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2013 – Is Now a Good Time to Buy Gold?

2013 January 28

charlie_imageAs 2013 is just beginning and our American financial house in disarray with $16.394 trillion debt, and each tax payer owing $145,000 it’s no wonder why people are starting to look at investing in gold! Hit shows like Gold Rush are attracting tons of viewers. Heck even J$ at BudgetsAreSexy.com is investing in gold – Liberty Head Coins. It makes you wonder…do other people know something that I don’t? It’s kind of like when you are on a sinking ship (but don’t know it) and you see all the rats running one way, but don’t yet know why they are running.  



titantic rats

Over the last few years I’ve taken a serious look at precious metals investing and I’ve mentioned it a few times in previous posts. However, I can’t help but continue to sound the alarms even when our stock market is currently at all-time high today at 13,895 (Dow Jones). Even though our stock market is at an all-time high I think everyone could collectively agree that we are in no better shape than we were in 2008 during the peak of the financial crisis. Something still doesn’t set right. Do you agree?

That is why I continue to believe that gold is a great diversifier for your investments into in 2013. Here are four reasons I came up with.

Reasons to Invest in Gold in 2013

  1. Country Addicted To Debt – in 2008 we had about $10 trillion in national debt, and now we’ve added six more trillion since the crisis. It’s much like the country is addicted to a drug and the drug is debt, but we aren’t seeking any help. We’re continuing to feed our addiction, because we have no other way to fund our spending. In the fall of 2007 (at our previous stock market high) gold was at about $730/ounce and now it’s at $1656. Here is a great chart of how gold has fared over the last 5+ years showing how gold’s increased 131%, but the DOW has only increased 5.96%! (Sad face for the stock market!)
  2. The Treasury Continues to Print Money – as we’ve now gone through three interactions of the Quantitative Easing and no stop in sight this should be a red flag for any investor. How can the treasury continue to print money to buy our national debt? How is this a long term solution towards fiscal stability? It’s not, and when investors start realizing this then people will flood out of US bonds and out of US dollars. Then where are they going to go? Yep…you got it! Gold!
  3. Foreign Governments Have More Than $1 Trillion In Our Securities – you ever had a friend or family member that you borrowed money to? What about someone that keeps coming back to you for money? Does it ever get to the point with you lending money that you realize….”hmm, I don’t think he’s going to pay me back, because he owes me A LOT!”? If our national debt continues to grow exponentially like it is doing, then foreign governments will begin to realize somethings up. They’ll all come knocking on the door, want to get paid, and in a lot of the same way people had bank runs during the Great Depression. It’s at this point that gold will really begin to glimmer, and increase in value. You can’t print gold. :)
  4. Unwilling To Tax The Middle and Lower Classes More – during the latest fiscal cliff crisis that we “averted” a lot was changed! However, not enough has changed. We taxed the rich a little more, but not much else. Is taxing the richest 1% going to really make that big of a dent in our $1 trillion per year deficit? We didn’t fix the addiction to spending (with debt), and frankly we should have asked everyone to start paying a little more. As a result of our continued focus on more spending and bigger deficits it’s going to keep pushing precious metals higher and higher. The thing is most people won’t realize that our currency’s value is being slowly eroded underneath our feet.

As always I have to give a big shout out to who I listen to on investing in gold. I’m a big follower of Peter Schiff (reference Wayne’s World here – “We’re not worthy! We’re Not Worthy!), and he’s been sounding the alarm of “now is the time to invest in gold and silver“. Here is a great video I recently watched (kinda long, but great!) that will shed some more light on why you should be buying precious metals!

So what are your thoughts? Do you think buying gold now is foolish? How are your protecting your money?

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Charlie

An IT professional, Charlie also buys and sells liens, lives on the cheap, runs marathons and helps to run his family farm. In his spare moments, he raises 3 children, does the dishes and writes one post a week. His former blog, Frugal Retirement Plan, has been cited by US News and World Report.

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2 Responses
  1. Mike permalink
    February 5, 2013

    Don’t invest in gold, it’s pure speculation. Here a few reasons:
    -It’s a bad inflation hedge (supposedly what it’s bought for).
    -It’s taxed at higher rates than investments (28%).
    -The fact that it’s been up doesn’t mean that I’ll continue to go up (look at the 80′s).
    -Schiff has a vested interested in people buying metals (he has a company that sells them: EuroPacific precious metals), sounds like a clear conflict of interest, don’t you think? Even further… Why does Schiff sells his gold to others? If he’s so sure about what’s going to happen to the dollar, why does he keep accepting dollars in exchange of his gold? Why is he not keeping all the gold for himself? Sounds really fishy to me.
    -You’re buying gold with the assumption that you’ll be able to sell it at a higher price to somebody else (look up the “greater fool theory”); otherwise, why would you buy it? Well, the person that’s selling it to you believes that you’re the greater fool… And so on.

    Don’t fall for the gold trick. Or any other person telling you what’s “sure to go up”. Instead, create a plan and follow it.

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