I wanted to point out even though it may be obvious, with the recent drop in Treasury yields at all maturities, gold is a much better investment choice. Many conservative investors are more concerned with the return OF their principal rather than the return ON their principal, so I thought I’d compare two “safe” investments to show why you should consider a precious metals investment…specifically gold…instead of the typical “safe” US Treasury Bonds.

Investing in Gold Vs. Treasury Bonds

Let’s look at the yields Treasuries are paying in the chart below I swiped from the US Treasury website. The first thing you’ll notice is even the longer term bonds are only paying about 3.00%!

3 percent! To tie up my money for 30 years and all I get in return is a lousy 3 % rate of return?

I don’t think so….

And remember even though US Bonds are “safe” they still have to keep up with inflation or I’m actually getting a negative return. Does anyone believe the US will not experience at least a few bouts of serious inflation over the next 30 years?

I sure as heck do…

January 2009
mm/dd/yy 1mo 3mo 6mo 1yr 2 yr 3yr 5yr 7yr 10yr 20yr 30yr
01/02/09 0.04 0.08 0.28 0.40 0.88 1.14 1.72 2.07 2.46 3.22 2.83
01/05/09 0.05 0.14 0.32 0.43 0.78 1.08 1.67 2.07 2.49 3.37 3.00
01/06/09 0.05 0.14 0.31 0.45 0.80 1.10 1.68 2.07 2.51 3.41 3.04
01/07/09 0.03 0.11 0.29 0.44 0.82 1.15 1.66 2.02 2.52 3.41 3.05
01/08/09 0.04 0.09 0.28 0.44 0.83 1.16 1.60 1.95 2.47 3.40 3.04
01/09/09 0.03 0.07 0.28 0.43 0.75 1.11 1.51 1.88 2.43 3.39 3.04
01/12/09 0.04 0.12 0.29 0.43 0.74 1.09 1.45 1.81 2.34 3.30 2.99
01/13/09 0.02 0.11 0.29 0.43 0.76 1.07 1.44 1.80 2.33 3.30 3.00

You couldn’t pay me to invest in the US Treasury market right now. Talk about a bubble…when that pops I’ll be sitting very happy in precious metals. You should be too…

Revisit your “safe” investments that really are not so safe or are not really investments. A money market, CD, or Treasury bond can’t at this point really be considered an investment when negative returns are more likely than not. Add the insolvency risk in the banks, insurance companies, and yes…even the US government…buying precious metals looks better and better.

Remember at this point I only recommend investing in the physical precious metal…not the futures, mining stocks, or even coins…just bullion. If you want to be sure to store your wealth where inflation or default risk can’t swipe it from you in these turbulent times…precious metals bullion is the answer.

Happy Investing!

I found and included a 30 minute video clip of the David M. Walker documentary I.O.U.S.A. as a fiscal “wake-up call” to the American people, but also to illustrate exactly why I believe precious metals are a wise investment.

I.O.U.S.A. Documentary Alarming

This documentary is alarming at best and downright frightening at worst. This film dissects the history of US government spending, rising National debt figures and puts everything into a thoughtful order to show the viewer “the problem”.

For the fist time as I was watching this 30 minute clip, I really felt the weight…the full force, gut punch…of this Financial Armageddon. It scared me…due in large part because they offer no solutions or even hope of finding a solution.

It hit me as the film outlined all the unfunded obligations the US was responsible for in the future with Social Security, Medicare, and the interest on the debt…a total of $53 Trillion…and the lack of will the American people and their elected leaders possess…we won’t make it. It reminded me of the Detroit automakers asking for a bailout last week. The over-promised their workers pensions and health care that now make them inviable in the marketplace. On top of that, they produce a product that less and less Americans want. Bloated, top down thinking, with a overreaching ego that says “We can do anything and get away with it.”

This is the same thought the average American has when he buys a house with “no doc” mortgage he can’t afford. The same thought a Congressman has when he passes legislation that can only get funding through borrowed means.

We get the government we ask for…and it’s not surprising the government is a reflection of ourselves. The “baby boomer” generation is too blame…like a spoiled child, who doesn’t mind killing the future to have comfort for himself.

