November 24, 2008 – Gold remains in a bull market, but has been in a correction since making a new record high above $1020 in March. Gold’s $50 surge this past Friday put it once again at $800, but more importantly, is a strong indication that gold’s correction is ending. Therefore, there is no better time than now to brush up on the reasons for owning gold, so that you are prepared for its next leg higher. One way to do this is by reading good books, and I have a few that you should consider.
First up is the “Guide to Investing in Gold and Silver” by Mike Maloney. The subtitle is “Everything You Need to Know to Profit from Precious Metals Now“, which is a wide-ranging statement, but this book does not fail to deliver.
I knew I was going to like this book when reading the first page of the Foreword, which makes the point of distinguishing between money and currency. These two terms are generally used interchangeably, even though they are different things. The misuse of these words is one of my pet peeves, so it was refreshing to see them used correctly. The Foreword was by Robert Kiyosaki, and this book was written for his Rich Dad’s Advisors organization.
There is a lot that I like about this book. Mike has a keen understanding of gold and the fundamental factors that drive it in relation to national currencies. And as he capably demonstrates throughout the book, gold always wins the battle against national currency, which is a basic fundamental fact that governments consistently fail to understand.
Next on the list is “Buy Gold Now” by Shayne McGuire. But it is not just the title that is good advice. This book is loaded with practical information on how to turn your paper currency into – well – gold.
Shayne is the Director of Global Research at the Teacher Retirement System of Texas. With $155 billion in assets, it is one of the nation’s largest pension funds. Given his role in this prestigious organization, you can assume that Shayne’s analysis of gold is thorough, first-class and spot-on. I can assure you that you won’t be disappointed, but there is even more to this book.
Shayne also provides a detailed analysis of the different alternatives to buy gold, and importantly, distinguishes between physical gold and paper gold. He explains as I often do why ‘paper gold’comes with risks that one does not incur when owning physical metal. That alone is reason enough to buy this book, but this one point just scratches the surface of the vast amount of material offered in this book.
My third recommendation is “Financial Foghorn’s Guide to Gold“, written by Michael McGowan, a.k.a. the ‘financial foghorn’. A self-described securities investor, former stockbroker, portfolio manager and “recovering lawyer”, he has been teaching investor education since 1979.
I liked this book a lot, and my recommendation of it on the back cover is worth repeating: “This book is filled with humor, loads of investment common sense, and useful information about money, which are three good reasons to read it.” Actually, any one of these three reasons is alone sufficient motive to buy and read this book, but if you were curious how humor and investing can be beautifully blended into a very readable book, then Michael’s book is for you.
Last on my list is one-half a book. The book is “The Goldwatcher”, and I recommend the half, which was written by Frank Holmes, the CEO and Chief Investment Officer of U.S. Global Investors. He manages more than $1 billion in precious metals funds and over the years has built a stellar record.
The first part of the book written by Frank’s co-author is supposed to provide an overview of gold itself. But instead of meaningful analysis, it comes up with conventional wisdoms long discredited because they fall short of explaining gold and how the gold market really works. Therefore skip that half, and go right to Part Two beginning on page 209, which is the half written by Frank. If you are looking at the factors one should consider to invest in mining stocks, you won’t be disappointed.
Frank shares his ideas and the processes he uses to make investment decisions in the stocks of gold mining companies. The information he provides is well worth the price of this book, so don’t feel you are losing out by needing to buy the unread first half as well. Frank’s insight is unique, and he makes an invaluable contribution to the growing body of literature on investing in the stocks of gold mining companies.
Each of these books is available on the Internet through Amazon or other sources. I hope you enjoy them as much – and find them as informative and useful – as I did.