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The Golden Rule: Safe Strategies of Sage Investors Hardcover – May 3 2010
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From the Inside Flap
With today's increasing economic uncertainties, a strong investment strategy is to put a portion of your net worth in gold. However, given investors' overall lack of knowledge about gold as an investment, as wealth insurance, or as a store of value, many are hesitant to enter this arena.
That's why Jim Gibbonswho has studied the role of gold in the world economy for over thirty yearshas created The Golden Rule. Comprised of contributed chapters from many leading experts in this field, The Golden Rule answers many essential questions, including: How do you purchase gold and in what form? Why gold now? When should you buy? And, most importantly, from whom?
Throughout the book, Gibbons and the extraordinary group of experts he has assembled, put gold in perspective and show you why it belongs in every investor's portfolio. Page by page, this reliable resource provides practical gold investment insights from some of the best minds in the business, including seasoned Wall Street prognosticator Peter Schiff, William Bonner and Addison Wiggin of Agora Financial, James Turk of GoldMoney.com, Congressman Ron Paul, Rick Rule of Global Resource Investments Ltd., Eric Sprott of Sprott Asset Management, and many others.
Along the way, this timely guide also:
Demystifies gold by putting it in the context of twenty-first century economic realities
Highlights a variety of ways to invest in goldfrom mining stocks to buying gold coins and bullion
Discusses gold's importance to both the world economy and your future
Provides contact information to the gold experts highlighted in the book
And much more
With the financial markets more erratic than ever, gold appeals to investors looking for a safe haven for their assets. With The Golden Rule as your guide, you'll quickly learn how to incorporate gold into your portfolio and make the best decisions possible with regard to this precious commodity.
From the Back Cover
Praise for The Golden Rule
"I have been around the 'hard money camp' for almost thirty years and know almost all of the writers in this book, often for decades. I have learned from them and now you can reap the accumulated wisdom of many years of these masters of the gold markets. Got gold? You should!"
John Mauldin, Millennium Wave Investments, author, Bull's Eye Investing
"The Golden Rule contains serious analysis and arguments why every saver should hold some of his cash and assets in physical gold and gold-related investments. A fine read!"
Marc Faber, Editor, The Gloom, Boom & Doom Report
If you don't trust Greenspan or Bernanke, Bush or Obama, Congress or any other part of the regime, to plan your economic future, own some gold. It's a personal declaration of independence."
Llewellyn Rockwell, Chairman, Ludwig von Mises Institute
"If there's one thing American investors need to know more about, it is gold. They can either learn about it nowahead of the curveor later from the school of hard-knocks. Jim Gibbons thinks now is better and has done a great job gathering some of the industry's most knowledgeable experts together in one highly informative, full-spectrum package."
Charles Goyette, author, New York Times bestseller The Dollar Meltdown
Before the recent economic crisis, some investors were leery of holding an asset such as gold, which pays no dividend and earns no income. But times have changed, and today, having gold in your portfolio is more important than ever.
Nobody understands this better than author Jim Gibbons, and now, in The Golden Rule, he has assembled an extraordinary group of experts in this field, who will help you gain a firm understanding of gold as an investment, as wealth insurance, and as a store of value.See all Product Description
Most Helpful Customer Reviews on Amazon.com (beta)
First, as it is a collection of two dozen essays, it presents a variety of ways to invest in gold. My knowledge about the practical aspects of gold investing was limited and the various essays filled in many gaps for me. Although Gibbons' point of view is that the primary reason to hold gold is as a form of wealth insurance, the investment aspects of owning gold also receives wide play from the various contributors. Despite gold being at record prices, I guess it's not surprising that virtually all the contributors think the price of gold is going much, much higher.
Additionally, Gibbons also asks the reader to believe that the contributors he has gathered together are much more trustworthy than your average Wall Street brokers or financial planners. He does a good job of conveying to the reader why we this might be so. If one can believe Gibbons, the referrals alone are worth the price of the book. The list of referrals includes stock brokers, coin and bullion dealers, and investment newsletter publishers among others. A few names I recognized, but the majority were new to me.
Again, I am no expert on gold, but the combined effect of the essays makes the book feel more like a primer on gold investing than it does a detailed analysis. Although a few of the contributors go in to great detail about certain aspects of gold investing, it is readily apparent that each one of them could have written their own book on investing. Some of them have. This is both a strength and a weakness of the book depending on what you hope to get from it.
If there is one true weakness in the book, it is that a couple of the essays already seem a bit dated. It's for this reason that I only gave the book a 4 star rating, although if just one of the contributors I plan on contacting pans out, it would be 5 stars.
The book is divided into five parts, roughly classifying the professionals who contributed chapters: Brokers/Money Managers, Investment Newsletter Writers, Coin and Bullion Brokers/Dealers, The Miners, and Game-Changing Educators. Some of the names are quite familiar, such as Ron Paul, others less so; yet all of them have in common, besides a great deal of knowledge and expertise, so much conviction that at least one has been imprisoned for following his beliefs.
