Friday, March 11, 2005

I'm a Gold Bug

I admit it. I've been a gold bug since the early seventies. I've taken dizzying investment rides up and then often down again, on the physical metal itself and on mining and exploration stocks. I love the whipsaw effect as the junior exploration stocks careen up and down in reaction to bullion price swings or sometimes, seemingly, nothing at all. Volatility is good, if you have the stomach for it. It presents lots of opportunity for trading in-and-out, if you are watchful and disciplined and don't get emotionally attached to the stocks for whatever reason.

The stocks I love are not for 'orphans and widows,' who need to preserve capital above all and to squeeze some sort of regular, ongoing income from an investment.

My favourite way to hold physical gold is the Canadian Maple Leaf one ounce gold coin. It's pretty, easy to get, easy to store, easy to sell. Similarly, the Canadian Maple Leaf one ounce silver coin is a good way to hold physical silver.

I am following with some interest the situation in the United States where the government-operated social security system, as might be expected of any Ponzi scheme, is in trouble. The baby boomers are understandably concerned about funding their imminent retirement. A Bush administration proposal to fix the problem for future retirees, promotes wider choice in self-funded and directed retirement plans. I think that is a good thing, in principal. The more control anyone can exercise over their life and assets, the better it is.

The only real danger I can see is that people who really shouldn't do so might invest in some of the types of stocks I do. The attraction of a big score or two on penny stocks is powerful and makes some of us do foolish things. The reality is that many exploration stocks disappear and become worthless. I have been intimately acquainted with more than a few. Only some will soar in value and make their investors happy.

I think that sound financial planning should be taught in school, stressing caveats like:
  • If sounds too good to be true, it likely is.
  • Never gamble with money you can't afford to lose.
  • Don't get caught up in company hype.
  • Do your research homework.
  • Don't buy something you don't understand.
I think that gold is currently in a bull market and that there will be many dollars made by astute investors in shares of some gold and silver exploration and mining companies.

Which companies?

That, my friends, is a very good question.

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