The price of gold has advanced more than 100% is less than a year. Is this a time to buy or sell?

As you know gold comes in many forms. Gold bars, gold coins, gold mining stocks, Exchange Traded Funds (ETFs) and gold mutual funds. Lots of gold bars are at the U.S. Mint. These come in various sizes and the biggest drawback is resale because they have to be re-assayed for purity content.

Gold coins are minted by many governments including our own. They all have approximately one ounce of gold, but may be of different carat purity. There are American Eagles, South African Krugerands, Austrian Philharmonics, Chinese Pandas, Canadian Maple Leafs, Australian Kangaroos and on and on. Almost all stamped in one ounce coins and many are available in 1/10 ounce size. These can be bought and sold at any legitimate coin shop with a bid and offer differential of less than 5%.

Price of gold fluctuates daily as it is traded on a supply and demand basis. There is not a single major currency in the world in which gold has not seen a price rise. That is why gold is going up and that is why gold has not seen its highest price yet.

Lets look at it a different way. An ounce of gold is still an ounce of gold, BUT the major world governments are printing more and more paper money every day with no backing to the currency.

What you are really seeing is more paper money being created for the same amount of gold. Yes, more is being dug out of the ground, but Japan, Germany, England, France, Germany, etc. etc., are running the printing presses faster than the guys are digging with the shovels. As long as that continues the price of gold will rise and there doesnt seem to be any end in sight.

The excess printing of paper money until it has become completely worthless has been done many times in history before including by our own government. During the Civil War both the North and South printed themselves into oblivion, but gold was always accepted because it had value.

Gold has always been hoarded more in Europe and Asia because they have seen the ravages of the government printing press. We all remember the stories of inflation in the Weimar Republic of Germany after World War I where it took a wheelbarrow of paper money to buy a loaf of bread. Unless we can put a muzzle on politicians it can happen again. The only protection the citizen has is real value and gold represents one item of true wealth.

Is gold still a buy? As long as the federal government continues printing worthless paper money gold will be a good investment.

Al Thomas

Albert W. Thomas has spent most of his life in the field of finance. In 1965 he founded an insurance holding company, Security Dynamics Investment Corporation, after having been an agent and General Agent for several life insurance companies. In 1970 he became cofounder and president of Real Life Estate, Inc., that marketed a unique real estate and life insurance package.

After he became interested in commodities he bought a seat for his personal trading on the Chicago Open Board of Trade, which is now known as the MidAmerica Commodity Exchange. Later he became a full time trader and also acted as a commodity broker for a few select clients. By fellow floor traders Al is considered to be an excellent technical analyst much of which is outlined in his book IF IT DOESN'T GO UP, DON'T BUY IT! It became a best seller on Amazon.

In 1981 he sold his membership on the Exchange and with his wife, Carolyn, lived full time aboard their 41' ketch, the Aumakua (which means guardian angel in Hawaiian). They sailed in Florida and the Bahamas for two years.

He founded World Trading Group in 1984 that grew to the seventh largest introducing commodity brokerage firm in the U.S. with 35 offices from coast to coast, Alaska and Canada. It was sold in 1992.

Al is a graduate of Northwestern University with a B.S. degree in Commerce and is a member of MENSA. He is now president of Williamsburg Investment Company that syndicates his weekly financial column since 1999 to more than 300 newspapers and writes a financial market letter called Over My Shoulder that is quoted in Barron?s and many other publications. A 3-month trial subscription is available on his web site. He is a regular guest on several financial radio talk shows.

His favorite pastime is fishing.

Mr. Thomas is available for speaking engagements. Please call 321-453-5300 for more information.