The preface does a good job of explaining what the book is all about and how the author brought together so many experts but I suggest that you start instead with the introduction, "The Tie That Binds", which perfectly illustrates how gold, which has proven itself to be a reliable way to store and preserve wealth for thousands of years, is still important in our modern world. If you aren't the type of person to read introductions or if it doesn't convince you that the information presented here is relevant to you, skip to pages 49 and 50 and read about the two Vietnamese refugees--then go back to the preface and start over, from the beginning.
Certainly "The Golden Rule" is an excellent current overview of the entire subject of investing in gold but therein, perhaps, lies a fault: the book is written for this particular time and it refers to specific stocks and firms and even quotes the current value of gold in U.S. dollars. This means that although the the principles presented will still hold true in twenty or fifty years, the specific examples will not. This was obviously a conscious decision on the part of the author, to gain relevance, interest, and practical usefulness in exchange for some timelessness. For the most part, this was successful, although certainly prices have changed in the time between when the words were written and when they are read. I deduct half a star for this but still round up to five stars--the books on investing in an inflationary environment from the 1970s are still useful and arguably even more interesting for being a record of their times.
In thirty or forty years, reading this book about gold at $1,000.00 an ounce will likely induce nostalgia for when the U.S. dollar was really worth something. Fiat money has always failed and the best one can hope for is that it succumbs to the type of slow inflation that has ravaged the U.S. dollar over the past decades, for even time is its enemy. Gold endures.
A copy of this book was provided for review by the author.
Having read a number of other books on pretty much the same subject, I was interested in seeing what the latest thinking might be regarding the state of the U.S. economy in general and the future of gold in particular. When I began reading the book, however, I soon discovered that it was essentially a compilation of essays, articles, and speeches by a number of investors and analysts knowledgeable in the various fields of gold investment. Unfortunately, at least from my initial perspective, the majority of them dated from 2008 or earlier, with one going back as far as 1997.
I found this to be something of a disappointment. But as I read deeper into the book my opinion began to change. The reason for that change was that there appeared to be two types of essays/articles in the book: 1) those which offered specific investment advise; and 2) those which more broadly addressed the current state of affairs with regard to the U.S. economy and its implications for the U.S. dollar and gold in the future.
I found many of the former chapters to be somewhat self-serving and also a bit difficult to put into proper perspective. Although they were highly informative and offered some sage advice, their recommendations were outdated making it hard to put them into any meaningful context. This difficulty was compounded by the fact that the "original" dates of publication of this material varied from chapter to chapter. Broadly speaking: I learned a lot from these chapters, but it wasn't what I was looking for, and I wasn't sure how useful it might be.
The articles and essays of the latter type, however, proved to be extremely interesting and enlightening. In the main: they addressed America's economic and political problems and outlook in a broader sense and, as a result, although they might also be dated, the information they conveyed was timeless. Several of the chapters stood out above the rest and should be of interest to anyone having a specific interest in any of the book's topics, or who, like many of us, is just a casual but concerned reader. The ones I would recommend most highly are: Chapter 7, Bet Against a False Premise; Chapter 8, Undervalued Companies and Gold; Chapter; 12, Gold is Truly Precious; Chapter 15, The Internet Gold and Currency Provider; Chapter 16, Gold, Fiat Currency, and Integrity; Chapter 21, What the Price of Gold is Telling Us; and Chapter 22, The Gold Price. Chapter 16 is the best and most telling. It may sicken you, may even scare the pants off you, but it is an absolute must read.
As you can see, I have mixed feelings concerning this book. But the book's good features far outweigh the bad, and I feel that it is a book which should be read by anyone seeking to know more about America's economic problems and/or what the implications of those problems might be for the country and/or the gold market.
The book is actually a collection of 23 essays and articles, most of them reprints from other publications that appeared mostly in 2007 and 2008. These essays are divided into five categories but all share the common theme of talking about what a good investment gold is and why it should take up a share of your investing dollars. The variability amongst the various articles has more to do with the particular viewpoint of the writer than the general feeling that you should own gold. Several parts become very repetitive - after all, one can only read that paper money is not backed up by anything except for trust, and that the Fed and other government officials are con artists so many time before it gets bothersome.
One after another of these essays trots out pretty much the same basic argument which is that gold has held up its value for thousands of years as a means of value exchange while paper money is too easily manipulated by corrupt politicians. While the overall message comes across since it is hammered into your head repeatedly, I found other sections to be much more interesting. Those were the sections that delved more deeply into the various ways that you can own gold. Whether you choose to invest in the metal itself (by buying coins, say), or choose to invest in a mining company stock, or an exploration company, there are essays here that help you launch your own searches into the particular investment type and that was worth the read.
