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Mick Weinstein The Week's Best Stock Blogs

Mick Weinstein, The Week's Best Stock Blogs

Will Precious Metals Glitter Again?

by Mick Weinstein

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Posted on Friday, August 22, 2008, 12:00AM

Diamonds may be a girl's best friend, but gold and silver are her traditional safe havens during times of market uncertainty and rising inflation - like now. For investors who aren't interested in following the vagaries of mining stocks, exchange traded funds (ETFs) like streetTRACKS Gold (GLD) and Barclays iShares Silver Trust (SLV) have made investing in the physical metal much easier. All you need is a standard brokerage account and you can hold the equivalent of bullion with the click of a button.

This ease of investment in precious metals ETFs has contributed to run-ups in the metals' prices. As Hard Assets Investor reported recently: "The European-based platinum ETFs... together own about 365,000 ounces of platinum as compared to about 40,000 ounces at the end of 2007. All of that platinum stored by the ETFs has been taken away from industrial users and no doubt contributed to the rise in platinum prices."

Amidst a big selloff in precious metals over the past month (gold is down about 15% and silver has fallen about 30%), market bloggers consider their next move:

• David Templeton notes that the U.S. Mint remarkably stopped selling the American Eagle gold coin this week - the first halt since production began 20 years ago - because the mint's inventories were depleted during the recent fall in gold prices. That sounds bullish indeed, but Templeton thinks this demand may be short-lived: "When the speculators head for the exit, one could see a rapid decline in the price of gold."

• CFA charterholder and hedge fund advisor Cam Hui agrees that this gold correction may have further to run: "Investors haven't sold enough of their positions to warrant a call for an intermediate term bottom... (but) not all is lost for the gold bulls... smart funds... remain stubbornly overweight the materials sector, indicating that they haven't given up on their commodity bet."

• Yet Michael Fitzsimmons points to huge stated demand from bullion dealers like Kitco as reason to view the current market as "a wonderful opportunity" to buy gold vehicles. Fitzsimmons suspects that there is a "tremendous unwinding of leverage in the gold market causing a short term price drop that is neither fundamental nor warranted. When was the last time a confrontation between Russia and the U.S. caused the price of gold to drop? When was the last time rising inflation numbers caused gold to drop?"

• Hard assets expert Brad Zigler acknowledges that "gold has certainly been thwacked in the past few weeks. As much as gold has fallen, though, gold stocks have plunged even farther. The sell-off in mining stocks has been so deep that they look, at least to some, historically cheap in relationship to gold itself." Zigler finds options trader Larry McMillan suggesting a bullish play on this development - a put/call spread on the Market Vectors Gold Miners ETF (GDX) against the GLD.

• Silver expert Tom Szabo comments on the recent 10:1 split in the silver ETF, explaining how it's all about increasing liquidity in the instrument. Szabo owns SLV and believes that "[w]ith SLV baskets more like water now than sand, we may see the premier silver ETF go on an absolute gobbling spree in the months ahead. This, on top of SLV being possibly one of the most strongly held investment vehicles out there with virtually no decline in its holdings after a 40%+ price drop."

• Marc Courtenay has a bone to pick with those who think precious metals will continue downward: "I don't smell a bear market, I smell manipulators, paper-traders and self-styled gurus... the fact of the matter is the world that supported gold at $970 hasn't become a safer, friendlier, less inflationary place where the US dollar remains the bastion of safe paper currencies. On the contrary, the things that usually make gold a safe haven, money-preserving cache are increasing... For this reason, we expect a rebound will occur fairly quickly. Gold is a compelling buy under $800, with little downside risk and tremendous upside potential."

• Global macroeconomist Gary Dorsch thinks that gold's traditional "role as a safe haven in times of financial crisis might come into play again, if the Fed is forced into another round of rate cuts to fend off a systematic meltdown in the US credit markets." Moreover, "the direction of gold prices and inflation expectations also hinges on the direction of world oil prices. It's doubtful that the ECB hawks and the Group-of-Six central banks would have been so successful in knocking gold and oil prices lower without the help of Saudi king Abdullah, the central banker of oil."

