Buying gold now?

IS NOW THE RIGHT TIME for you to buy gold?

    Six months ago would have been better; Buying Gold in mid-Sept. '07 would now show a near-50% gain against the Dollar, Pound Sterling and Euro.

    Buying gold six years ago would have been better still; it has very nearly trebled against the Dollar and Pound since 2002, and it's doubled versus the Euro since 2004 alone. Early gold buyers spotted trouble ahead, and they have been rewarded for taking a risk on this no-income asset.

    But very few of these early investors seem to be selling gold just yet. Many respected analysts agree that the real trouble in global finance – against which gold may offer you a defense – has barely begun.

Gold Bullion Investment: Gold & the credit crunch

    Compare the current "credit crunch" to a major sports event, says Jon Markman for MSN Money, and Satyajit Das – "one of the world's leading experts on credit derivatives, author of a 4,200-page reference work on the subject, among a half-dozen other tomes, and developer and marketer of the exotic instruments himself over the past 30 years" – believes that we're just in the middle of the national anthem before the game even begins.

    "It won't end well for the global economy," says Das. If you think that this crisis will get worse before the world's debt problem is cured, then Buying Gold Today could prove a wise decision.

    Buying Gold Bullion is not without risks, however. The gold market is very volatile over short-term periods of time, twice as volatile as US stock markets in fact. And even if the bull market starting in early 2000 runs for another seven years from today, you mustn't ignore the chance of a sharp pullback in the meantime.

    "Gold rose 600% in the 1970s," as Jim Rogers, world-famous commodities trader and best-selling author of Adventure Capitalist, recently put it.

    "Then gold went down nearly every month for two years," he noted, and "most people gave up."

    You can't blame investors who quit the gold market between 1975 and 1977. The gold price fell very nearly in half!

    But that’s simply "what happens in bull markets," as Jim Rogers says. He adds that between 1977 and 1980 "gold went up another 850%."

    Might a severe pullback cut the gold price in half once again? Gold enjoyed a huge surge up to May 2006, rising by $200 per ounce in only six months. For the first time in more than two decades, gold began making headlines at last – and the price promptly slumped by one fifth.

Gold Bullion Investment: Know your risks

    Now gold priced in Dollars, Euros and Pounds has shot higher to a daily run of new all-time record highs. But there's no reason to think a sharp pullback won't happen again. Ask your financial advisor, and he or she should warn you that after six years of solid gains, gold's bull market could perhaps burn itself out. Then they should point to the 1980s and '90s, and show you how gold just kept sinking, year upon year.

    Anyone who bought gold in Jan. 1980 suffered a 70% loss over the next 20 years. They still won't be even today. Don't think it can't happen to you, starting today.

    Your decision to Buy Gold comes down to weighing up a potential loss in gold against the risks of rising inflation, falling bond prices, a serious failure in the global banking or finance system, and a return of the bear market in stocks and shares. Many serious analysts think the scales are tipped firmly in favor of gold.

    Should the golden bull market roll on, however, "the volatility in commodities [will be] problematic for a lot of people to deal with," says Rian Akey at Cole Partners in Chicago, a $120 million fund. "Even if the long-time trend is up, you still have periods where you’re going to be down 10% in a month, and that’s quite difficult for most people."

    Accept responsibility for your decision, and it might help you sleep better at night. Ignore the risks before you Buy Gold, and you could find yourself tossing and turning worse than a hedge-fund manager holding a pile of mortgage bonds backed by the very worst subprime debt.

    One other tip for judging the size of your Gold Bullion Investment. Many professional advisors recommend somewhere between 5% and 10% of your total available funds, excluding the value of your home. Here at BullionVault, we think that's a pretty blunt tool. Sometimes owning gold will outperform all other asset classes; other times, gold is most definitely NOT what you want to own.

   But if you find this 10% rule useful, yet you worry that putting 10 cents in every Dollar of your liquid net worth into gold would keep you awake at night, then cut back your BullionVault.com" target="_blank">Gold Investing until you start to feel easy. Buying Gold is about defending against risk. Raising your blood pressure by over-investing would be to defeat the object.

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Or click the right-facing arrow below to read about Gold Bullion Investment: How the gold market climbed higher to its current 27-year highs...