Why Does the Price of Gold Go Up?

Traditionally, there are many variables that have affected the price of gold in the market place. Here are some fundamental guidelines:

-When the US Dollar goes up, Gold goes down
-When stocks go down, Gold goes up
-When oil goes up, Gold goes up

Because there is so much volatility in the market place today and signs show we are in an inflationary period, the rules above no longer seem to really apply and the gold market has now taken on a life of its own.

There are other things that affect the price of Gold like knee-jerk reaction buying and selling based on fear and greed. Collapsing currencies, countries going bankrupt, rumors of war and war, etc. have always affected the price of Gold. People flock to gold as a safe haven during these times.

Of course, there is also the long-term manipulation of the price of gold. The spot price of gold and silver have been manipulated and suppressed for many decades by the central banks, governments and JP Morgan. This was something that was dismissed as conspiracy theory bunk only a year ago and now that the Andrew McGuire story broke through to the international main stream media, thanks to Bill Murphy of GATA, it is being accepted more and more as fact throughout the world.

Recent comments by the media and people such as George Soros that gold is the ultimate bubble seem asinine to me when you consider the following:
- Federal Reserve and other central banks printing money (out of control) causing inflation.
- Gold for millennia has been a safe storage of value – Historically, all civilizations and cultures go back to gold after they debase their currencies. Washington is allowing the Federal Reserve to print money into existence and there are no signs on the horizon that this will end or slow down. - If you look at any historical gold chart, gold has risen with small corrections and pull-backs along the way and in the big picture, steadily climbed. This is a classic sign that gold has been chronically bullish with no bubble in sight.
- Basic Supply and Demand Fundamentals: There is less than 1/2 an ounce of gold above the ground per person alive on the planet right now. What does that mean when failing currencies prompt everyone at once to turn to something more sound?
- Jim Rogers was quoted that he is not selling any of his gold. If gold goes down, he’ll buy more. If it goes up, he’ll still get more. He is certain that due to the imbalances in the world economy and financial system right now, we are heading towards a currency crisis in the next year. Does this sound like the actions of someone who has heavily invested in a commodity that is in a bubble status?
- China has already said that their demand for gold will double in the next 10 years. Is this bubble talk?
- Looming currency crises globally - You cannot open a newspaper or turn on your TV today without being told about the declining Euro and other failing currencies. This will become more prevalent in the media in the coming months.

Finally, because we know gold is inflation-proof, we know that the price of gold isn't actually going up or increasing in value, it is the value of the dollar that is decreasing. An ounce of gold purchases the same today as what it did 2000 years ago. It is the purchasing power of the dollar that is decreasing.

As Simon Heapes said “You cannot study the subject of Gold and Silver without studying its counterfeit, that being the world’s paper currencies.” Simon also recently reminded us that “Taking time to study history gives you the "jump on the crowd." History repeats. Consider King Solomon who said, "There is nothing new under the sun, that that is, is that that will be again." This is particularly true with markets and the emotional reactions of the crowd”.

In history, we have learned that in times of economic hardship and despair, there is also great opportunity. Ask me how you can participate and position yourself for the “Great Wealth Transfer”, which will accompany the looming financial crash.

By Kirsty Hogg
YOUnique Gold Tribe Member
http://www.fundsingold.com/
Goldvestments Copyright © 2010

SECRETS OF THE WEALTHY SERIES: Debt Slave vs Gold Save

Debt Slave Vs. Gold Save

Generally speaking, most people feel that saving or investing in 999.9 fine Swiss minted bullion is not something that they are in a position to do. What I have discovered is that it is totally possible for EVERYONE TO SAVE IN GOLD starting now.

If you’re reading this, I know you are already attracted to the shiny stuff and for good reason! It could be the recent spotlight on gold in the media that it is “about to soar” or the hedge against inflation and God forbid, protection against hyper-inflation .

People reject the notion that they can begin tangible gold ownership today for several reasons. They may feel they cannot afford it, or perhaps they are single mindedly bullish on silver. Some people are stretched and don’t have any money left over for savings or investing.

Let’s address the last point first. Simon Heapes, Director Treasurer of Anglo Far East said, “If you do not save, the seeds of success are simply not in you”. An ancient secret of the wealthy is that they ALWAYS put aside some of their income NO MATTER WHAT into a form of savings and forget about it. Western culture overtime has lost this knowledge. In a matter of a few generations, we have gone from a culture of savers to a culture of spenders and debt slaves.
What is a debt slave?
“The borrower becomes servant to the lender”. When we allow ourselves to go into debt for luxury items, we postpone the inevitable; paying for something we couldn’t afford in the first place. Many face that when in debt, we feel pressure to work more hours, or two jobs to make the payments. Some feel they are not in a position to ever pay it down. In this situation, your options are diminished and you become “servant” to the lender. You are simply trading hours of your life to work for money to pay the lender, you are debt slave. The daily stress of that in peoples' lives has very negative consequences on their health and happiness.

Our grandparents and great grandparents grew up in a society that if you had debt, people would literally look at you side-ways. This was not an acceptable way of life to them and people in debt were even looked upon as unsavoury company. Our great grandparents were people who worked hard and saved their money. If they wanted a better car, they would save for it. This goes for holidays, jewellery, renovations, real-estate, also. I’m using this example to point out that we now accept heavy debt as a fact of life, where as a mere three or four generations ago, it was taboo.

