Got Change for a $10,000 Bill? By Andy Hecht, Editor, Senior Commodities Editor Dear Sovereign Investor, I'm absolutely sure your local Starbucks wouldn't be able to change a $10,000 bill, even if such a thing really existed.
Well, the same holds true for physical gold holdings.
You wouldn't walk into an airport and expect to buy a ticket with a 32-oz. gold bar – at today's prices worth, more than $56,000 – even if they accepted gold bars in the first place.
Nonetheless, gold is hard currency. And if things really go pear-shaped in the U.S., hard currency is exactly what you need to be armed with.
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And things certainly don't get any more sovereign that having your own gold stash. With gold, you are truly the master of your own destiny.
Not only is gold a safe haven for capital, It is also the ultimate flight capital – as those who were able to use gold as bribes to escape Nazi Germany will testify.
Gold also falls safely within Aristotle's definition of good money, which my colleague, Jeff Opdyke, cited in one of his recent articles. Aristotle said good money has four characteristics – divisibility, durability, portability and scarcity.
Portability, of course, is what makes gold excellent flight capital in times of emergency.
And when cash is not worth the paper it's printed on, history has proven that gold holds its value.
If the economy in this country continues to spiral downward, you'd be well advised not just to hold gold as hard currency, but to hold it in small units, such as coins.
This way you can easily carry thousands of dollars in your pocket – which is important in case you ever felt the need to head for the exit in a hurry. There is Nothing like Physical Gold Bullion The form of gold that we own is of paramount importance.
Gold equities will benefit from a rise in gold prices, but they are not gold.
Gold exchange-traded funds will also benefit from a rise in gold prices but again, they are not gold.
Unallocated gold holdings, which are one of the most popular ways to trade gold, will track the international price of the precious yellow metal, but this is not the same as physical gold.
Allocated holdings are always better, because you become the owner of specific gold bullion, in your name.
Allocated gold also has costs associated with it, such as storage and insurance. However, the benefit is that no matter what happens to the company that holds the gold, the precious metal remains yours.
Of course, you should always hold some bullion and coins for yourself in a safe place to avoid the storage charges – just in case you ever really need them.
Only gold coins and gold bars purchased from a reputable gold dealer are true gold holdings. Physical gold that is at least 99.5% pure is the ultimate gold investment.
And with respect to a quick get-away or a nest-egg that's not under attack by the vagaries of the Fed, only physical gold coins and gold bars in your direct possession will meet your needs.
Gold bars come in all sizes, shapes and purity. A "good London delivery" gold bar is 400 ounces, and minimum 99.5% pure.
Then there are gold coins – Krugerrands, Maple Leafs, U.S. Eagles and many others. These usually come in one ounce, half-ounce, quarter-ounce and tenth-ounce sizes. Diversify Your Gold Holdings I recommend diversifying in three ways: • Own a combination of gold bullion and gold mining stocks. The mix should be based on the relative value of gold bullion versus top-flight gold producing companies. There are times when the gold price is high relative to gold stocks. But even if that changes, you should never totally liquidate physical gold.
• Hold your physical gold in a variety of safe locations. While it's a good idea to always keep a small portion of your gold holdings in a safe place in your home, I recommend geographic diversity for the remainder. Spreading your bullion across countries like Switzerland, Australia and Singapore will ensure it remains safe and accessible.
• Perhaps most importantly, take advantage of gold's divisibility. Make sure you own a variety of sizes and shapes of gold that is at least 99.5% pure. Diversifying your gold portfolio gives you flexibility in the future. Remember, it is hard enough to get change for a $100 bill or even a $50 bill at Starbucks these days. It would be impossible to get change for that $10,000 bill!
Holding fractional, well-known gold coins as part of your portfolio might cost a little more on a per ounce basis. But it is worth the cost... you'll have the flexibility you want, during times when you really need it.
Happy trade hunting...
Andy Hecht
P.S. With politicians endlessly scheming new ways to get their greedy hands on your money, gold is just one good way to protect yourself. We've brought together our best expert advice and research on the steps you need to take today to protect your family's future financial wellbeing in our new Sovereign Survival Guide. To find out how you can get a copy today, click here now. | | >>RECENT ARTICLES | 2/22/012
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