• Tim Iacono, author of the blog ‘The Mess That Greenspan Made', comments on gold's divergence between the paper and physical markets and the curious lack of inventory reduction at the GLD ETF.

• Finally, James Conrad believes something's way out of whack in these markets. "North American shops are completely bare of silver. Indian shops are empty of both silver and gold. Even the Indian banks don't have any gold or silver." According to Conrad, the big western bullion banks, based in New York and London, control both the gold and silver trade. With "true physical metal still in severe shortage, the metal will disappear quickly, as the price goes down below where true market forces should be bringing it to reach equilibrium between supply and demand... We have a disconnect between reality markets and fantasy markets." Conrad owns both physical gold and positions in GLD and SLV.

 

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  • Terry - Monday, August 25, 2008, 12:28PM ET  Report Abuse

    • Overall: 4/5

    To the laughing idiot who is recommending finacials, or those who currently own financials I recommend exiting quickly and buying gold and silver bullion as well as gold and silver miners. Concentrate on the producers. Don't listen to the market shills telling you to buy financials, tech stocks or bonds. They are trying to unload these on you so they can buy gold and silver. So far, we have only seen the tip of the iceberg with this collapse. Play it smart and protect your wealth.

  • jarrett - Monday, August 25, 2008, 10:27AM ET  Report Abuse

    • Overall: 3/5

    It's all about the oil markets...gold FOLLOWS oil. If oil rises, so too will gold and the other comoddities. Oil is the blood of the economic body and it affects all things eventually. Why do all these gold articles aim to discover some other reason?

  • Da Big Guy - Monday, August 25, 2008, 9:41AM ET  Report Abuse

    • Overall: 2/5

    I didn't see RK's Blog. I thought he was the precious metal expert!

  • Yahoo! Finance User - Monday, August 25, 2008, 5:10AM ET  Report Abuse

    • Overall: 4/5

    To those who are calling the commodity "bubble" and "bear". To those who think gold is just a commodity like Oil and Wheat ... I say, why not?! Commodities are being consumed by humans like drunkards. In fact, I offer you a unique prediction ... one day the WATER that you drink will trade as ONE of the commodities ... read the bible, "A quart of wheat for a day's wage". The problem with people nowadays is when you can't deal with it, DENY it, or if that doesn't work, see a shrink and DENY it some more.

  • Love2Fly - Monday, August 25, 2008, 3:22AM ET  Report Abuse

    • Overall: 3/5

    "There's a lady who's sure all that glitters is gold...." Maybe we should go back to Alchemy to convert any metal into Gold, oh but wait, that will only decrease its value. The article was a little too heavy for me but I did like some of the comments. I have lots of savings and I worry a little that all this saving will continue its drop in value as the $ falls; However, I think any investment could break you. I like the comments posted on the 24th @ 7:17pm; most self-made millionaires are dedicated hardworking people that worked 20hrs/day 7days/week to make their first million, just look at Gate's life back in the late 70's and early 80's, luck and timing are also major factors. I know I don't have the dedication required to be a millionaire, so I just accept to live in comfort and not in luxury.

  • Yahoo! Finance User - Monday, August 25, 2008, 1:21AM ET  Report Abuse

    • Overall: 4/5

    For over 4000 years, gold has been used as MONEY. It will always have that function. Gold does not increase in value. Rather it is the paper currency that is falling in value. No paper currency in history has survived. The US dollar was backed by gold until 1971. It's only been a little over 35 years since it lost this backing, and it's already fallen to record lows relative to other currencies over the last year. Take a lesson from history.

