The Power of Gold

“It glitters and shines, it badgers and blinds” – Dan Fogelberg.

Lately, I can’t get gold out of my mind. Perhaps it’s from the unrelenting barrage of gold commercials on the tube, in the print media and almost every time I pull up an app. And I wonder if William Devane really does buy gold.

Here are some thoughts I’ve jotted down about gold.

Jot #1 – Why is gold so valuable? Gold is one of the heaviest elements found on earth right up there with platinum, uranium and silver. But, gold and the other heavy elements weren’t made on earth. Until recently astronomers and astrophysicists believed these heavy elements were forged in the death throes of a huge dying star (super nova) where the temperature was approaching a hundred billion degrees. It had to be that hot for the atoms of lighter elements to fuse into the heavier ones. Can’t happen on earth. The explosion of the super nova flung gold and other elements far out into the universe where they eventually became part of the formation of the earth’s crust. New theories now suggest that gold was formed when two super hot neutron stars collided. Whatever the circumstances these cosmic events only lasted a few seconds so there wasn’t a vast supply of gold created, thus, making it extremely rare. In an article in Forbes earlier this year Warren Buffett said the world’s entire gold stock would fit comfortably within a baseball infield if melded together to form a cube. Others say that all the gold mined from the earth could be stored in three Olympic sized swimming pools. Who knew! Scarce and valuable.

Jot #2 – What’s the best way to own gold, you ask. This is a no-brainer. Physical ownership. My first choice would be on your property in a very heavy safe. Perhaps at a nearby bank in a safety deposit box, maybe. Your gold should also be in a manageable form – one ounce pieces whether coins or bars. Leave the heavy bullion to Auric Goldfinger. In a futuristic “Water World” scenario those one ounce coins could come in handy. Don’t ever own a paper certificate that states you own gold stored elsewhere.

Jot #3 – Is it a good idea to have gold in an IRA? This is a tough call, and there are strict rules. You can have physical possession of certain types of gold coins in a self-directed IRA, but bullion must be placed with a qualified custodian, bank or trust company. I still like the idea of physical possession. IRA ownership is too complicated.

Jot #4 – Most everyday people who buy gold, keep it, and the gold ends up with the next generation. Remember the news article earlier this year about the deceased gentleman in Las Vegas with millions of dollars of gold coins in his seemingly modest home? His mother had lived with him before she died and probably bought most of the coins. Why would you want to sell a rare & shiny element anyway?

Jot #5 – I read an article about gold is being used more and more in a variety of high tech products in addition to Rolex watches and jewelry making gold a “consumable” as well as a medium of exchange. This certainly would drive the price of gold up in the future.

Jot #6 – For my next birthday I want a custom solid gold iPod with the complete Beatles library on it. No other tunes. 24ct, please which is 99% gold. None of the 18ct. stuff which is 75% gold.

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