|
|
2003 Vancouver Investment Conference. January 26 & 27,
2003.
Featuring an incredible line-up of speakers - covering
all types of direct investments in Canadian public companies
- speculative investing, resource exploration, oil &
gas, world outlook, investment strategies - and more!
Register at www.cambridgehouse.ca
|
|
How To Buy Gold
|
|
|
Gold is not necessarily a trading vehicle; it's
a core holding. Buy it as privately as possible, put it away,
and forget about it.
You can accumulate gold using the commodity
exchanges, in 100-ounce contracts, but that makes no sense
unless you are dealing in large quantities. For practical
purposes, you want to have the metal in your own possession,
except for what you might store abroad. And you want coins,
not bullion, for the same reason coin has always been used
in transactions: it's more convenient, and you know exactly
what you are getting without using a scale or calipers.
Which coins should you buy? I suggest strictly
bullion-type coins that trade for close to their intrinsic
value. That would include Austrian 100 Coronas (containing
.98 oz. gold) and Krugerrands, which are both available for
2 to 3 percent over the bullion price and represent the best
value. Maple Leafs and Eagles (each one ounce) trade in the
5 percent premium range. Sovereigns, which are the world's
most recognized gold coin, and are semi numismatic to boot,
are an excellent value at a 4 to 5 percent premium; an additional
convenience is their small size (.2354 oz. gold). You should
emphasize sovereigns in your purchases.
Few Americans today own meaningful amounts of
gold coins. Take a straw poll among 10 or 15 neighbors; it's
unlikely any of them have even seen a gold coin, much less
buy them monthly. For 99% of the population, the importance
of owning gold is in the "you'll find out" department.
Determining when to sell an investment is at
least as hard as figuring when to buy. With gold, more than
almost anything else, you will be tempted to hold it, or buy
more, when you should sell. That's because the next major
run in gold-the last on, I believe, before we return to a
gold standard-will take place in a chaotic environment. The
metal will grace the covers of Time and Business Week, and
everyone will try to buy it in a panic. I hope to look around
then and find some other value that's very cheap, something
worth trading my gold for. Maybe it will be corporate convertible
bonds with 20 percent yields. Maybe it will be Japanese stocks
for a fraction of book value. Maybe it will be real estate,
when it once again shows large cash-on-cash returns.
No one can know what it will be, but something
will be very cheap when gold is very dear. Say gold is triple
its present level and the investment of the future is one-third
its current price; that is, arguably, a nine for one return
on capital. It may not be possible to get out of gold and
into something else at the best possible moment. But if you
keep looking with an open mind, it will be worth the effort.
This decade should see the final bull market
in gold, with a total restructuring of the world's financial
system. It's hard to envision just another cyclical extension
of what's been going on for the last 20 years, although it
also seemed unlikely back in the early '80s when the economy
not only muddled through but gave birth to a huge bull market.
The grand finale of the upcoming last leg of
the gold bull market should be reminiscent of the better scenes
from the movie Rollover, if not Road Warrior. I expect to
see gold well over $1,000 during the next few years, and I
suspect I'm being conservative in that forecast, which is
typical at the close of a long bear market.
********
|