  • Yahoo! Finance User - Monday, August 25, 2008, 12:47AM ET  Report Abuse

    • Overall: 3/5

    To the person commenting on how silly and useless it is to own gold and silver: Well, maybe. I'd like to argue that most people that buy and hold gold and silver do it because they realize there has never been a single fiat currency in the history of the world that has not reverted to its intrinsic value of zero, and buying and holding precious metals is simply a way to provide insurance against that very simply fact. Your comments that gold and silver return no dividends that common stocks is completely correct, but neither do they ever lose all of there value that so many common stocks do, including, currently, many of the financial stocks. Will the financials return? Yeah, some will. Most won't. These guys have leveraged their businesses to the moon and most will and deserve to fail. Sadly, our corrupt banking system led by the completely corrupt Federal Reserve will bail out most of these guys to the total detriment of American taxpayers. Americans have trusted our money supply to our government and to our banks. Our mistake. That money supply is now being completely inflated away to nothing. Your comment that you could always purchase a computer and use technology to earn a living and create wealth is true as well (as that's how I currently make my living), but heaven forbid a person might want to save some money aside and enjoy a decent retirement instead of constantly looking for new ways to keep running faster and faster against inflation. You certainly can't put all of your beans into a savings account. Not at 1% per year with inflation raging along at 5% (which is in reality closer to 13%--see shadowstats.com). And you could try to get a decent return on common stocks as you suggest, but you better watch those stocks closely and make sure you're in the right sectors at all times. No, it's important to denominate your savings in something other than US dollars. America has borrowed itself into oblivion, and the only thing that's keeping us together as a superpower is our ability to continue to attract foreign capital to fund our profligate lifestyle. And what did you say about our creating the things the world wants and needs? When's the last time you were in WalMart? Or Target? Or Macys? Or Home Depot? There's practically NOTHING that's made in the USA anymore, and if it is it's being sold to someone else at a yardsale because it doesn't work any more. To me, the one main advantage that the United States still has on other countries is that we're still relatively free. We are able to innovate and conjur up new products and inventions and sometimes even manage to market them and build up a business, but with government getting bigger and bigger and restrictions to entering business becoming more onerous by the day, even that's starting to look a little dicey. No, I'll let you hold on to all of your common stocks and increasingly worthless dollars. I'm sinking my beans into real stuff, like underpriced commodities which right now is just about everything: oil, gas, base metals, agriculture, precious metals, coal, water, etc. Your main asset is extraordinarily overvalued. Mine undervalued. I'll be buying your assets from you in about 8 years, and I'll be buying it much cheaper than you paid for them because my money will be worth more.

  • SandyLady - Sunday, August 24, 2008, 10:24PM ET  Report Abuse

    • Overall: 2/5

    Gold is a commodity. Period and paragraph. It is NOT pegged to the dollar, Euro, Aussie or Swiss franc. So where does all this hysteria come from? Since gold is a commodity (just like wheat, or corn or lumber) I would rather have a few Eagles in my safe deposit box than an index fund GLD stock share. A $20 Eagle is much more of a value and you know it will always be worth at least $20.

  • Yahoo! Finance User - Sunday, August 24, 2008, 8:49PM ET  Report Abuse

    • Overall: 1/5

    I laugh how people can actually sit here and talk about investing in gold and silver. Like peter lynch says, most people forget that stocks ever interested them in the first place and before you know it, they are off to all these side bets, put call spreads, straddles, and all this other nonsense. Gold and silver is nonsense people. Its hard enough making money in stocks so how in the world are you going to make money in gold and silver? Gold has no underlying fundamentals and no balance sheet. I laugh because most investors are idiots. And do you honestly think you can make money in gold or even commodities now? Everyone and their mothers are in commodities and all the iflation data is now known. Its priced into everything. Sell all your gold and move on to buying quality financials and quality companies that actually sell products in demand. People always love investing in something they have absolutely no clue about. Its hillarious. I guess we need people like that so people like me can make money off of them!

  • fedex11 - Sunday, August 24, 2008, 8:26PM ET  Report Abuse

    • Overall: 4/5

    nice article i for one expect commodities to jump very soon

  • yattaboy - Sunday, August 24, 2008, 7:21PM ET  Report Abuse

    • Overall: 5/5

    Fascinating article, for the different points of view. I almost didn't read it since there's so much fluff about metals. It's got me thinking, though it's hard to pick a strategy...GLD put/call spread, long SLV, physical gold, etc. One thing for sure, it's got something for the metals bulls and bears.