We need to get back to the fundamentals of saving as a culture. We can draw a lot of power and protection in our lives by doing this. From birth to adulthood, through a very sophisticated, multi-media, systematic bombardment of messages, we have been programmed to reject the obvious benefits of saving and go into debt for a variety of consumer items, that by and large, we simply DO NOT NEED.

Let’s get back to the topic of gold. Saving in gold has a multitude of benefits:

1. It is an inflation-proof asset-In the media, it has been named as the right asset at the right time.
2. It is a great hedge against inflation and protect against hyper-inflation (An insurance policy that you and your family can cash in on and benefit if we have a drastic currency event in our life-time.
3. Per many media sources, it is a great investment. Marc Faber continues to beg people to buy gold every month here.
4. When you save in gold, you are less likely to spend your savings. E.G. If you are in a crunch and need to cash in some of your gold, it takes a couple of extra steps to get it out of the safe or safety deposit box, march down to the local coin exchange shop to make the transaction. You won’t be able to impulsively spend it on that pair of shoes or electronic gadget you see at the mall.

Now that we understand the importance of saving and the benefits of saving in gold, now let’s look at why a savvy smaller investor should begin to buy gold once per month as well. I hear many people who are asserting that silver is a better investment for a variety of reasons. There is no question that silver is a sweet deal right now and that it is about to make a spectacular move. I do not contest this in any way and I too love to buy silver. If this strikes a chord in you, I ask you to consider the following. Silver may be perched and bullish right now, but here is why you should begin a set and forget savings plan and buy small amounts of gold along the way as well.

Some people plan that when they get large sum of money, they'll buy a lot of gold. Others prefer to stick with silver because it is more affordable and they like where it’s heading. They plan to buy it later when they have more money or when they swap their silver at the right time. Well, by the time the average person saves enough money for a large gold transaction, or same person is ready to do a swap with their silver, what makes you think there will a supply of gold to buy from? Remember, everyone will be thinking the same thing, and by then, it may be too late. Of course, there will be gold available, but at HUGE premium. As Franklin Sanders said, "This is what happened in 1978 and 79. People were trying to find some way to protect themselves; they ran into gold and silver. What most people don’t realize is that it’s a real small door, and when everyone tries to run in there at once, the price has to skyrocket to clear the market."

If you accumulate it slowly, you will be averaging out the price, capitalizing on buying on the dips as well. E.G. If you buy a 10th coin per month, you will have a one ounce of gold in 10 months! If you don't, you'll have ZERO ounces of gold in 10 months.

Gold is a good thing to constantly acquire as well due to its higher value and what that means in terms of storage. I have experienced first-hand that you need a lot more storage when it comes to silver. Let’s look at the sheer weight of $10K worth of silver x $20 per ounce compared to the same amount in gold coin, you could easily put $20K worth of gold in a safety deposit box and find room for 33 times that amount and not have to worry. Try that with silver and the bank storage fees would be ridiculous.

If you want to begin a set and forget savings plan in gold or silver, I can get you started on an affordable and flexible savings plan in a tangible form of wealth. Let me know if you are ready to take action and diversify!

By Kirsty Hogg
Goldwars.blogspot.com
http://www.fundsingold.com/
Goldvestments Copyright © 2010

Why Are There Premiums on Gold and Silver Coins?

This is a quick update with some buying tips in the area of premiums, for the first-time, small investor looking to purchase small denomination tradable coins or bars. I often get asked why smaller coins have a higher premium, etc. Or why gold/silver coins are not available at spot price of the metal. There is always premium on 999 fine gold and silver bullion.

Part of the premium, of course is a result of the refining, minting, administration and distribution fees for the actual manufacture of the coin. When you go to the gas station to fill up, you are not paying the spot price for a barrel of oil at the pump. There are many costs involved in the refining and distribution of fuel. We just expect that as a fact of life. It is the same for precious metal coins.
When the spot price of silver dropped considerably last year, the high premiums we were paying at the time reflected what was considered as a natural correction of what a more realistic price of silver should be based on supply and demand. The low price seems farcical as many people wanted to buy silver at that price, but there was low supply and long waiting times. Suppliers were charging 40% premiums. So if an economic event occurs that will spike the demand for an American Silver Eagle, and the mint has only regular reserves available, the high demand and low supply will push the premium higher.

SOME BEGINNERS TIPS:

Always research what premium you should expect to pay before buying. There's a few simple ways to do that:

1) Here's a website where you can see what to expect: 24hGold. Scroll down all the way to the bottom on the left hand side until you see "Let's Get Physical - BULLION - METAL VALUE AND PRICE" On the right hand side of the chart in green text, it lists the average percentage of premium to expect. Use this information to compare and shop around for similar products and rounds. There are other premium research tools at the top right of the site under the tab "BUY AND SELL GOLD ON EBAY"

2) Another good thing to do is a quick comparison directly on the Ebay site for a similar item. So for whatever you are looking for, type it into the Ebay search field. For example, type “100g bar silver”. It will come up with what they are being sold for that day/week.

3) If you have the time, take a saunter down to you local coin or precious metals exchange shop. Prices will change daily.
Your goal should be to accumulate the maximum oz's of gold and silver for your money as possible. Part with extra premium for a premium product that will offer added insurance. As an example you may consider paying extra margin for a smaller denomination or non-legal tender private mintage. Buy before the rush! When everybody is rushing into the bullion market at one time, premiums soar very quickly.

This will get you up and running to begin buying right away. Now for all of you seasoned gold and silver buyers reading this article, I welcome your comments and additional personal tips you can pass on to everyone.

Find out why I prefer privately minted bullion rounds and coins here.

Kirsty Hogg