How to Buy Gold on a Budget: Part I

Okay so everyone is saying buy gold, but show of hands if you have $1,000 sitting around the house for just one troy ounce?

That's what I thought, if you did you would be reading a high priced, subscription site instead of this free one. So, this leaves us with a pressing question; How to Buy Gold on a Budget?

The answer is found in discipline. As Americans we have been trained to become consumers of all things. We buy, eat, drink and consume like an army of red ants. That doesn't have to change when dealing with gold, it just needs to be altered.

First, let's address the impulse buying that haunts so many of us. Instead of grabbing the 32" LCD television, think about it. Downgrade a few hundred dollars and get something smaller. Right there a consumer can save/refocus a few hundred backs. That takes a potential gold investor to almost 1/4 of the way to buying gold.

Now add that to the other impulse items we buy and bingo; there's the money to purchase on American Gold Eagle. Changing from an impulse to a smart consumer is a beneficial and smart move. Look at this way, you are still consuming but instead of a product that will some day be tossed aside, you have consumed an investment.

Secondly, set up a plan to purchase gold at specific intervals through out the year. Target a plan where some form of gold will purchased at X time. Doing this will require discipline, but will allow for a gold portfolio to slowly build.

Insurance Compaines: A good short play for Investors?

Health care, it is the buzz word of the day for politicians. Of course, health care reform has been tossed about for numerous years, the most memorable being the early days of the Clinton, a battle that altered the Clinton administration and turned them right.

Now it is Barrack Obama's turn at health care and the debate is already on. The Senate has started the process, but not surprisingly it has already come to a grinding halt. Despite all the objections, all the talk, look for a plan that creates a government funded system along with the private sector health care insurance.

In the long term, any savvy investor understands that government v. private will end up being only government. However, in the short term, my spider sense is telling me that major insurance supplies will drown in a grand windfall.

The following is pure speculation, but it is based on observations of the past and a logical conclusion of the future. With those two tools, I believe the following scenario is likely to play out.

In today's business world of stock prices and stock holders, business has become about the short term, lifting up profits and the stock quote on Wall Street. CEO's have taken note of this, because an unhappy major stockholder means an unemployed CEO. When the government opens this new segment of health care, one created not to compete, but to supplement the private sector it will create an opportunity the big boys will simply be unable to resist.

The opportunity for investors is this; an astronomic rise in profits. It will play out like this. Person A is a risk, they have a pre-exisiting condition, health care bills are high or could be high. This person will be delegated a high risk and pushed off to the government plan. How? By creating skyrocketing premiums that the company or individual is unable to pay and left with no choice. While person B, the healthy 30 year old, will continue paying the same premiums, but seldom if ever taking benefits. The end result will be the same amount coming in for companies, but far less going out.

When this begins to happen, and IMO it will, profits will soar, stock prices will follow and investors will reap the windfall.

Of course the common person, the one politicians are so concerned with helping will be getting hit twice. Their premiums will remain the same if they stay in the current policy, yet taxes somewhere must go up. Those that are forced out, will suffer through the bureaucratic nightmare that is Medicare or any government program, while paying higher taxes. Higher taxes will happen, ignore those saying otherwise.

In the end the government will eventually liquidate private insurance companies, but not before creating this initial windfall and then dropping billions of subsidies into the hands of private insurance companies to ease the crunch of high risk patients being pushed to the new government medical system.

So the purpose of this column? Pay close attention to the health care debate. Watch how the the insurance lobbying groups act (if they don't the above is even closer to happening), investigate the insurance giants (for the biggest, best and the ones closely connected to Obama) and consider jumping in on this potential windfall. But buyer be ware, the long term position of holding insurance companies is a bad play.

Buying Silver

Let's face it, the economy is struggling and the dollar has been staggered, times are difficult. So what does this mean for the common gold investor? It means that gold and silver are becoming even more critical.

So many people still see gold and silver as an oddity, an option that should be left for graduation presents or baby gifts, but this is simply wrong. This false perception of gold and silver has been driven into the minds of the Americans for one purpose, Keynsian economics. FDR understood that for Keynesian economics to succeed people had to be taken off gold and silver, allowing the government the ability to control the value of the dollar.

Now seventy plus years later, that process has been completed at least for the masses. But what many fail to realize is the wealthy continue to invest and compile gold and silver. Savvy investors use gold and silver bullion to protect against inflation and they understand both will always hold a tangible value. The price will not controlled by printing presses and interest rates.

Back to the topic, buying silver bullion. Silver is the perfect hedge for the common investor.

Silver bullion is cheap, compared to gold and therefore can be easily massed. The spot price of silver has been around $12-15 for an ounce. This allows for most people to pick up large amounts of silver for a decent price.

Silver, if an economic crisis hits can easily be turned into goods. With a lower value, silver coins could purchase groceries, shoes and clothing. Unlike gold, silver's value translate into everyday use, making it a practical metal.

Finding silver to purchase is simple. There are so many forms that silver fits any investor's needs, including coins and bars. Most coins are one ounce and bars normally come in 5 and 10 troy ounces.

After deciding on what type of silver to purchase, find a respected dealer. This really isn't hard as many places, including banks deal in silver, especially the American Silver Eagle. Do a little research and test the dealer with a small purchase, testing their customer service and quality of the silver.

China: America's New Owner

Treasury Secretary Timothy Geithner announced today that China has expressed confidence in the United States dollar. The announcement was praised as great news for the United States and it certainly is. However, think about the consequences of this statement and the fact it holds so much importance.

Geithner is in China attempting to soothe the ever growing Chinese fears about our economy. Failing to understand the possible consequences of the need for Geithner's visit is failing to understand the situation we are spiraling into in.

For those that do understand, this is yet another red, glaring warning light concerning the condition of this nation's economy. As individual investors it is becoming ever more critical to re-think our portfolios and honestly, holdings in this nation.

It is time for the common man to build up silver reserves. Silver is cheap and available. The one set back is price, which is racing upwards. But by becoming a bargain shopper, deals can be found by any potential buyer.

The prudent move is to now start looking for those deals and start turning the weak dollar into a tangible item with a tangible value.

GM Failing Apart...Free Market Losing a King

The word is coming that GM is now basically Government Motors. The term of the day is taxpayer owned, but let's face it; GM is government owned and tax payer funded. The problems with a government run business are immense (I present exhibit A- Amtrak and Jaguar) and I hope to post about this later. But right now I wanted to encourage even more so the investment into gold and silver.

The spot price is going up, but deals can be found and it doesn't really matter if that is in gold, silver or platinum (which is really for the big dogs).

Anyhow, I wanted to add some more links to stories I have done for eHow, which is nice residual income for anyone interested, check it out and sign up.