gold investment

Economy expert Arnold Bock, who studies the world financial crisis and is well-versed in the effects that inflation, the devalued dollar and the trade deficit can have on the average American family, is encouraging Americans to stock up on gold to prepare for the future.

His latest article outlines the reasons that he believes that gold can provide an important safe haven from turmoil in the stock and bond market. He also has concerns for the real estate market and makes the point that smart investors should stock up on gold to secure their assets and prepare their family's financial portfolio to weather the coming storm.

To read the full article, visit financial site MunKee.com.

A variety of economic and political factors around the world pushed gold to record highs today, topping out above $1270 per ounce in mid-day trading. The rally seems to be driven by continued economic difficulty in Europe, a weakening U.S. dollar, poor manufacturing numbers in Germany, continued gold-buying by world banks and even increased retail purchases, primarily due to a rush on gold by consumers in India, who purchase gold in times of celebration.

The news is no surprise to precious metals bulls, who have been predicting the recent increase in gold prices could continue for quite some time. So far, the spot price of gold is up 1.5% in the month of September and nearly 16% for the year 2010. Meanwhile, silver prices are spiking as well, topping $20.44 per ounce on Tuesday afternoon.

Some analysts predict that even at this price, silver remains a bargain and has a lot of upside potential. The price of gold is currently trading about 65 times the price of silver, which is a low ratio historically speaking. It’s also low when the actual rarities of the metals are considered. Gold is only 16 times more rare than silver, so based on that ratio, the price of silver should be more than $79 per ounce – a fact that continues to drive demand from silver buffs.

In a recent article, TheStreet.com offered their advice to first-time gold buyers. The concepts are simple, but for investors new to precious metals, it can get a little confusing.

According to the article, there are three main mistakes to avoid:

Rule #1 - Don't get ripped off

Many companies charge a high percentage over the spot price of gold for bullion purchases. The article specifically mentions that buyers should not pay more than 5% to 10% over the spot price of gold. According to the article, "Premiums though can reach as high as 75% or more based on the gold item. Kitco (an online gold dealer) is also selling a one-tenth of an ounce gold eagle coin for $162.12, which is a 35% mark-up."

At The U.S. Gold Bureau, the typical mark-up is only 2% to 5%. Gold bars are generally the cheapest way to buy gold bullion, since the U.S. Mint marks up the price of coins, due to the expense of the minting process.

Rule #2 - Be careful with gold-related stocks

It is difficult for investors to pick the right gold-related stocks. Gold mining companies, like any business, depend on good management practices, corporate business strategy and their ability to beat their competition to be successful. As the article states, you "have to pick the right stocks, which is a risky business."