trade paper gold and silver through a brokerage firm like Fidelity, Ameritrade, ScottTrade and the many others out there. The best ones to use is the one with the lowest trade fees. Then as Warren Buffet does, keep your eye on a small basket of investments like gold, silver, ETFs and mining stocks. Invest or trade by doing your own diligence. In general, buy low and sell high. You may also get into technical swing trading which is a good foundation to look at stock charts and get some meaning from them even though technical analysis/trading is a day trader's momentum trading tactic. Also remember, you cannot eat gold or silver so many say only 10% of your assets should be invested. Some say more, some say less. That will be a personal choice but in the end, there will be a time to sell and times to buy, be diligent and keep your best interests in mind.
