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.

We then move on to government as an investor in gold. Given the fact that gold is not really vulnerable to the intricacies of market shifts it makes sense for governments to invest in it. They achieve this through careful planning and a stocking up of the precious metal until it is time to spend. It also acts as a buffer against inflation because they can take cash out of the economy by simply investing in gold bullion.

The international gold markets are controlled by the different elements that manage the gold investment sector. Therefore countries like China have been able to garner considerable leverage on the international market through their collection of very large reserves of gold.

On the other hand countries like the USA get worried about these gold reserves because they threaten their supremacy in the market. It is very difficult to predict how the situation is going to turn out but one has to look at the way that China is building up gold investments to see that it is going to be the next super power.

The final sector is the different companies that deal in gold in order to add value to their shareholders. It is considered to be a relatively safe investment opportunity and therefore one has to look at gold in a totally different light from the other investment opportunities that are on the market. For example gold is simply not perishable. That means that the insurance costs remove some of the premiums for specific natural disasters.

On the other hand the shareholders will be reassured when they learn that the company directors are investing their money into gold. This is partly due to the great reputation that this precious metal has built over time. It is for a good reason that we talk about things being as solid as gold. In the end it is all about how we manage the gold investments.

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.

Nobody can predict the bottom of a bad market so don’t even try. But what people can do is wait for the upswing and take action when that happens. Yeah you lose on the initial part of the upswing but the market is so far below fair value right now that whatever you missed out on will be made up later down the road. The main thing you want to worry about is not being the first to get in line but the last. If you wait until everyone is comfortable with the market then you will be the one that is left out in the cold while others are profiting. That is what happened in the last recession. When the nightly news started to talk about the money that was being made in the tech bubble, that was the time to get out. The same with the housing bubble that we are going through now. I knew that it was too late to cash in on the housing phenomenon when TV shows started showing up everywhere on how to flip your home. By the time a money making gets to that level, that usually means that the market is saturated and even harder to make money in.

So now that we are in a down cycle the thing that you want to do is take the time to make sure you plan for the eventual up cycle. If you are a newcomer to the stock market take the time to get educated so that you have a slight idea on what you are doing. Even if you are planning to give your money to a broker or mutual fund, learn enough so that you are able to keep tabs on them, to make sure everything is on the up and up. You do not need the training of a day trader to learn the basics of the market. There are plenty of books and web sites out there that are geared to the novice investor. If you are not prepared to take at least an hour a week to read a book about the market then you are not prepared to place your money into the market.

If you plan on not using a broker or placing your money in a mutual fund then you need to look at step two. Step two would be to learn how to read a financial statement. This is not a hard thing and is truly a lesson that can last a life time. Again there are plenty of information resources out there that will teach you how to do this and it’s important that you get the hang of it. You want to be able to tell what the company that you are investing in is doing quarter to quarter. If you feel like they are wasting your hard earned money then it is time to pull out. If you like the results of the R&D(Research and Development) budget they have set for the next fiscal quarter then stay in. You get to know these things by studying an hour a week at least on your stock buys. Again if you are not willing to give an hour a week on your stock picks then there is a good chance you should be using a broker and not doing your own investing.

Cashing in on the bad economy is not a hard thing to do but it does take time and patience. There are no true get rich quick schemes in the world. If you are looking for that then I suggest that you sign up for a game show. There are however activities that if you take a little bit of time and a little bit of reading then you will be able to profit off of them. Stock picking is one of them. You will get some wrong and you will get some right but with the market as it is now, getting in on the upside is worth a whole lot more.