Trends in Gold: Guidelines and Top Videos for Investment Planning

At the dawn of the millennium, the gold market has come to play a dominant role in investment planning. The large-scale trend is slated to continue over the first half of the 21st century.

On the other hand, the path of the gold market will not be smooth or straight. Rather, the metal will behave like other types of assets in the financial forum by following a winding and confounding route.

The financial crisis of 2008, along with the global recession in its wake, shoved the gold mining industry over a cliff. Even so, the companies in the field are regaining their strength thanks to the pickup in demand for natural resources of all kinds as the global recovers its footing.

If history is any guide, the stocks of the large producers of gold - also known in the industry as the majors - will lead the ascent to newfound heights of prosperity. The spearheads will duly be followed by the small fry, otherwise called the minors.

On the whole, the equities of bantam firms will lag those of the heavyweights in the arena. Yet many of the midgets will soar much faster and higher when the time comes for them to flourish.

By the same token, the minors will fall much faster and further each time the upsurge comes to an end. In fact, the majority of the minors - consisting of the current players in the field as well as the hordes yet to be born - will end up going bust.

As a result, legions of heedless investors who plow untold sums of money into the juniors will end up with a drubbing. The bulk of the punters will have little or nothing to show for all their frenzied hustling and wispy dreams of wealth.

Prospective Future

Looking at the big picture, the gold market tends to thrive under extreme conditions of one sort or another. More precisely, the golden metal has a field day in an age of prosperity, and it does likewise in the face of adversity.

For instance, suppose that the global economy were to thrive. In that case, the surging demand for natural resources including precious metals will drive up the price of gold.

By contrast, consider the scenario where the economy falters. The midst of a downturn, the governments of the world are bound to print up money in vast quantities out of thin air. The surge in the money supply will then drive investors to seek refuge in gold as a hedge against the ravages of inflation.

As noted earlier, though, the upward path of the golden metal will not be steady or direct. The long-term trend will be twisted this way and that by giddy swings to the upside as well as nauseating flops to the downside.

Given the rough ride in store, any investor who remains exposed to the metal at all times will be bashed and bruised by the tumult in the marketplace. For this reason, the canny players will plan on a partial engagement with the market by entering and exiting the arena during the most propitious times.

In this light, the body of this article highlights the primary forces and major events looming on the horizon. Even so, we need to keep in mind that the future is not cast in stone. Rather, a variety of sideswipes - spanning the gamut from war and plague to flood and famine - will add to the tumult in the marketplace.

In spite of the uncertainty, though, certain outcomes are more likely than others. For this reason, the thoughtful investor would find it advisable to draw on the insights of the best minds in the field.

The gallery of videos presented below is designed to serve as a starting point for further exploration and analysis of the gold market. The cameos are supplemented by a roundup of tips on investment vehicles as well as pointers to additional resources.

The price of gold has reached newfound heights since the turn of the millennium. In spite of the resurgence, though, the price of the metal is still below its prior peak after adjusting for inflation.

As the industrialization of the planet picks up speed, the demand for raw materials will climb even higher. One consequence will be a groundswell in the price of gold. The real price of the metal will doubtless rise to its watermark from 1980, then advance much further over the decades to come.

Legendary investor Jim Rogers is bullish on commodities of all types including gold. In the following video, he points out that gold will have to surpass $2,000 per ounce just to reach its previous high - $850 in 1980 - after adjusting for inflation.

• Jim Rogers Says Gold Could Hit $2,000 Over Next Decade

One of the long-term trends in gold is the rise in price due to the upswell of money sloshing around the economy. Against this backdrop, the golden metal will continue to advance in terms of all the major currencies around the globe.

In particular, the U.S. dollar is in a weaker position compared to other stalwarts in the currency market. For this reason, the price of gold will rise even more in terms of the greenback compared to the case for rival currencies.

The following video (April 2008) delves into this issue.

• Gold vs. Dollar

In the modern era, one of the curious traits in the market for raw materials is the divergence between the surge in price and the ability of the producers to ramp up production. In a number of areas ranging from oil to gold, the run-up in prices has failed to elicit a comparable rise in supply.

