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Faith in the Bailout? Or in Gold?

blog1With the U.S. government now struggling to steady the teetering economy, and bailout after bailout being sucked down by greedy banks and other businesses who then ask for more, where can investors look?  The market is clearly struggling under the weight of unscrupulous investment deals that have now gone south.  And many are looking at the gold market.

Gold prices are currently sky high.  In late February, they topped $1000 per ounce; a benchmark that wasn’t anticipated until much later this year.   Since then, they’ve come down somewhat again.

Sure, the glittering metal has mesmerized people from all walks of life for thousands of years.  But as an investment, it’s had a slightly tarnished history.  In the 1980’s and 1990’s, it actually lost value as the stock markets gained and some global central banks started selling their reserves of the precious metal.  By the late 1990’s, it was below $300 per ounce and as an investment, it returned zilch.

But then came September 11, 2001.  The terrorist attacks of 9/11 shook global markets and sent investors scurrying for something they could hold on to: gold.   By 2006, the return was 16.25% across five years.   And last year, the global equity market collapse brought a boom in the price of gold.

The attention being placed on gold right now is largely due to the uncertainty that many investors feel.  In the past, they might have considered buying land as an investment, but speculation in real estate has cost already. And nobody feels sure where the drop in land values might end.  Thus, as the stock market crashed last year, demand for gold rose 64% over the preceding year.

What does this mean to you?  If you’re investing in gold for financial security, this is a tricky time.  The price of gold has already seen huge gains.  Nobody wants to get in when the price is already high.  But if you are trying to get out, it might not be the right time to do that, either.  Buyers are now turning away from trades because the high prices have brought out everyone with a bulky neck chain or bracelet left over from the 1990’s.

If you buy gold on a site like Apples of Gold, you are buying it as a purchase of love; either you love it or you care deeply about the person that you are buying it for.  These are not financial investment pieces, but rather a down payment on a lifetime of caring that you hope will return rich rewards on a regular basis.

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