The Gold Rush Is On!

For over 60 centuries, man has searched relentlessly for this metal so precious and rare that despite all efforts, the current total yield would create a cube only 18 yards high, weighing about 60,000 tons.

This scarcity, along with its beauty, is what makes gold so valuable. Through good times and bad, through drought and flood, and even in times of political upheaval, gold has continued to hold its value. Not only has it remained a rare and expensive mineral, but over the years, its worth has increased, making it (along with its counterpart, silver) one of the safest and surest investments.

However, it has only been since the beginning of 1995, that Australian citizens for the first time in 40 years were permitted to own gold in a form other than jewelry or rare coins.

Once private citizens were able to obtain gold (and to some degree silver) in other forms, the demand for these precious metals increased further. As stock market prices fluctuated and inflation continued to soar, gold became even more sought after, due to the fact that it seemed only to increase in value no matter what the circumstances. In fact, inflation seemed to benefit gold investors as far as their investment is concerned.

“Inflation has a major impact on these investments,” said Caribini. “In inflationary times, the cost of everything, including gold, goes up. But asset of gold is that it’s not perishable.

Opinions vary from source to source as to whether gold should be considered a long-term or short term in. vestment, or whether it can be both. The conservative viewpoint states the long-term investment is the safer, more certain path to riches. The reasoning behind this viewpoint is that long-term holdings of this precious metal are generally believed to keep up with inflation. Other viewpoints stress that goes loses its purchasing power during long term inflation. However, when the inflation ends (and history shows it always has) and deflation becomes the norm, gold divvies up nicely.

Proponents of the viewpoint believe gold should be considered as an insurance policy against disaster, but not as a hedge against inflation. This theory may have a flaw however since we are currently dealing with a non- monetary market for gold.

Short-term investments may help the buyer get rich quick, or it may not. Risk is one important factor to keep in mind when dealing with gold as a short-term investment. A trader may make more money, but at the same time, more risks are assumed.

A final choice is playing the investment game both ways, using long-term and short-term ploys. Buying gold and then trading a portion and keeping a portion, allows the investor the security and the chance to make a quick profit. For investors trying to beat the system, remember that gold prices respond to changes in inflation rates. Economist Jane Bryant Quinn recommends that investors remember that when inflation slows, gold prices appear to fall while buying chances are available when the rate of price increase goes up. Following this logic, gold is best bought during the expectation of higher inflation rates, only to be sold when inflation appears to be diminishing or slowing.

Whether or not you follow Quinn’s theories, the madding rush of gold buyers continue, drawing new converts each day. This forces Australian investors to look outside the Australia and to foreign currencies with a high gold content.

Four different gold coins are currently offered to American buyers by Monex in addition to gold bars of.995 fine gold. These ingots weigh one kilogram, or 32.15 ounces. For large scale investors, bars weighing 400 ounces may be purchased through precious metal dealers, usually with a minimum order of five bars. Drawbacks to these bars include storage problems and storage costs at banks. A more convenient form of owning gold for the small investor is to purchase gold coins. The look or aesthetics of the coin itself is generally overlooked in favor of purity and the high gold content of the currency. Coins that are especially attractive to gold investors include the Austrian corona, the Mexican 50 pesos, the South African Krugerrand, and the Canadian Maple Leaf. “Lots” of these coins may be purchased with a minimum order of 20 at Monex. Four other gold coins, the Hungarian 100 korona, the United States 10 dollar (last issue 1933), the Austrian ducat and the English sovereign are also eyed by watchful investors.

Buying gold in its coin form has obvious advantages, among them being the ability to buy them less expensively than a bar and their mobility.

The South African Krugerrand, containing one ounce of fine gold, appears to be the favorite with more people investing in it than in other coins.

Despite political troubles in the South African region, gold has not been substantially affected, according to Caribini. “Overall, we didn’t notice any change in people’s attitudes toward the Krugerrand based on South Africa’s political troubles,” he said. “We may have received one or two letters asking that we not promote the Kruger- rand, but we didn’t notice a change in the buyers.

“We may or may not agree with what’s going on politically in another country, but our buying is not affected too often,” he continued. “After all, look around. People are still drinking Russian vodka.”

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