  • Yahoo! Finance User - Sunday, August 24, 2008, 7:17PM ET  Report Abuse

    • Overall: 3/5

    I swear. Most of you really were born yesterday! You seem to forget the lessons of history that do not bid well for precious metals. First, before I go any further, let me tell you...I have indeed been a precious metals investor in the past...and yes, I actually physically held the metals. But, my investments were relatively small (thank goodness). I cashed-out of gold and silver when I realized they were not paying the returns that common stocks were giving me over time. Now, please name me just ONE person that has made a tremendous fortune with precious metals. Name one. Can't do it? I knew it. I can name a few that lost their backsides in metals though - the (previously wealthy) Hunt Brothers of Texas back in the early 1980s. Ok, now name some of the richest people on the planet...Warren Buffett, Bill Gates, Paul Allen. Where did the majority of their wealth come from? Owning stocks. People that keep saying that gold is the best investment because our economy will somehow crash and burn, obviously don't have a handle on the geopolitical importance of the USA. IF we were a third world country, then yes, you would want your currency backed by something like gold or silver. However, what makes the USA strong is not its precious metals, but rather, our ability to invent and mass produce what consumers around the world really want. If I gave you the choice between owning 1 ounce of gold (worth roughtly $850) or a brand new computer system with the same value (assuming you had no computer), which would you take? Personally, I can make far more money USING TECHNOLOGY than I can by staring at a small piece of shiny metal. I can go on eBay and sell stuff (heck, I have even bought and resold things on eBay at a profit). Or, I can join a multitude of home businesses that are internet based. I could type term papers for college kids that never bothered to take typing class. What I have just done is given you the REAL REASON as to why the USA no longer needs the gold standard; our technology and industry is what makes us a world superpower, that is where the real wealth has been for the past 100 years. The people that suggest gold and silver as investments are looking back to ancient times for a cure for the uncertain times that we live in now. Guess what? They never had airplanes in Ancient Greece. Nor did they have home computers in Ancient Rome. If you really like owning gold and silver, go ahead and buy some. I am not saying it is a bad thing. I have done it myself in the past (and still own some now that I want to SELL). But the only way to make significant amounts of money in ANY investment is to dive in with most of what you have. Would I want to be holding onto a precious metal with the intent of making money...or even preserving capital? No way!

  • James - Sunday, August 24, 2008, 2:09PM ET  Report Abuse

    • Overall: 3/5

    Oil is the new GOLD if you are looking for an inflation hedge. We have been writing about this on our blog www.stockshotz.blogspot.com Inflation is going to get worse in the very near future. The fed has been lucky that the credit markets have been tight. Once they get going again---we are going to see wild inflation.

  • Yahoo! Finance User - Sunday, August 24, 2008, 12:09PM ET  Report Abuse

    • Overall: 4/5

    The Federal Reserve is on the verge of monetizing our debt obligations, as foreign loans inevitably begin to dry up. It is during this period of monetization that we will see our money supply (already grossly inflated over the previous 35 years) completely balloon out of control. Very few people understand this. Very few. Those that do are currently purchasing precious metals and taking delivery of them. The general American public still does not have a clue how money works, where/how its made, what its function is, how our system works, and so tremendous faith is placed with our bankers and politicians. As soon as the smallest percentage of our population begins to understand that the dollars they hold and save are backed by absolutely nothing, that is when we'll see gold and silver fly away, becoming virtually impossible to obtain. Right now it's still possible to purchase these metals (although much harder than it was just a few months ago), using overvalued US monopoly money to exchange for currency that has never become worthless in over 5,000 years: gold and silver.

  • Mike - Sunday, August 24, 2008, 9:40AM ET  Report Abuse

    • Overall: 4/5

    So lets see, gold and silver are the standard for what? Gold is a belief standard without measurable intrinsic value. So long as the speculators and market makers keep the belief alive, the suckers keep rolling in.

  • Mr. Seminole - Sunday, August 24, 2008, 8:06AM ET  Report Abuse

    • Overall: 3/5

    all of you people saying gold is going to heaven are the very reason gold will crash to 600. Until there is a mass exodus, the market will keep crashing. The market will push down until you all give up and sell, and that day will be the day it starts to go back up.. 600 gold here we come!

