Buy Gold, Hunker Down And Wait It Out

The last time I remember seeing economic conditions this bad was back when I was in high school and Jimmy Carter was the President of the United States. Back then as stocks fell and interest rates climbed to previously unheard of levels, an old timer told me once that the best thing to do was to 'buy Gold, hunker down and wait it out'. As a kid, I thought that old guy was suffering from some kind of old age illness when he said that. However, today as the price of Gold soars and stocks continue to slide – that old man seems much smarter today than he did 35 years ago. During good economic times, Gold merchants are always trying to get the average investor in invest in that precious metal, with few takers.

However, with world economic conditions showing weak signs of growth and as the US dollar continues to tank against other world currencies – most long term investors would have been wise to have bought some Gold back when it was trading around $300 per ounce. That said, investing in Gold is very boring most of the time. The past few months Gold has been setting new records, but for decades the price of Gold stood at about $300 per ounce and moved little from day to day. Right now Gold investments are exciting because the price fluctuates wildly every day and Gold's overall market trend has been heading higher in recent months. That said, I would not be a buyer of Gold at $800 per ounce even though the worldwide economy and markets might go through several more months of pain before things start to turn around.

Like most other people, I wish I would have bought some Gold back when the price was around $300 per ounce. However, if I had owned Gold for several years and it did not move up I would have probably sold my stake in Gold when it hit $400 per ounce and missed this tremendous increase, anyway. Investments in Gold are the longest of long term investments and act nothing like world markets of stocks and bonds. Only people with the most patience investment horizon will ever profit from investments in Gold. Right now most of the money being made and lost by Gold investors is in the futures market. While I have never been fond of futures trading, some people have done quite well with these types of investments and for the short term trader that wants to take advantage of the current volatility in Gold, futures are probably the best way to go. Just remember that futures trading is very dangerous and should only be conducted by market professionals.

Read more about the Economy:

Bear Market Out Of Hibernation, Big Bull Sleeps
Federal Reserve Stops Price Plunge For Now
BOA Joins Citibank With Huge Quarterly Loss
Fed Acting Like Enron In Some Ways
It's The Economy, Stupid All Over Again

January 23, 2008 Archives