How do I go about buying gold and/or silver? And is it a good idea at this time?
Terry Says: I’ve written extensively about that in the past because industrial metals tend to become more valuable in an economic boom. Gold is a hedge against inflation. Unfortunately we are in a global slump (note falling oil prices) and there is little fear of inflation right now. BUT, of course, that is the time to buy — when no one wants these things! Problem is, prices could go even lower. I still own all the gold investments I made in the past because I know the world’s “central bankers” will never let the global economy go down the drain. Instead, they will “print” — devaluing paper money.
I would suggest three “easy” ways to buy gold:
1. Buy gold bullion coins. A one-ounce American Eagle trades for about 5% premium (maybe less at a good dealer) to the daily price of gold. Deal with a reputable dealer. (In Chicago I use Harlan J. Berk, Ltd at 31 N. Clark St.)
2. Buy the exchange traded fund (ETF) called GLD — It trades on the NYSE, and its daily price is a proxy for the price of gold. In other words, when gold prices move UP this stock goes up, and similarly, the share price falls when the global price of gold (set in London, and on daily financial futures markets) goes down.
3. Buy a mutual fund that buys shares of gold mining companies, many of which pay dividends. I recommend going to www.USFUNDS.com and buying their Gold and Precious Metals Fund (USERX). But read the prospectus first. (Full disclosure, I have owned this fund forever!) But every other major no-load fund company — Fidelity, Vanguard, American Century — have gold funds, as well.
Remember, this is a small portion of your portfolio — a”hedge” against future devaluation of the dollar. Right now that does not appear to be on the immediate horizon!