I'm going to start advertising gold on this site, so I wanted to put out an official sales pitch on why gold is a great investment opportunity in this market. So here goes.

The Proof is in the Pudding

Check the chart below; it's a 10 year chart of the price of gold.


No other asset class has held up as well since we began the bubble economy -- starting with the dot com bubble, the housing bubble, and now the resulting crisis. In times of crisis, gold is a safe haven. It has served this role for thousands of years, and continues to do so today. This is because gold is, in reality, a form of money.

Why Gold is Money

To understand why gold is money, we need to go back to the origins of money. When economies were first developing, people bartered, exchanging one set of goods for another. In such an economy, what becomes the easiest thing to trade becomes money; people will accept it for the goods and services they provide because they know they can easily trade it. And throughout history and civilizations, one commodity has served better at being money than anything else: GOLD.

For a deeper look at this issue, see my previous post on commodity money; and to help flesh out the bigger picture, see my post on the story of how money is created.

Gold as a Protector of Economic Freedom

Because gold can essentially serve as money, it serves as protection against government efforts to print as much money as they want and give it to themselves and their friends. Curiously, even Alan Greenspan, former chairman of the Federal Reserve who created the dot com bubble and the housing bubble by printing too much money, admitted gold's role in preserving economic liberty and free market capitalism in a 1966 essay he wrote entitled, "Gold and Economic Freedom."

The Video Sales Pitch

If you're more into audio/visual explanations, here's a video of me talking about gold.


Kid Mercury's Personal Gold Strategy

Everyone's financial situation is different, and thus what is appropriate for me may not be appropriate for you. Here is what my investment account looks like:

approximately 40% in gold
approximately 10% silver
approximately 50% in active currency trading

I don't foresee closing my gold position until sometime in 2012 or after -- though I watch the markets and will react if information comes out that skews my analysis. I'd also likely close out if gold breaks below $1,050 before then, but will continue to buy on dips.

(*Note: price updated to $1,050 on November 16, 2009.)

How to Buy Gold

For buying gold, I recommend Midas Resources and Bullion Vault. Midas Resources for physical delivery; Bullion Vault for buying gold that will be stored in a vault for you. I recommend both options. Bullion Vault allows you to store your gold in different vaults throughout the world, which I also recommend in the event that certain governments enact legislation making it difficult to convert gold into government-ordered currency.

Click here to go to Midas Resources
Click here to go to Bullion Vault

If you have any questions, don't hesitate to ask them in the comments below.