  • Yahoo! Finance User - Sunday, August 24, 2008, 1:26AM ET  Report Abuse

    • Overall: 3/5

    To the guy that suggests buying real estate as an investment (sounds like raw land), good luck with that. With blue chip stocks (Exxon-Mobil, General Electric, Proctor & Gamble) you will receive a dividend every 3 months. In many cases, that dividend will increase over time. So, right now most blue chips are paying roughly 2.5% a year, with hopes of increasing each year. With the raw land, instead of RECEIVING a dividend, you will be paying property taxes...and chances are, as local governments run out of cash to fund the multitude of social programs that they started, they will be looking for ways to increase taxes (including property taxes). So, unlike dividend generating common stocks, you will be paying roughly 3% a year just to hold onto your investment. If I suddenly need some cash, I can go online or pick-up the newspaper and know EXACTLY what my stocks are worth. I can call my broker to make the sale and 4 days later I can pick-up the check (or have the funds wired to my bank account). The nice thing is, if I have $100,000 worth of stock, I can sell maybe $20,000 of it, if that is all I require. If you have a parcel of land, you will again have to PAY someone to value the land. Then, hire a real estate agent or broker to market the land. Several months later, you might get a nibble. But, as with most real estate deals, the potential buyers will want to haggle about the price. Does it come with mineral rights? How about an insured deed? Better pay an attorney to do a deed search! Never know, maybe it's been in escrow for 20 years. Who is going to pay the closing costs of several thousand dollars? Yeah yeah, real estate is some investment. Just ask the tens of thousand of people moving through foreclosure right now, or even the builders that at sitting on raw land that they can't build on, because the market for new homes is too soft.

  • steve - Saturday, August 23, 2008, 9:22PM ET  Report Abuse

    • Overall: 4/5

    If inflation is 5% and it will be double digit by next year. If my savings account is paying 3.4% and my "no touch" long deposit CD is paying a little more; by the time you finish reading this you have lost money from your wallet or savings acount/CD..Just what stock are you going to buy, that will save your as*...? You know, ...one that will make you 15-20%?... The gold/silver I bought is "floating" and will pay me in tomorrows dollars WITHOUT inflation devaluation....no loss.... My actual lifesaving buoy is finding a perfect piece of land in a perfect location (remember the 3 rules of real estate..Location, location,loc..) and holding on in a very comfortable place. Please remember in the next 2-3 years that it's not making money...it's losing less than everyone else.

  • Squanto - Saturday, August 23, 2008, 8:20PM ET  Report Abuse

    • Overall: 4/5

    The precious metals price drop is a buying opportunity. I just tried to buy some silver at Kitko and they don't have any bars or silver eagles and they don't know when they will be able to get them. Supply down and price down? I don't think so. This is a blip that won't last long.

  • "Jackson Cash" - Saturday, August 23, 2008, 11:49AM ET  Report Abuse

    • Overall: 3/5

    When the governent quits selling gold, to me it is an indicator that you know what is about to hit the fan. Deprive people of the one true hedge amid the sinking titanic. Thanks for absolutely nothing. Folks, you need to purchase what you want now because it will be utterly prohibitive to obtain financially in the future... you can bet on it. Try and buy gold, or silver -- prices are WAYYYYYY over spots which tells me the same mafia racket strategies on energies are being leveraged against citizens in metals. BULL$HIT!

  • Yahoo! Finance User - Saturday, August 23, 2008, 11:12AM ET  Report Abuse

    • Overall: 4/5

    Why is there a shortage of physical silver and gold? Why has the US mint cancelled the gold eagle program? Let's see... Could it possibly be because the price of gold and silver is being manipulated? Maybe the public is too smart for that. They were buying up silver and gold at market prices - manipulated prices, in other words, and the government was running out of the real thing and didn't want to sell at the low, manipulated price. In any event, I'll take the real thing - gold - over Bernanke's fiat currency any day. America is becoming a joke.

  • Gregory - Saturday, August 23, 2008, 10:34AM ET  Report Abuse

    • Overall: 4/5

    Imagine a graph showing the last commodities bull market. The graph would begin at 1971 and end ''around'' 1981. There is an arrow pointing at 1974-75, and beneath that arrow it says: ''YOU ARE HERE.'' // Ps... I just LOVED the comment by the guy who thinks gold will crash at the *same* $850 as the last bull market. $850 adjusted for inflation is *now* $2500. This is going to be a double header, and we are only in the second inning of the first game. // Lastly, anyone who focuses too hard on the price will end up holding a bag of worth-less paper. Not completely "worthless", but rather "worth-LESS"... *much* *much* LESS. If the dollar can maintain it's valuation by the time the government is done nationalizing Fannie, Freddie, GM and Ford, (to say nothing of recapitalizing the FDIC)... then this truly is "Bizarro World."