We will have to discover less greedy and self-centered Americans to solve this problem…and sadly, I do know any of those people.

So, do what you must to protect yourself and your family…watch this video clip even though it’s long…and prepare yourself for the financial meltdown that only now it coming into full view.

Happy Investing!

Jim Rogers was interviewed by FT.com’s John Authers in Soul Korea a few days ago and he said some interesting things that those interested in precious metals should know. Rogers is worried about Obama’s pledge to tax capital, the US dollar, and the US housing and financial crisis…just to name a few things.

Jim Rogers interviewed

US Dollar Doomed

When asked about his thoughts on assets classes that will be profitable in this chaotic environment, he said,

“You buy the things that have been unimpaired”

Rogers is talking about commodities….including my favorite commodity…gold when he says “unimpaired”. Companies and their stock values can be hurt by bad management, political meddling, tax policies, and central banker tinkering….commodities can’t.

Commodities markets are very large…global in fact…and central bankers or Wall Street pundits can’t sway commodity prices that are not valid by the fundamentals. Rogers likes this because then the analysis becomes one of supply versus demand…and not a dozen other factors.

When asked when he’d get out of the dollar…he responded with,

“I hope I’m smart enough to recognize when to get out of the dollar because it is a flawed and even a doomed currency”

He goes on to say,

“The US Dollar is finished!”

Wow!

When Rogers says the dollar is doomed or finished….everyone should pay attention. We are in a nice little dollar rally right now (…and the gold price is stagnant because of it), but Roger’s sure this will be temporary and the dollar will return to historic declines. I don’t have to tell you when the world stops seeing the US dollar as a valuable storage currency, gold will skyrocket.

He was asked about whether the dollar weakness would cause politicians and central bankers to return to the gold standard, he said,

“I suspect not…but having said that John, I want to show you I got my own gold…just in case…I’m ahead of the game.”

Rogers then pulls out what appears to be 3, 1 ounce gold coins. The interviewer upon seeing the gold laughs like a giddy school girl taking a ride in a Jaguar for the first time.

Hilarious!

Politicians Will Make Things Worse

When asked about the coming recession he said, “The recession will be the worst since the second wold war”. I agree on the depth of the recession and have written extensively on the meddling of Treasury Secretary Paulson’s attempt to support the real estate market.

Rogers recounts the real estate bubble and mortgage crisis condemning the stated income programs stating it will take years to unravel. On this point I agree it will take years to get the consumers interested in home buying again. Even if demand rebounds, the availability of mortgage money will be suspect since the banking crisis will be in full force then.

Paulson can’t create a housing demand but in the attempt to “help” he’ll cause more harm than good. Rogers believes this as well referring back to improper tinkering with the economy by politicians during the Great Depression stating,

“What should have been a normal recession turned into a depression and it’s happening again.”

Couldn’t have said it better myself…you can watch the full video here.

Good Luck!
Rob K. Blake,
The Gold Insider

Investing options are often so vast and confusing, one opts to make no decision over making the wrong decision. This is one of the many reasons I like and recommend owning precious metals as a necessary addition to everyone’s investment matrix. No one can argue the efficacy of that statement.

It’s unambigous…and truthful.

“Every investor should own precious metals”

A bold statement, no doubt…but one I’ll stand by.

The real question is not should physical precious metals be apart of a diversified investment portfolio, but when to go “heavy” on the metals, which metals, whether to use leverage, among others are the more pertinent questions….and where it gets a little confusing once again.

But the base line question…”Are physical precious metals a good investment for me?”…has been answered.

Why Are Precious Metals a Good Investment?

Over the coming weeks, I will write on all these topics and more but suffice it to say…

Physical Precious Metals are Good Investment because..

Can be a hedge against inflation

Can be a hedge against falling dollar

Can be a hedge against falling real estate values

Can never go to “zero” …has intrinsic value

Can be leveraged for greater rate of return

Can be traded long or short so money can be made regardless of market conditions

Can be a better option if stock, bond, real estate, and other markets are too risky

I could go on and on why owning physical gold (not gold futures or other derivatives…I’m talking about the actual gold bullion) or other precious metal is a fantastic option…especially now in our current global financial crisis.

Thanks for stopping by and stay tuned!

Rob K. Blake