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Thursday, March 14, 2013

Is Gold at a Bottom level and Should You Buy It? 

It is the last day of February and stocks post four months of straight gains the day before the sequester takes effect. Now a looming list of budget cuts are supposed to turn on when we turn on the lights tomorrow but despite that gold drops one percent to $1,580 per ounce.

There are so many who are attempting to discourage consumers from owning gold in their portfolio and make it seem like an illegitimate option. Many in the media and most ordinary advisors would rather see you put your money in stocks, bonds, and mutual funds.

The real difference between these media personalities and the majority of financial advisors are by nature diverse from the gold loving consumer. The "gold lover" by nature is traditional and are worried about the nations debt, government spending, over reliance on the government, protection from a mysterious and vulnerable stock market, as well as the chance the dollar could lose a lot of it's value.

I hold a lot of the same concerns as many investors and understand why gold is such an interesting and attractive investment. Recently a book by Dan Kennedy cataloging the behavior of baby-boomers and seniors. Inside this book he reveals that 60 % of boomer and senior men and forty percent of boomer and senior women "view gold as being the best investment" (long-term) but "don't necessarily believe (gold) is the safest."

With the issues in Washington and also the increasing national debt, the demand for gold will continue to rise. But is it possible that the recent gold laws and quite possibly a gold bottom cause many to purchase the wrong kind of gold. I believe it could and believe that Franklin D. Roosevelt's gold confiscation act of 1933 can be quite a great example of this fact.

Roosevelt issued Presidential Proclamation 2039 which was an old statute that was never removed. This statue forbade "hoarding of gold coin, gold bullion, and gold certificates." Not only was it prohibited the penalty was huge, $10,000 (adjusted for inflation equal to nearly $200,000) and as much as a decade prison time.

In 1933 the government had to be more conservative due to the gold standard. The gold standard meant they couldn't print money at will. This forced the government to get creative, confiscate privately owned gold. Each citizen was required to submit their gold for just over $20 per ounce, the next year the Gold Reserve Act set a new value for gold at $35 per ounce.

So now you might be saying, "nice lesson in history Matt, but what's the point?" Well this is very relevant today and a huge lesson of government behavior. What we should can learn is there is something lurking in the shadows that could cause so many gold portfolios to be at huge risk? Reporting.

There are two types of physical gold portfolios: Reportable and non-reportable. The real difference is one isn't subject to confiscation and one is. Reportable are gold and silver bullion and most gold and silver coins, the majority of are believed to be commodity transactions and are thoroughly regulated. There are not a lot of options for non-reportable, two are the Austrian Philharmonics and Canadian Silver Leafs.

For everybody who is worried about government spending, large government debt, government reliance, a crazy volatile stock market, and a weak dollar you may want to consider gold in your portfolio. My recommendation is own the right kind of gold, primarily now that gold is possibly at a bottom.

Matt Golab

Matt is an Investment Advisor Representative as well as Chief Advisor of Aaron Matthews Financial Resources located in Elk Grove, CA. Click here to learn much more about Matt Golab and how his company Aaron Matthews Financial Resources can help you!

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