  • Mark - Saturday, August 23, 2008, 9:56AM ET  Report Abuse

    • Overall: 4/5

    When the government bails out all of these banks by monetizing all of their bad debt, it is a sure recipe for a lot more inflation. The gold price is more likely to go up than down over time, but there can be a lot of volatility. Keep buying on dips until the banking crisis is over.

  • Maloogie - Saturday, August 23, 2008, 6:28AM ET  Report Abuse

    • Overall: 4/5

    4 Real Silver 1962 dimes bought a gallon of gas in 1971, melted down today, that silver'd fetch $3.80, the same gallon of gas. Your 1971 240Z Nissan, $3495, is now $34950, your 1971 $40K house, now $400K (down from $600K), the 10K salary you started with 1971, better be 100K today. That's 7% inflation yearly. All the rest? Govt BS designed to prop up worthless paper. Thomas Jefferson said, paper's the ghost of money. "Not worth a Continental", paper based solely on full faith and credit, was his experience--wheelbarrows filled with them for a loaf of bread. That's why the Constitution says, only gold and silver is money. Nothing's changed and getting in high and selling low is the only downer I see amongst naysayers. 1980 gold bubble was caused by Bunker Hunt cornering and defrauding silver futures. Many were fooled, but their loss doesn't disprove the bankruptcy of only paper over time. Their experience only shows, the decline of paper, isn't a straight line. It'll have to be stuck with "inevitable". 1933-gold banned to provide paper that if you don't invest, you lose 3-7% yearly. That was to help us gunshy invest to get out of Depression, another program totally unrequired, as WWII actually did the expansionary job. Verbiage "paper held redeemable for gold or silver" slowly disappears from our currency. 1971, we abandon fixed gold at $35/ounce, it pops to $105 nearly overnight, a triple in 38 low inflation years. 38 years later, it's up TENFOLD, a 7% annual increase. Ahead of itself? Hardly, with 7% inflation annually, 15% during the Carter adminstration alone, all the fiddling with what constitutes "core" versus non core a joke to be played upon by the unwary, who think housing ought to "increase". Housing isn't increasing, the value of the paper money that housing represents is decreasing, just like that gallon of gas and those four silver dimes. Fed has a vested interest, you don't need a Fed if you use gold and silver, says Alan Greenspan. Of course you lose another power mad hand on a fabricated tiller, don't you. And that wouldn't do at all. So be prepared for dollar worth a dime, turning into dime worth a penny, and it wont take 37 years this time. It'll take ten, and I'll have a horde of gold and silver to have the appreciation, or in this case counter the depreciation, of the dollar to a dime to a penny, in those ten short years.

  • Yahoo! Finance User - Saturday, August 23, 2008, 5:25AM ET  Report Abuse

    • Overall: 3/5

    We are going to ask bloggers for advice on investing? Tell you what. I have every check I have ever written, every bank statement I have ever received and every investment statement since the age of 14. I won't bore you with all details about how I walked 6 miles to school barefoot, then went home to plow the snow covered fields using a latern. Just suffice to say that I did not come from a wealthy family...nor even a middle class family. So, in the course of 25 years since graduating from college, I have gone from less than zero (student loans) to having $1,200,000 in LIQUID assets. Add another $300,000 for hard assets (home, collectables, etc.) and I am worth 1.5 million dollars in total (and no, that does not make me wealthy). However, I would love love love to see the personal balance sheets of these bloggers that tell everyone else how to invest their money. Enough said.

