Gold Investments
Why to Invest In Gold and the Best Ways to Do It…Gold investments recommended by IU
Gold is the ultimate hedge against catastrophe – in world markets or world politics. On that basis alone, gold investments deserve a place in every smartly constructed portfolio.
So yes, Investment U will show you exactly how to use gold as a hedge for the kind of security most investors crave.
But as Investment U will also show you, the yellow metal can be used as a dynamic profit generator, too. You just need the right tools for harnessing potential in gold investments, and IU will provide them.
And within days, you could be outperforming your neighbor’s tech-stock portfolio with “the world’s most conservative investment,” which is what many consider gold to be.
For example, stocks on gold mining companies rose – ON AVERAGE – 489% between 2000 and 2003. The “high-flying” Nasdaq by comparison LOST 66.12%…
But before we get to the ways you can maximize your profits from gold starting today, let’s start with this basic question: Should you have gold investments in your portfolio at all?
At Investment U, we believe that you should, as part of our own systematic approach to investing. Here are just a few of the reasons:
Three Reasons to Own Gold and Gold Investments
1. It’s super cheap. Gold is cheap, while stocks are expensive. In January of 1980, both the Dow Industrials and the price of gold were at the same level: 800. Now, nearly 24 years later, the Dow is near 10,000, while gold is less than half its January 1980 value.
2. Governments will make our money worth less to pay off their record debts. Governments can print money to pay off their debts. But they can’t create gold. The supply of paper money can be infinite. But the supply of gold is extremely limited (they say that the entire gold production in the history of the world could fit on the basketball court at Madison Square Garden). And it’s difficult to extract. Bill Gates could buy all the gold mined in the world in a year from his checkbook.
3. Gold should do well in major international conflicts. The price of gold was fixed during World War I and World War II. But silver, for example, rose by over 100% in both world wars. It’s been rising for the duration of the War on Terrorism. It all comes back to #2, above…governments ultimately print money to pay for wars.
Three “Non-Traditional” Ways of Trading in Gold Investments
You can make 500% in gold stocks, or 50% in raw gold. You can even make thousands of percent in futures and options – or you can lose it all. Let’s cover the various options in gold investments, and the risks and rewards associated with each, starting with the most risky…
1. Futures and options on gold.¼br> Yes you can make thousands of percent in these in a gold bull market. And yes you can lose all your money, and then some (in the case of futures). While I don’t recommend this route (so I won’t discuss it further), if you’re interested in pursuing it, someone we trust that has been doing it for 20 years and provides excellent personalized service is Sue Rutsen (www.suerutsen.com 800-345-7026).
2. Junior mining stocks (exploration companies).¼br> Phew…these are much too risky for my blood as well. They say only one in 10,000 exploration companies will find a mine and bring it into production. For the lucky one that’s found, the average cost of finding and developing a gold mine in Canada, for example, is $100 million (figures from the book Bre-X by Diane Francis). The cards are stacked against you in the junior mining stocks, so I generally avoid them. But they can and do rise many hundreds of percent in a gold bull market. How lucky are you feeling?
3. Gold stock mutual funds. ¼br> This is probably your smartest way into gold stocks. Chances are, you’re not an expert in analyzing assay results. That’s okay. Guys like Frank Holmes at U.S. Global funds (www.usfunds.com) know how to find the winners. His World Precious Minerals Fund is up 68%, and his Global Resources Fund is up 75% year-to-date-the best performer in its sector by far. Learn more about Frank’s three different funds with gold exposure at www.usfunds.com
Profiting from Gold In Limitless Ways
The above are just a few examples of how Investment U readers have learned to profit from gold. There are many more, and all fit within the IU system for investing – a sound approach that involves diversification of your portfolio, limiting your downside risk, and maximizing your upside potential with every investment. (It also involves a good dose of “against the crowd” wisdom… to find out more, just click here.)
Sometimes, you’ll hear about traditional gold plays, such as physical bullion or certificates of ownership. But you’ll also hear about gold investments practically no one else is profiting from – despite the fact that some of them are among the most profitable!
Also, check out coins as one of the gold investments you could make solid gains on this year.
As IU President Dr. Steve Sjuggerud says: “People who buy most of my investment recommendations and generally love what I have to say have still not bought coins. Meanwhile prices are rising fast…”
For most people, gold coins and gold investments in general have been a horrible place to be for nearly 20 years, Dr. Sjuggerud concedes. But take a look at this gold coin index in our Investment U Charts area.
As you can see from the chart, gold coins bottomed (after losing over 80% of their value) in early 2001 and are now up 50% since then. Wow!
Even with the 50% move, we’re still 75% off the 1989 highs in gold coins. But nobody cares.
If you want to make extremely large returns, you’ve got to find value where others see dead money, and then be willing to buy what nobody wants… like investment-grade gold coins. Shares of Lucent or Cisco simply aren’t going to make you hundreds of percent.
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