Saturday, March 5, 2011

Why Buy Gold

Feb 23, 2011 Sarah Zitin

In the current marketplace, investments that are relatively safe are hard to come by. Gold appears to be not only holding its value, but also appreciating.

Ever since the stock market and housing industry crashed two years ago, the U.S. and global economies have been struggling to correct themselves.

What Happened?

Real estate prices have all but crashed globally and in many parts of the country bankruptcies, foreclosures, short sales and growing unemployment rates have swept the economy. Not since the great depression have we experienced such a devastating strain on our financial future.

Who are the Culprits?

We have been consumed and driven underground by corporate America and by a monetary fund that is struggling simply to maintain the status quo. Gas prices have skyrocketed beyond control and the wars in the Middle East seem to be eating away at the resources in this country, in particular.

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As a result, the stock market is volatile and unpredictable and there is a great skepticism as to what people should invest in. Real estate is only a choice if we are willing to wait at least ten years for the market to change, as that appears to be the cyclical time-frame. And the stock market is too risky if we don't have much to lose.

What do We do?

Now seems to be the time to buy gold. "The Chinese population of over 1.3 billion people has taken up the cry to buy gold and is doing so in vast numbers. We are entering a period of strong seasonal growth in gold demand and the Chinese New Year is a big part of that. Physical demand has been supporting the gold prices on the downside even during the typical slack periods."

The Chinese are buying gold like hotcakes as the Chinese New Year, known also as Lunar New Year, begins on February 3 and ends two weeks later on the 15th with the Lantern Festival.

Gold and silver demand have been a phenomenon, and the Bullion dealers have stated that shipments have been heavy and began earlier that normal, in mid-December.


The Chinese, who have been ahead of the game in technology, education and overall, economically in the past 5 or more years, seem to carry the trends and the United States follows the lead. The fact that they are investing in gold and silver would seem to indicate a trend towards moving away from other investment markets and moving more towards these precious metals.

"Chinese New Year is the time of year when the Chinese share gifts, usually money in little red envelopes. The red envelops will be a bit heavier this year." Because Chinese banned gold ownership for most of the 20th century and that is now over, China now has a savings rate of more than 30% and an inflation rate of only 10%, which is much less than the U.S. Chinese households now have the money

to buy gold and with their high savings rates, are taking advantage of the situation.

According to a Bullion Vault analysis "based on GFMS data courtesy of the World Gold Council since 2005, the January through March period has seen China's private household gold buying raise an average of 22% from the previous nine months."

"China is in the process of overtaking India as the biggest national buyer of gold. The two countries take half the newly mined gold and the future is rising."

Buy Gold

If taken with the perspective of the global marketplace, and given that India and China are the largest and fastest-growing economies in the world, the U.S. would be well-advised to follow the gold-lead and invest in gold, too. We are all-too-quickly losing our #1 status in the global marketplace, and we need to step up to the plate and regain our position as the international super-power. We can only do this by relying less on oil and more on natural fuel, by reinstating the necessary regulatory commissions that were divested in the 80's, and by participating in alternative sources of investments that aren't dependent on the whims of corporate America. Right now, gold seems to be the answer.

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