Buying Gold Investment or Speculation

In this economy of uncertainty, nations accumulating vast amounts of both public and private debt and governments turning on the printing press (or pressing a button) to solve its financial woes, savers, investors and the general public need to find something to protect their wealth because of the inflation tax.

For more than 6,000 years, gold, and other precious metals, such as silver, has been the ultimate currency. Gold bullion is money and continues to prove that it is the better alternative than the fiat currency experiment that has failed.  Is it investment or speculation?  It depends on how you view bullion.

In the early 2000s, the price for one ounce of gold was near $200 per ounce. As of 2012, gold has ranged from $1,600 to $1,800.  Silver has also experienced the same level of growth. A one ounce Silver Eagle Coin was valued at about $8 a decade ago. Years later, it is above the $30 mark.

These are very important statistics when comparing it to the price of goods and services and to the value of the dollar.  For instance, how much oil can a one-ounce silver coin purchase?  How many groceries can you buy at your local supermarket with a 1/10 gold coin?

There are many economists out there, some who could not see the 2008 crash coming and praised the United States economy as being one of the best in the world, who argue that gold is in a bubble and that its dramatic rise is based on pure speculation. However, once again, these financial experts do not look at the intrinsic value of bullion – it certainly can’t be printed at the Federal Reserve or Bank of Canada at the command of its respected governor or chairman.

Investors and savers, who put their money into precious metals, do so for a variety of reasons. One person may want a hedge against the current status quo economy and want to protect his or her money.  Another person may see a perfect opportunity to make some money in the market, which is a good choice considering how poorly the market is performing.

In the end, though, gold, silver, copper, palladium, platinum and other metals should be invested in as a hedge to protect your wealth. If it goes up in value then it is just an added bonus.  Remember, the great fiat experiment is crumbling down and any tangible assets will be a safer bet than accumulating Federal Reserve Notes and general pieces of paper.

The gold standard did have its share of problems, but it was better than the system that we suffer from today.  Even Alan Greenspan, the former Federal Reserve Chairman, opined throughout the 1970s in many essays that gold should be utilized as money and that unbacked currency would inevitably collapse.