The author (or collector?) of these essays does not have a long pedigree as a gold expert. He explains his own background in the front part of the book and we learn that he built and operated an inn and now operates a clam farm. So, what makes his insights useful? In the Preface he states that he has learned over the years that one of the most important things you can do in the investment world is to find out who you can trust and that his experience showed him who to trust in the gold world. Those people were the ones who were asked to contribute essays towards this book. Of course, speaking for myself, I do not know the author, nor do I have any way of evaluating whether the people he recommends are trustworthy, nor whether he himself is trustworthy so this is a bit of a dilemma.
Now after having finished reading the book the question becomes would I follow the recommendations given in it? My answer is that I would consider having some gold coins on hand as a type of catastrophic insurance, but no more than that. Gold is simply not appealing enough of an investment to my investing and thinking styles and I do not see the attraction. However, I do see how others with a different mindset may wish to explore gold in a deeper fashion. For those folks, this book can be a valuable addition to their investing library and therefore I chose to give the book four stars. Would I invest in gold? No - but it may make sense for you.
The political views of the various authors have a common theme. All are of a Libertarian (small limited government) bent. For anyone who may not know, this is exactly the viewpoint that our nation's founders (great men like Thomas Jefferson and Ben Franklin) had in common. The piece written by Ron Paul is a pure gem. This great man should be given a chance to lead America.
Here are the main themes in this book. 1) The value of gold as real genuine money; 2) Why it's so important to own gold now in this time of out-of-control government spending; 3) Myriad of ways of investing in gold; and 4) One of the most important considerations in any investment is the "who" (who you can trust). And this book introduces you to a circle of people that I believe you can trust (and in two cases that belief is based on direct experience).
The main thesis is that the federal government controls the dollar. It is a fiat currency backed the faith in that agency. Hey guess what? The federal government is a bloated, out of control bureaucracy. Not only are they spending insane amounts of money, they are inept at tracking it. They are too big, too inefficient and too corrupt to even know what they are doing anymore (even if the folks at the top genuinely wanted get a handle on things).
Money is introduced into the economy in two ways. The Fed sells bonds or the Fed prints new money to essentially buy their own bonds (they call this "monetizing the debt"). When people start losing faith and confidence in the Fed, they will be reluctant to buy those bonds. The Fed would then have to raise the rates of those bonds, which would only further decrease that faith and confidence, setting off a vicous circle. What they do instead is quietly buy their own bonds. Selling bonds is not so inflationary because it's sucking savings out of the economy-- that is money that would ultimately have been spent on other things. But when the Fed purchases their own bonds with newly minted dollars, that is the definition of inflation-- and it is happening now. The only other piece of the puzzle needed to trigger rapidly increasing inflation is a term economists refer to as "velocity". Velocity is the rate at which dollars change hands.
When the job market improves and confidence is increasing, businesses can hire and expand, people can spend more because they have faith that money is coming in. Then dollars will start changing hands faster and the market will start picking up on the fact that there are too many dollars out there competing for goods and services. Then high inflation will kick in. How high? No one knows, not even the Feds, believe it or not. But it could catch a lot of people by surprise-- that's how high.
Moreover, the dollar is unique in that it is the world's reserve currency. That means that other than gold, the one thing nations have wanted sitting in their vaults in case of emergency is the US dollar. China alone is supposedly sitting on over a trillion US dollars. Should the day come of double-digit inflation and increasing every day, they are going to be secretly panicking and running for the exits. Where will their dollars go? To gold of course, because it can't be printed out of thin air (and because other currencies will probably be crashing along with the dollar).
Should this happen, gold (and silver and platinum as well) will become the next bubble. There is no telling how high they could go. Keep in mind that gold (and even moreso silver) are "thin markets". There is only a miniscule amount of money in these markets today compared to dollars, stocks and other financials. Should a significant percentage of that money suddenly flood into the gold/precious metals markets, it will make the 1979/80 gold bubble look like a tiny blip.
You know how a bubble works? World banks (e.g. smart money) would pile into gold. Followed by saavy investors, less saavy investors and all the down to the shmoe in the street. Once people see a price skyrocketing they will want in on the act. Of course, you, having read and informed yourself will already have a generous stockpile, bought at bargain basement prices, in your safe deposit box. And you will be slowly selling into this maelstrom to pay off your debts and build your fortune, saving some gold of course, just in case the dollar really does fall off the face of the earth, only to be replaced by the Amero (North American currency) or even a global currency (based on a "basket" of gold, silver and "reliable currencies"-- the latter being an oxymoron of course).
If you understand this, you can potentially earn a fortune. If what you just read felt like I was preaching to the choir, then you don't need this book. It's money better put toward your gold/silver stash. But if you are new to this thinking, then this book will be an excellent primer to get you started.
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