The main reason for the shortfall is the challenge of finding brand-new supplies to replenish the existing lodes. A second factor lies in the difficulty of extracting any fresh resources from meager deposits nestled in deep-seated veins located in inhospitable locales.

The barriers to extraction will only grow bigger over the decades to come. John Embry, Chief Investment Strategist at Sprott Asset Management, talks about a variety of problems in the gold market as well as the financial system and the real economy. The following video (April, 2009) is the first module in a series.

• Gold, Gold Stocks & Gold Price Manipulation, Part 1

The dilution of the currency is problematic not only for the U.S. but other countries as well. With few exceptions, the penchant for whipping up a torrent of money is leading to the gradual breakdown of the currency. One direct consequence is a boost for the price of raw materials including gold.

Marc Faber, publisher of the Gloom, Boom & Doom Report, points out that the U.S. dollar has already lost its function as a store of value. People prefer to put their money in tangible goods such as gold bullion in secure vaults or luxury apartments in budding economies. The following cameo (Oct. 2009) is the first of three modules.

• US Dollar and Money Printing

Given the rampant creation of money by the central bank along with the budget deficit of the government, the U.S. dollar is destined to keep shrinking. Even in the absence of a catastrophic collapse, the currency could shrivel up until it has so little value that Americans can scarcely afford to buy any imports spanning the gamut from crude oil to mobile phones.

Peter Schiff, president of Euro Pacific Capital, is an outspoken critic of government policies. In the following video (Nov. 2009), he points out that the greenback has no intrinsic value; if people stop accepting the currency, then it would be worthless. Even if the dollar were to hang on to dear life, one outcome in the works is a massive jump in the price of gold.

• Gold Soon at $5000 or More

There are several ways to invest in gold. One approach is to own the metal directly by taking possession of bullion or coin.

The traditional form of bullion is a block of refined gold. The bars of such type come in a variety of weights. A variation on the theme is a small chip which is less than the size of a credit card. The weight of a single chip is apt to range anywhere from a single gram to a single ounce (about 28 grams).

The second mode of ownership is indirect. More precisely, an investor can obtain exposure to the metal by way of financial instruments. This type of vehicle is illustrated by an exchange traded fund (ETF) which holds a stake in a stockpile of gold. A pioneer in the domain is the Gold Shares fund which forms part of a product family known as the Standard & Poor's Depository Receipts (SPDR). The shares in the fund are bought and sold like any other stock in the U.S. under the ticker symbol GLD.

One of the most popular schemes is to buy shares in companies that have a stake in the gold industry. An example is a prospector or a miner of the metal.

On the other hand, the mining business entails an enormous amount of risk. For this reason, the majority of firms in the industry are doomed to go bankrupt sooner or later.

A part-time investor can scarcely afford the time to keep tabs on the marketplace on an ongoing basis. For this reason, a better approach is to buy an index fund based on a benchmark of the gold market. To this end, an exchange traded fund is a convenient and cost-effective vehicle.

A popular rig in this corner of the forum is a fund called the Market Vectors Gold Miners. The objective of the fund is to track the price and yield associated with the Gold Miners Index (GDM). The latter yardstock contains dozens of stocks among the larger producers of gold and silver; the names in the index range from Barrick and Goldcorp to Yamana and Kincross.

Listed on the New York Stock Exchange, the ticker symbol for the SPDR Gold Shares is GDX. The shares of the exchange traded fund can be bought and sold in a brokerage account just like any other stock.

An article at Wikipedia provides an introduction to gold as a target for investment. A link to the write-up is provided below in the Resources section.

A primer on investment planning for the golden metal is available in an article titled, "Investment Strategy for the Gold Market". The write-up is linked below.

The Aden Sisters are renowned for their grasp of the big picture of the commodity markets. A glimpse of their expansive mindset is available in the sketch titled, "Gold & Silver: The Shining Stars".

The price of gold is closely tied to the cycle of natural resources in the marketplace. The nature and cause of recurrent patterns is discussed in a set of articles titled, Market Cycles. The link is provided below.