Global investment demand for gold has hit record highs and supply has continued to diminish worldwide. Why have investors gone into gold in record numbers? Here with us today is Aurum Advisors President Marc Lubaszka to shed some light on this precious commodities rise and what to expect from this point going forward. He has successfully predicted several major moves in various markets over the last ten years while most experts have fallen short. He predicted oil to rise substantially when it was sitting at $14 a barrel in 1999 up 500% since then. He suggested investors buy gold at $265 an ounce in 2000 $11 above its 22 year low. Gold is up 300% since then. He began recommending investors get out of the U.S. dollar in 2002 before the dollar dropped over 30%. He suggested exiting real-estate in 2004 about 6 months before its collapse. Now he is suggesting investors increase their gold holdings. With that type of track record would you entertain the idea of buying gold?
IBT: How has gold performed during the crisis compared to other assets? Where do you see gold going in the next 12 months?
Marc Lubaszka: Gold has outperformed everything over the last 10 years tripling in value. It will continue according to some of the smartest minds out there for a minimum of 5 years. Over the next 12 months expect an above average return. We will see gold challenge if not surpass the $1200 an ounce mark. Every financial advisor on the planet would agree there is never a time where you shouldn't have some of your money in gold. During normal times having a portion of your money in gold will serve as a hedge against uncertainty, a hedge against disaster, an unexpected crisis. You should have a larger position in gold now than during normal times not only as a hedge, not only as something that will provide protection, but also as an investment that will give you the growth that the rest of your portfolio is lacking because it is still possible to gain during these uncertain times. In fact a tremendous amount of money will be made during this period for people who are paying attention and gold is certainly one way to do just that.
IBT: When has gold been a bad idea for investors?
Marc Lubaszka: Gold? It has never been a bad idea. There have been times where other investments have been a better idea but gold has never been a bad idea with at least some of your money. Some traditional vehicles outperformed gold in between 1970 and 2000 but gold quietly increased 7 fold over that 30 year period. $10,000 invested in gold in 1970 turned into $72,571 by the year 2000 – so ultimately it makes sense for investors to have some of their money parked in gold during good times and it makes sense for investors to have a larger percentage of their portfolio in gold during bad times. Things are going to get worse so if you don't have any gold you want to get some today and if you have some gold you want to increase your gold position moving forward.
IBT: How will mining production decrease affect gold price?
Marc Lubaszka: It's no secret it is becoming more and more difficult for gold mining companies to find new veins of gold even with the advances in technology and the gold mines that are already pulling gold out of the ground are having to dig deeper to pull gold out of the ground which is increasing the cost of production. And gold, like oil, is limited. It's a limited resource and as we know the price on any commodity will go up as the availability shrinks. So you have a situation where mine production has been on a steady decline for many years now and you have demand for gold increasing which is resulting in huge gains for investors who have acquired bullion gold coins. Investors who have been with us have tripled their money over the last 10 years and they have been able to do it safely.
IBT: Do you think inflation will be a bigger problem short term or long term?
Marc Lubaszka: Either way, short term, or long term, you want to add the only investment that can really protect your portfolio. You have to have money in gold. You have to. So I suggest doing what a lot of very smart investors did during the last inflationary period we saw here in the US during the 1970's – they bought bullion gold coins and gold during that time increased 2400% so as soon as we get the first big wave of inflation you will see that wave of inflation in the gold price – a dramatic rise can be expected. I know I continue to repeat the same ideas over and over again on every program I'm interviewed on, but these very basic ideas can have a profound impact on one's portfolio if put into action. Most people are afraid to take action right now. Most people are just kind of sitting tight waiting to see what will happen because there is so much conflicting information out there but you want to take action. The biggest mistake investors can make right now is not moving in the direction of commodity related investments. If you want a safe bet go into areas that are more predictable and more stable. You want to acquire assets that take advantage of the problems we are currently facing.
IBT: What is the most efficient way of investing in gold?
Marc Lubaszka: In this kind of economy, avoid owning gold stocks, futures contracts, and online storage opportunities. The only way to buy gold is to buy gold if you want something you can count on. Get the gold in your hands; you can keep it in a safety deposit box or somewhere safe. This does two things. Number one, you protect your money in reality not theoretically. And number two, it gives you the peace of mind that owning an asset outright gives you with an above average return. Not having to worry is really one of the most valuable commodities on the planet right now.