Gold’s popularity over the centuries has endured wars, plagues, civil unrest and all sorts of other perils. But would gold prices hold up well in a prolonged deflationary spell?
For the first time in several decades, we’re starting to find out.
With the economy shrinking sharply over the past two quarters, inflation pressures have faded. The U.S. Consumer Price Index has dropped in four of the past six months, and the inflation rate for 2008, at 0.1 percent, was the lowest reading since 1954.
Gold prices also have retreated, slumping from a 2008 peak of $1,011 an ounce to a current price of about $915.
“Gold is unusual in that it’s an asset that likes inflation,” Natalie Dempster, head of North American investments for the World Gold Council, an industry group, said during a recent stop in Phoenix.
Even so, gold has bounced back from a low near $700 an ounce in November. The metal has held up better than many other commodities amid the deflation headwinds.
Demand for gold isn’t just a function of inflation and deflation, of course.
More than anything, gold is used in jewelry, with 68 percent of the metal destined for this use, Dempster said.
Industrial uses such as electronics take an additional 19 percent, leaving a fairly small remaining slice for coins, bars and the like.
Much of the demand, especially from places such as India and China, isn’t directly tied to U.S. consumer-price levels.
The supply side of the equation, meanwhile, is affected by mining activity and new discoveries, of which there haven’t been many lately.
“Mine production has been in a downtrend since 2001,” Dempster said.
Supplies also are influenced by the amount of gold recycled as people sell jewelry to raise cash.
“A fair amount of scrap has been coming back onto the market,” she said.
With the economy showing signs of life, some observers think we may be near a crossroads where inflation picks up.
Diversification suggested
Russell Biehl, a chartered financial analyst at Classic Investment Management in Scottsdale, sees higher inflation ahead as the economy works through its rough patch and government spending kicks in.
He suggests investors diversify a slice of their holdings into inflation-sensitive assets, including gold.
“Eventually, the Federal Reserve will gain traction (in inflating the economy) with all the money they’re printing,” he said.
Jay R. Penney, a chartered financial analyst in Scottsdale, also sees an investment role for gold.
‘A compelling story’
“As a dollar hedge, it is a compelling story for a portion of a portfolio,” he said. “I do expect inflation to rise, and dramatically so in the future, if things continue in Washington as they are headed.”
A case could be made that investors generally are underexposed to gold.
Dempster estimated in 2007 that, on average, individuals and institutions held only about 0.5 percent of their portfolios in gold.
Long-term demand for the metal would increase to the extent that investors add to their allocation.
Volatility in the financial markets and extreme uncertainty over the economy have raised awareness of gold as something worth holding to supplement positions in stocks, bonds and the like.Â
Economic uncertainty
Because gold doesn’t move in sync with the financial markets, the metal provides a hedge in times of instability and unease.
So, how much gold should you hold?
“If you’re concerned about future inflation, you might want 8 to 10 percent of your portfolio in gold,” Dempster said.
“But even 2 to 4 percent can have a diversification impact.”
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Never a bad time to invest in gold
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With a record-high number of Americans collecting unemployment benefits, job seekers are being forced into heated competition for openings. Indeed, the number of people who have been unemployed for 27 weeks or longer has leapt to 3.2 million from 1.3 million at the start of the recession. The pressure is proving too much for some: Last month there were nearly 700,000 Americans that the Labor Department counted as discouraged workers–folks who have given up on looking for work because they don’t believe they’ll find it.
If you are unemployed and you think you’ve tried everything–sent hundreds of resumes and gone to numerous networking events, talked to every person you know and lots of people you didn’t know. If you’ve worked on improving your resume, and cleaning up your cover letter — and you still haven’t been able to find work, then don’t count yourself out. You still may have some options.
Here are some alternatives for the beleaguered job hunter:
Start your own business. Economic downturns and lousy job markets can prompt some workers toward entrepreneurship. Tight credit is a hallmark of this downturn, however, so capital-intensive businesses will be more difficult to launch. Good news for the jobless: Some states offer help for the unemployed to become entrepreneurs. Residents of states including Maine, New Jersey, and Pennsylvania, may be able to enroll in their state’s self-employment assistance program. To qualify, you’ll need to be eligible for unemployment benefits, and you’ll likely need to meet a couple of additional criteria, such as being likely to exhaust your benefits. You’ll also need a viable business plan. These programs pay out the same amount of money as you would have received through traditional unemployment, but generally also provide help in developing a business plan and financial assistance for training courses. One note: A program may require that enrollees be collecting unemployment for a limited period of time. Pennsylvania limits it to those who have been receiving benefits for no more than 10 weeks.
Do an unpaid internship. Most adults shake their heads at this option because they can’t afford to work for free. But if you’re already unemployed and your days are taken up with job searching, an internship can take up some of those hours without derailing your job applications. Katy Piotrowski, author of The Career Coward’s Guide to Career Advancement, recommends doing an internship at a smaller business that may be glad for your help. Approach the company with an offer to work a specific number of hours each week and arrange to split your time doing work that uses skills you already have–to their benefit–and work that trains you in new skills–to yours. It’s a low-risk offer for the company and a good way to improve your resume and skills while you look for paid work. Plus, Piotrowski says, a number of her clients who have done this have been offered full-time jobs at the companies. The trick is to treat the internship as seriously as you would a paid job.
