Buying Gold? Looking to make some quick money?

I have said before on our blog that I think buying gold is a really, really bad idea. First, you would have to buy a lot of gold to make your purchase worthwhile. Second, buying gold only makes sense if you know that the economy is going to go into such a tailspin that it will not soon recover, that you can get your gold when everything else falls apart, that you know someone will want it under something like equitable conditions after the final crash and that you will then be able to exchange your gold for stuff and if you have a plan for what to do after you have spent all of your gold. Any rush to buy gold now is likely to signal a kind of civilized survivalism taking hold. iT gives you a stake in things falling apart. It annoys me that the liberal and reactionary radio stations both continue to push buying gold as an economic strategy for ordinary people.

Big investors are indeed buying gold at more than $1000 an ounce now after a swing downward in prices earlier this year. Gold prices are expected to hit $1100 an ounce later this year before declining again. Massive gold purchases by these big investors are hurting the dollar and slowing down economic recovery to some extent. Not only do these purchases put the dollar at a disadvantage internationally, but they are being mixed with purchases of high yield bonds and risked capital. The governing assumption is that the dollar will not, or cannot, recover soon and that investors should play the marketplace looking for the best deals with a spread of money going into non-productive economic activity. If they're wrong, we hit another crisis in housing, credit, pensions and most trade deals. If they're right, we have no jobs and almost no industrial or green growth.

Judging from the radio ads and the Commodity Futures Trading Commission information, the market in gold is being quickly seized by speculative investors. They will trade to the point that they think they can make a profit and then drop out of the market quickly, putting the smallest investors at great risk. Even if you could buy lots of gold now and hold on to it to the point that it hits $1100 an ounce, speculators are likely to make the gains--not you--and when they leave the market you will not be able to reap a profit worth your time and trouble. You can't take gold with you--and you can't eat it or wear it or spend it directly.

If you really, really must buy a precious metal, have the money to do this and are not troubled by voices of conscience, try silver. Silver is now selling at over $17 an ounce. It took a hit last week, but it's still up 44% this year overall. Central banks want it, but so does industry. Its industrial demand is fed by the same kind of doom-and-gloom thinking gold is: silver will do better this year because military establishments the world over will need it for nanotechnological advancements. Silver is also seen as solving some health and safety problems in the solar-power industry.

Before you go off thinking that you're doing the good and green thing by trafficking in silver, though, remember that most silver comes to us through processing lead, zinc, copper and gold and that mining and refining precious metals is always ecologically and environmentally destructive. "So what?!" you say. Mongolian authorities will greet you with open arms when they hear of your new found interest in silver and your lack of conscience. Mongolia is the world's last frontier in precious metal mining and, like all of the former socialist bloc, is up for sale and promises little or no regulation and oversight. Get your silver, make your profits and leave the peasants to fend for themselves.

Maybe gold and silver don't feel exactly right for you. Here's another way to perhaps make some quick bucks. Some large corporations are now selling bonds and borrowing money in order to pay higher dividends to stockholders and attract more investment. This adds nothing real to the economy, but it does fill up some tv airtime and some folks are going to make a killing quickly before the market falls apart again. If you can loan a corporation $425 million or so, and if you don't mind that most of that money will be immediately pocketed by investors as dividends and as salary increases by bosses, you might live long enough to make back $7.50 or $7.70a share.

The question isn't your longevity, but the company's, I suppose. After you hand over all your money you might wish that you were dead, but that's another problem. Companies doing this are burying themselves in debt. Their bond rates are being set low for a reason: these companies may not survive, and you may be stuck. On the other hand, capitalism has been known to reward risk. You could also end up as a proud owner of a defunct aircraft-parts manufacturer, a major food processor or a multinational agricultural and alcohol manufacturer. If Kraft Foods and Cadbury are now in the business of increasing and selling their debt, it can't be so risky, right? Of course not! So trust those good folks at your bank and pension plan to do the work for you and invest heavily in debt with your money. What else would you do with the money, anyway?