Credit Crisis

The different sectors that make up the gold investment profile
There are different sectors that are part of the family of portfolio items that make up gold investment. These sectors are responsible for getting the industry into shape and ensuring that there is a great presence of gold in the spectrum of economic activities within the country.

The first sector is composed of the private investors that try to make money from buying and selling gold. These are traditionally people that have relatively large incomes but with the democratization of the economy it has become common practice for common folk to get involved in the process of getting some differentials on the market price.

They buy the gold when the prices are low and then sell it when they are high. They then pocket the difference. This is especially obvious during poor economy situation, as gold is mostly considered as safe heaven during bad economy. It is a simple formula but it can work very well no matter how the system is configured. At the end of the day we are dealing with a system that is configured for the mass market but the individual players can also have something to contribute.

In 3 months we have lost 1.2 million non-farm related jobs. The only industry that was up was Government jobs. Ladies and Gentlemen meet recession, recession meet the people. You are hearing reports that the economy is bad. The economy isn’t bad, it’s hell on a hot plate. The highest unemployment got in the 2001 recession was 6.3%, we are already at 6.5% and most economist believe that this recession is only at the beginning.  I am not telling you this to scare you, only to warn you that don’t believe anyone trying to sugar coat what kind of trouble the economy is in.

Before the economy busted you kept hearing the talking heads on TV say the the fundamentals of the economy were good and that the media were trumping the problem up. I have not seen not one of those talking heads say, “oops my bad, I was wrong”. The stock market is indeed influence by news but it also is influence by the realities of what was going on in everyday life. The tech bubble that blew earlier this decade was bad but this recession is a whole different kind of monster. We are talking about housing, the biggest investment most Americans will make in their life. Last year around this time you would keep hearing on TV that the “sub prime crisis was contained”. Obviously they were wrong. This is not the time for I told you so, this is the time to listen to your gut more than any talking heads on television. You know better than any professional whether your financial portfolio is sound enough to start spending and investing again.

The worst thing that you can do when the economy turns sour is to become scared. Warren Buffet has advised people to start buying equities now to prepare for the eventual turn of the market. He is only partially right. Yes you do need to be prepared for the eventual turn around of the market but unlike Buffet you can not afford to let your money sit in the market watching as the value slinks further and further down waiting for the day that it finally shifts. The main thing that you need to do now is plan and plan well for the eventual turn around.