Change direction. It may be time to totally rehab your work talents and build skills that are more in-demand and marketable. Research is crucial if you’re going to try something new. Career Voyages, a website set up by both the Labor and Education Departments, has tools for finding information about various careers. Perhaps most useful is their map of the most in-demand occupations for each state. Click on links associated with the occupations and you’ll find options on charting a path toward a new career, including possibilities for registered apprenticeships, information on community colleges, or details on obtaining necessary certifications.
Keep in mind that just because a career is “in demand” doesn’t mean it’s necessarily going to be the right fit for you. Michael Duggan, a counselor and professor at the College of Dupage in Glenn Ellyn, Ill., says job seekers need to consider not only the careers that are in demand but what work would be consistent with their skills and interests. Unemployed workers will often want the quickest training program the school can provide, Duggan says, but it’s important to take the time to understand all the options so time isn’t wasted in the wrong program.
Find non-traditional income–but beware. If you have exhausted your unemployment benefits, your financial worries are running high. You might consider renting a room in your home or selling items on eBay. If you can paint homes, walk dogs, fix bicycles, or design websites, then you should consider finding non-traditional ways to build income. The goal is to get creative with part of your time, although your job search should continue to take up most of your time.
Keep in mind that whatever efforts you make to boost your income, danger is lurking online. Job scams are everywhere–phishing for your personal information, trying to get you to pay for career advice, even setting you up with interviews that are really sales pitches. Many of these scams pitch work-at-home options. Before you leap on any unusual opportunity, check it out with the Better Business Bureau.
By Liz Wolgemuth
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4 Last-Ditch Strategies If You Just Can’t Find a Job
~Robert Kiyosaki
The other day, my wife and I were shopping for a new car. We stopped by the Cadillac dealership because we wanted to see the new Escalade Hybrid. The lot was filled with new cars. There were at least 10 salespeople ready to help us, but there were only two customers: us. I felt bad for those salespeople and the staff. I wish I could say we purchased a new car, but we didn’t.
Many people blame the automakers for the problems that they are facing–and they are to blame, but not completely. As entrepreneurs, we can all learn at least three big lessons from the auto industry mess:
- Leaders should be on the same compensation plan as the sales staff. If Detroit’s leaders were paid only for the number of cars sold, they might be better businesspeople. Instead, the leaders have megasalaries, private jets, midweek golf outings and benefits suited for royalty–all unrelated to sales or company health. These corporate leaders have been stealing from the company, workers and investors who gave them so much. To be a great entrepreneur, be a leader who works for those who work for you. As the head of my company, I work for my customers and my workers. If my company is not profitable, I should not get paid.
- Â Leaders listen to the customer. Never forget: It was the customer that wanted the big SUVs and trucks. An entrepreneur needs to have a crystal ball and prepare for changes in the customer before the customer changes. As my company’s leader, I have been preparing for this economic downturn for years. As some of you know, I have spoken out against the financial planning industry, mutual funds and the financial gurus who recommend them. Instead, I have been an advocate of personal financial education and have built my company around it. Today, my company’s sales have increased as more and more people realize that a well-diversified portfolio of mutual funds is not a safe investment and investing in a financial education might offer a better return.
- Politicians reward incompetence. Many of the politicians the Big Three automakers were begging for money are the very politicians who protected the inefficient industry. It was the politicians who protected the unions and high wages. Most entrepreneurs do not have the benefits of high-paid lobbyists and friends in high places. I realize President Obama promises change. But never forget: He is a politician, not an entrepreneur. Getting elected takes more than just money. That is why entrepreneurs need to watch what politicians do–more than what they say.
Big Lessons from the Big Three
From : Revver – mike Videos
Author: melanie1 Added: Sat, 02 May 2009 11:52:47 -0800 Duration: 0http://www.homebusinesssuccess.weebly.com Direct (876)865-0876, Melanie Phillibert discusses how to overcome economic downturn and acheive success at home through MLM opportunities. Kiyosaki endorse
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How To Overcome Economic Downturn: Attraction Marketing Theory
Quickplan D.I.Y, a free on-line business plan course, is launched. It brings the tools, support and knowledge needed to design and launch new businesses. When used by existing firms, it will provide new insights.
“Everybody needs a new set of skills,†says Peter Mehit, co-founder. “The changes to our economy will be structural. It’s critical that people learn how to evaluate a business idea and then launch and run it, because the world is going to look very different a few years from now.†The company believes that acquiring these business skills is a prerequisite for prosperity in the new reality.
The course contains eight instructional videos, a MS Word business plan template and a MS Excel financial model template, available at the company’s web site. The program is also offered on DVD at a nominal charge for those living in low bandwidth areas, having limited computer access or who just want to have the program in video format.
The program, which has been taught to hundreds of students, business owners and entreprenuers, takes users through how to figure out if a business idea will be profitable, the reasons for a business plan, building pro forma cash flow models, doing market research and pulling the written narrative together. The company also offers support for the D.I.Y. course as well as guided development courses.
“Whether the program is used to write a complete business plan or not, the fundamentals discussed are important for anyone that needs to create their livelihood,†says Mehit. “I heard someone say ‘this is bad as it’s going to be’. The fact is, nobody knows what’s next. You have to become your own rainmakerâ€
For more information about Quickplan D.I.Y., visit www.wbpllc.com/quickplan/.
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Quickplan D.I.Y
