15 Reasons to Buy Gold!

1. China is buying Gold for its central-bank reserves.  China is reducing its proportion of dollar purchases.  Government-run Chinese TV encouraged 1.3 billion new Chinese “gold bugs” invest in Gold, which they can now do at local banks, fueling domestic demand.  Beijing has almost doubled its central-bank bullion holdings in the last five years.

2. Central banks are now net buyers of Gold for the first time since 1998 – when the current program of central bank Gold sales began. 

3. Inflation is now beginning to rise and Gold is a classic inflation hedge. 

4. New Gold ETFs (Exchange Traded Funds) will promote more Gold buying.  ETF-s must buy physical Gold to back their shares.  This alone boosts Gold’s demand volume.  The SPDR Gold Shares exchange-traded fund (ETF) now holds more Gold than many major governments, about $35 billion in Gold.  In addition to the existing ETF-s, a new Gold ETF was recently launched, “Physical Swiss Gold Shares.”

5. The national debt is soaring.  The White House recently predicted that another $9 trillion will be added to the deficit over the next 10 years.  DOUBLING the national debt by 2019.  In 2009, the U.S. budget deficit added $1.6 trillion, more than three times last year’s deficit and 10 times the 2007 deficit.  Uncle Sam’s total debt now equals more than 80% of GDP. 

6. Through early December 2009, silver is up 70% and platinum has risen 60%, compared with just 35% for Gold.  Oil prices are up over 100% since February.  Supported by a Bank of America Securities report Gold should play catch up soon.

7. Gold production growth is down 8% per year since 2001 falling about 1% each year.  The South African mines are old and depleted.  It takes years to bring a new find into production.  New Gold supplies barely match population growth, so that any demand growth can push Gold higher.

8. Major insurance companies and hedge fund managers are buying Gold.  Northwestern Life, America’s third largest insurance firm, recently bought Gold for the first time in its 152 year history.  In addition, 20 of 22 (91%) leading hedge fund managers recently surveyed were buying Gold personally for protection from a weak dollar and inflation.  Individual and IRA demand was up so much in the last year that for the first time in 23 years, the U.S. Mint had to suspend selling many different Gold bullion coins.

9. Gold hedging by producers has stopped.  Leading Gold mining companies like Barrick Gold have stopped hedging their future Gold production.

10. A falling dollar usually pushes Gold prices up.  Gold is universally quoted in dollar terms, so when the dollar falls, Gold usually rises.  There tends to be a mirror image (negative correlation) between Gold and the dollar.

11. Mainstream publications are turning stock market investors into Gold bugs.  Nearly every day, the Wall Street Journal and Financial Times have Gold stories, plus Barron’s “Commodities Corner” and major money magazines “Forbes, Fortune, Money, and Smart Money), which feature Gold on the cover.

12. Failed banks are draining FDIC reserves.  In 2009, well over 140 banks failed and over 550 are predicted to fail as well.  The FDIC reserve fund is down to 0.22% of insured deposits.  The FDIC estimates that bank failures by 2013 will cost the FDIC $70 billion – vs. $10 billion available now. 

13. Another 9/11 (or similar crisis) could send Gold soaring.  The attack on America in 2001 was the beginning of the current long-term bull market in Gold. 

14.  The “Dubai World” debt default took the world by surprise, helping to send gold above $1,200 in December 2009.  In America, a new health care bill on top of other massive spending programs could send the federal deficit souring further.  The dollar could then decline much faster, sending gold up farther.

15. Jewelry demand is the missing link.  Gold has risen strongly (to over $1,100) without help from India and other global jewelry markets.  Jewelry demand is down 25% in 2009.  Once those markets recover, and after the global recession ends, this major demand source could push Gold higher, faster.

Don’t wait to buy Gold, buy Gold and wait!