By: John Fisher
Do you own a home? Do you have homeowners insurance? People would consider you foolish if you didn’t. You hope you will never need to use your homeowners insurance for a burglary, hurricane, fire or other loss. But, if you do need to use it, you’ll be glad you have it – right?
What about auto insurance? Suppose you were hit by an uninsured motorist or you hit someone’s car – or even worse you injured someone? You would be exceedingly glad you had top notch automobile insurance – right? What would have happened if you didn’t have coverage?
The correct way to think about owning gold is also as insurance. Gold is a store of value virtually independent of economic and geopolitical conditions. Gold protects your wealth, no matter how you hold it. Unlike paper assets – gold will always retain value. Gold will never go to zero. Governments cannot “print” more gold. Gold cannot default. Gold is the only asset that is not someone else’s liability. And gold always pays all of its claims!
As an example of gold’s ability to store value, 2000 years ago one ounce of gold would buy a fine man’s outfit. Today one ounce of gold will still buy a quality man’s wool suit with enough left over to buy a few shirts, ties, socks, a pair of shoes and a belt!
So, think of gold as insurance. Do not think of gold as a way to “make money.” Do not try and “time the market!” Instead, buy gold in small amounts regularly over an extended period of time.
All Things Considered – John’s Commentary
How much gold “insurance” should you buy? The percentage of your total wealth devoted to gold depends on your particular situation. A conservative goal would be 10% with a more aggressive target being 33% in times of greater uncertainty.
Action to take: Gold is stuck in a trading range between $1,150 and $1,250. Silver is currently stuck between $17.50 and $19.00. They will stay there until they break either to the upside or downside, with the upside favored in both cases. Add to your positions when the metals retreat significantly, as they did recently.
What to buy: Gold below $1,200 and silver below $18.00. I have a vast selection of “fractional” (less than one ounce) world gold coins that sell for premiums at or below mainstream one ounce coins. In silver, I have (2) 50 ounce silver bars and (40) 10 ounce bars at 4.1% over spot
Quote of the day: “Gold is forever. It is beautiful, useful, and never wears out. Small wonder that gold has been prized over all else, in all ages, as a store of value that will survive the travails of life and the ravages of time.” – James Blakely
