Getting Started in Gold/Silver Investing with CEF

I am a big believer in commodities.  This includes all commodities: Precious Metals – Gold, Sliver, Palladium, Platinum; Base Metals – Copper, Zinc, Lead, Aluminum; Energy – Oil, Uranium.  

“Commodities demand is growing for a variety of reasons, but the great industrialization of Asia is certainly the primary one.  About half of the world’s population lives in Asia and has never experienced anything like the abundant material standard of living that we take for granted in the States and Europe.  As the rise of Asia gradually increases the local standards of living, the per capita consumption of virtually all major commodities will probably eventually approach first-world levels.

China is the greatest example of this phenomenon, as a recent Earth Policy Institute report pointed out.  The Chinese collectively already consume 40% more coal, 68% more meat, and 148% more steel each year than the United States.  A fascinating subsequent EPI report just published this week, while unabashedly environmentalist in focus, ponders the impact on commodities if the Chinese per capita income of $5k eventually reaches the US level of $38k.” – Adam Hamilton

Over the past months you have seen many headlines such as this one released today “Gold storms to new 25-yr high, silver surges.”  Most will say its at a 25-yr high, I’ve missed the run.  Don’t fall into this trap.  The commentators never quote the inflation adjusted price.  Here is an article that explains the difference. I don’t subscribed to this person’s newsletter.  I am only using his article to make my point.

I personally think that one of the best/simple/conservative ways to make money over the next five years – is to dollar cost average into gold and silver.  Determine how much money you want to invest in this sector over the course of a year and each month buy 1/12 of your investment.  Central Fund of Canada (CEF) is probably the easiest way to implement this strategy.  CEF trades on the AMEX.

“Central Fund invests in gold and silver bullion and does not speculate with regard to short-term changes in gold and silver prices. As of October 31, 2005, on a physical basis, 50 ounces of silver were held for each ounce of gold held. During such time, Central Fund’s net assets at market value of approximately $541 million consisted of 53.9% gold bullion and certificates, 44.5% silver bullion and certificates, and 1.6% cash, marketable securities and other working capital amounts.”

GLD (a Gold Exchange Traded Fund -ETF) is another easy vechicle and there soon will be a silver ETF.

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