  • Yahoo! Finance User - Saturday, August 23, 2008, 5:13AM ET  Report Abuse

    • Overall: 5/5

    I am giving this article 5 stars because it is fair and balances and does not take a side on the issue of where precious metals are headed. Smart move. As for all of the self-proclaimed pundits on this message board, allow me to also weigh-in. I have a close relative that bought gold at $800 an ounce around 1980 (the last time we had sky high inflation and economic woes). From $800, gold declined steadily. My close relative commented - just don't you worry. Gold will come back and go over $800! You just wait! And wait he did; he waited for 28 years for gold to once again exceed his purchase price of $800. Congratulations. So, what could he have done with his money from 1980 to 2008? Well, of course, he could have bought thrown darts at the financial section of the newspaper to help him buy stocks - just about ANY stocks. You see, in 1980, the DJIA was trading at slightly under 1,000. Even with the recent BEAR market in equities, we stand at more than 11,000. Add in all those dividends paid by the blue chip companies and we are talking about the opportunity to turn every dollar invested into at LEAST eleven dollars some 28 years later. So, my gold-buying relatived had to wait 28 years to unload his gold at a total profit of roughly 20% (let's not even talk about the cost of safely storing a precious metal). Whist the monkeys throwing darts at the newspaper were up more than 1100%. Ok, so I am the genius that bought stocks instead of gold and silver, right? Nope. I too bought those shiney metals, but when they were way down in value in the late 1980s and early 1990s. Did I make money? Yes. A little. (I obviously sold too soon.) But, the invest return on gold and silver for me, personally - has been well below what I have been earning in common stocks. So, take it from someone that has been there and done that. Precious metals are not the place to be for most investors. Buy yourself some nice blue chip stocks...or a well managed mutual fund with low fees...and let's talk in another 28 years...you will be thanking me.

  • BarJ - Friday, August 22, 2008, 11:25PM ET  Report Abuse

    • Overall: 3/5

    The price of extraction has risen for almost all mining cos. to a point that the gold price can not go down much more without making it a losing proposition to bother mining it. Further, the gold traders (read Goldman, JP, etc ) are all on the FED leash and jerk to wherever the FED wants them to or no more loans, etc. There is a huge anti-gravity machine conspiracy going on but it will ultimately fail and as the US economy declines, it will be USD down, AU up.

  • Dfgdfgf - Friday, August 22, 2008, 10:13PM ET  Report Abuse

    • Overall: 3/5

    Let's face it, market's a mess; US is no longer the sole global power in the world. Not the end of the world, it wasn't for Britain...but it's a new world and I don't think Americans have accepted this yet. Don't count on 9% per year long term US returns like we used to in the past. How to beat inflation without incurring the risk/volatility? Well, there's the principal protection with market upside potential model via call options: http://everydayfinance.blogspot.com/2008/08/financial-model-1-preservation-of.html Top fund of 2008; flat on the year in a year like this! Beats in markets up and down. http://everydayfinance.blogspot.com/2008/08/best-mutual-fund-of-2008.html #1 High Yield stock at 16% and it's not a commodity stock. http://everydayfinance.blogspot.com/2008/06/1-high-yield-dividend-stock-of-2008-at.html

  • steve r - Friday, August 22, 2008, 4:13PM ET  Report Abuse

    • Overall: 3/5

    When the paper money is not backed. When the folks holding US paper go to market and find the muscle is gone from the US paper...the world will look for something that HAS REAL value....An ounce of gold/silver a barrel of gas, food, fresh water. A line starts forming. When unemploy't gets bigger, a few more banks hit the dust, oil goes up as the oil well owners sense real power in their tightening hands....ever notice when oil goes up so does gold sales; when the dollar goes down, the silver goes up. When George puts us so far in debt that the lenders question our ability to pay. Auto makers are afraid, VERY afraid, airlines charge for drinking water, consumer buying goes.........down and down. I'm sure it's the gurus making gold a good investment, it's just hype...that guy must drive a Yugo,

  • Slugabug - Friday, August 22, 2008, 4:13PM ET  Report Abuse

    • Overall: 3/5

    "Gold is not a sensible investment except in times of true catastrophe. We aren't going that low, because McCain is going to win and O'Bomba is going to lose, and the recent market strength seems to indicate that." Whoever wrote this is way out of touch with reality. The next President is going to have a 10 Trillion dollar National Debt to deal with. One candidate helped create that debt and the other one had to get a mafia loan on his house. My bet is on gold.

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