Turn to any business news channel on TV, or read one of hundreds of websites online, and you’ll find very well qualified experts making predictions about where gold prices are going over the next few days, weeks or months.
But the funny thing is, when the next few days, weeks or months arrive, these experts are very often proved wrong. It’s like they had no idea.
So what gives? Why can’t they get it at least half-way right?
There are a few reasons.
First, TV producers don’t want to have guests on their shows who say anything remotely sensible, like, “I don’t know”. Or, “I don’t see much change in the near future”. That makes for boring TV. So they deliberately invite guests who have extreme opinions. Gold prices are either going to fly sky-high, or fall through the floor. And when it comes to gold, people who have extreme opinions are almost always wrong. But it does make for good TV.
The second reason is that regular people who buy gold coins to own, as a safe haven, often listen to the wrong experts.
For example, if you listen to a real expert whose expertise lies in junior gold mining stocks, he isn’t really thinking about people who own gold coins and store them at home. He is thinking about the risks and opportunities facing small mining companies in various parts of the world. His area of expertise does not lie in predicting long-term global gold prices.
Or, more commonly, these experts you see quoted so often are looking at gold as an investment. Maybe they invest money in ETFs, or in some of the larger mining companies. They have an investor’s mindset, which means they are always focused on investing to make the biggest possible return. Their view is short-term, and they are constantly moving their investments around to maximize their income.
In neither of these cases does the expert own gold as a long-term hedge against inflation, or some other financial back-slide. Their expertise is in predicting gold price movements to make immediate revenues.
So when they tell you to buy or sell, it’s best to ignore them.
First, they are usually wrong, even with their short-term predictions.
Second, they are talking about investing in gold, not in owning gold.
As an owner of gold, you have a completely different mindset. Your plan is to hold your gold indefinitely. Or until the time comes when really bad things happen to the world’s economy, and you really do need to convert some of your gold to cash.
Owning gold is like taking out an insurance policy. It’s not about making money. But unlike every other insurance policy, this one is owned and controlled by you. You decide if and when to convert some of your gold to cash.
For all the reasons outlined elsewhere on this site, there are still some excellent reasons to buy and own gold.
You can buy gold coins and gold bars online at GovMint.com.