Gold Again Over $1,200 -- Going to $2,000+ -- But False, Misleading Statements Still Abound, Says Expert

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There are still many false and misleading statements repeatedly made about gold as part of a diversified portfolio, even though the price again has climbed to $1,200 an ounce -- and will go much higher, according to veteran precious metals expert Barry Stuppler, President of the California Coin and Bullion Merchants Association and Immediate Past President of the American Numismatic Association. He believes that as the world's currencies continue to devalue gold will be $2,011 an ounce by the end of 2011.

Gold will be $2,011 by the end of 2011.

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Even with gold proving its long-term viability as it again tops $1,200 an ounce amid the financial problems in Greece and elsewhere, false and misleading statements about gold as part of a diversified portfolio continue to be repeated in the news media, according to Barry Stuppler, president of the California Coin and Bullion Merchants Association and Immediate Past President of the non-profit, 32,000-member American Numismatic Association.

As gold again moved above $1,200, he repeated the prediction he made two years ago: "Gold will be $2,011 by the end of 2011."

"Some of the hackneyed arguments against gold come from financial analysts who work for brokerage houses that have a vested interest in steering money toward equities they sell and away from physical gold ownership. Some news organizations are giving out the same incorrect or misleading comments," said Stuppler, who is also president of Stuppler & Company, Inc. of Woodland Hills, California, a rare coin and precious metals dealership.

Here are frequently encountered arguments against investing in gold and Stuppler's responses based on his over 30 years of professional experience in the gold and silver markets.

ARGUMENT: Gold drops when the U.S. dollar is strong, and the dollar recently has significantly gained against the Euro.

RESPONSE: "The belief normally has been that if the dollar strengthens against other currencies that the price of gold in dollars will drop. But gold continues to rally even as the dollar has strengthened with the recent collapse of the Euro caused by the current economic issues in Greece and upcoming issues in Spain and Portugal. Gold is proving to be the ultimate reserve currency, and therefore, should continue to rise dramatically as these Euro zone countries' economies continue to implode."

ARGUMENT: Since 1975, when Americans again were legally allowed to own such things as gold bullion coins, the Dow Jones Industrial Average has generated a greater return on investment than gold.

RESPONSE: "This is an apples-to-oranges comparison. The composition of a one-ounce gold coin doesn't change; it remains one ounce of gold. But the composition of the Dow has changed over two dozen times since 1975. Companies that declined in profitability or went out of business were replaced by other publicly traded firms. The price of gold has increased over 300 percent since 2000. Any comparison to the frequently re-juggled components of the Dow is invalid.

ARGUMENT: Gold is a risky investment.

RESPONSE: "And the stock market isn't risky? Recent activity in the stock market has given a totally new meaning to the word 'risk.' The price of gold may go up or down, but gold bullion coins are not subject to defaults, liquidity problems or the kinds of risks we've seen recently in the equities and real estate markets."

ARGUMENT: Gold doesn't pay dividends.

RESPONSE: "Neither do many stocks. Owning physical gold has proven to be a long-term way to preserve wealth and avoid the kinds of risks associated with even dividend-paying investments. Gold's dividend is the role it plays as portfolio insurance and balance. The absence of a dividend is more than made up by its outstanding relative performance over the last ten years."

ARGUMENT: Gold is not a good hedge against inflation.

RESPONSE: "Comparisons of gold versus inflation usually peg gold at its intra-day high back in 1980. If you track gold versus inflation since 1975, when Americans were permitted to legally own gold bullion coins again, the ratio is much better. And, if you still insist on using 1980 or almost any year as a starting point, then compare the purchasing power of the U.S. dollar since then. It's lost about three-fourths in the last quarter-century while gold has maintained its purchasing power. In 1932, you could purchase a man's suit for a $20 bill or a $20 gold coin. Today, a $20 bill will barely pay for alterations, but a $20 denomination gold coin now is worth over $1,200 and will still purchase a very nice suit."

ARGUMENT: Wall Street analysts say that gold exchange traded funds (ETFs) or gold stocks are better than owning physical gold bullion coins.

RESPONSE: "Better for whom? For sure, better for the brokerages that trade in ETFs and individual stocks. An ETF is still a paper asset and Wall Street's credibility isn't at its highest point. Advice from many 'experts' has been absolutely wrong lately. Some analysts touting ETFs and/or gold stocks work for brokerages that buy and sell equities, so there is at least the appearance of conflict of interest in their advice to purchase only gold stocks rather than gold coins. Remember, the reason many people buy gold coins is to actually own and hold a 1,000-year old proven way to preserve wealth. Investors buy gold coins because they don't want to put all their investments into paper assets that can be devalued by government action. The popular gold bullion coins offer excellent liquidity worldwide."

ARGUMENT: It's too costly to buy, sell and store gold bullion coins.

RESPONSE: "Major dealers, like me, charge only two percent over cost on sales of ten ounces or more of bullion gold coins. The comparatively inexpensive fees for a bank safe deposit box can be itemized as an investment cost on your tax return."

ARGUMENT: Some Wall Street analysts claim $1,200 an ounce is too high for gold.

RESPONSE: "Another Wall Street prediction? We've sure seen how absolutely wrong some Wall Street analysts and forecasters have been on many things recently. We've also heard over the years from so-called 'experts' that gold was too high at $600, $700 and so on. With well over 10 trillion dollars worth of U.S. dollars, yen and euros being printed or created with a few keystrokes in the form of credits to governments, banks and corporations, and with world government bailouts and stimulus packages, the value of global paper money is likely to be devalued against gold. As the world's currencies continue to devalue I believe that gold will be $2,011 an ounce by the end of 2011."

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