It is relatively easy to picture an ounce of gold, maybe in the form of an American Eagle or Canadian Maple Leaf. Even something like a kilo bar (32.15 ounces) is something you can see in your mind’s eye, even if you may never hold one. The amount of gold that is traded in the physical market and the derivatives market, however, is unfathomable.

Consider, for example, SPDR Gold Shares Trust (GLD), an exchange-traded fund backed by physical gold. The premise is that investors can buy into this fund and their money should track the price of gold. The problem is that since investors are buying into a company that owns gold and not gold itself, problems can arise. There is overhead to pay for and employees that need to be paid. It costs money to store and insure the metals, and when gold goes down the company sells some of those holdings.

SPDR has liquidated 300 tons – over 600,000 pounds, or 9.6 million ounces – of gold this year alone. The fund currently holds over 1,000 tons of gold in its vaults, but that figure is astonishingly lower than the numbers from a few years ago. SPDR used to be the premier gold ETF. Now, with a value of approximately $46 billion, it barely cracks the top five.

Yes, physical gold has gone down in value as well, but it is still an investment in a hard asset, unlike ETFs and other derivatives. Since you can hold it, use it and it doesn’t cost money to operate, physical gold investments are looking pretty good right about now.

This morning I received a great deal more emails than usual regarding the selling of gold investments. I seems as though the crash of the gold price on April 12-15, the recent trend of high-volume fluctuation during day-to-day trading and the dollar’s seemingly unstoppable strength as of late has spooked American household investors into considering liquidation of their gold holdings.

This is a shame, for two reasons. First, if you wanted to sell your gold and take profits from the market, I’m sorry to have to be the one to tell you this but you missed the boat. Savvy short-term investors sold their gold as soon as gold passed key support levels during the mid-April sell-off. Selling anytime between April 16 and today meant a loss for most investors who had not been in the market for a long time. I’m all for dollar-cost averaging but if you see the gold spot price fall by $200 per ounce in just a couple of days and you don’t sell then, you certainly should not sell a week or two later if prices are in the same range unless it is absolutely necessary.

The second reason I question individuals who think now is the time to sell has to do with the gold investment market variables. Think about what factors motivated you to buy gold in the first place. For me, the unholy amount of government (the United States now borrows 43 cents for every dollar it spends) coupled with the fact that gold was on a 3-year winning streak (I first bought in 2004) after remaining in a bear market for the previous 20 years. Other people buy because of inflation, deflation, interest rates or because they just don’t like the monetary strategy of our nation’s leaders, which is understandable. Have any of these factors changed or become less severe? Not at all. Therefore, unless you really need to create some liquidity, now is one of the worst times to sell your gold and silver.

As a gold investor, broker, market analyst and pundit I am constantly being asked about my thoughts on various aspects of the gold market. One question that keeps popping up lately is that of selling gold. Selling gold is always a popular topic but recently the questions have less to do with “how” to sell gold or “where” to sell gold; these days people want to know if now is the right time to sell gold.

I’m a firm believer in “the right investment, for the right person and at the right time” so by that way of thinking there is no one blanket “time” to sell gold. Gold doesn’t pay interest or dividends, so if you need to create liquidity, it is the time to sell gold. If you believe that gold’s bull run is completely over, you may want to sell your gold. If you have recently found new reasons to trust our government in its monetary policies, then you may not feel the need to own gold. As for me, however, I am not going to sell a single ounce of my gold, and here’s why.

Gold could drop another $50-$150 per ounce before it starts to rise again. Then again, it may not go below $1400. Either way, a little bit of extra profit is not a convincing enough reason for me to part with my gold or silver. Not with quantitative easing, incessant currency printing and interest rates this low.

Once savvy investors buy gold, they do everything they can to keep it. There is never a “bad” time to own gold, because even if you bought at $1600 per ounce in mid-April (before the crash that sent gold investing prices to $1400) you are still liquid and you have something that will move against a mostly falling dollar. Additionally, you have a hard asset that could be used to work for you or your family in a national or personal emergency. If you have to sell your gold now, that’s what it’s there for, but if you don’t need the cash, I suggest you stick around for the long run.

It’s a wonder to me when I hear that gold serves no meaningful purpose in our global economy and that gold investment is a waste of money. History is clear that the one asset that has always come back to show its importance has been gold. Yet, we still hear these absurdities in the media. Look at countries like Iran who assert that their gold reserves are approximately 907 tonnes. Well, good for them, because if they didn’t have it they wouldn’t be able to sustain their people for they are using gold and/or oil to purchase food because the latest financial sanctions have penalized its facility with which to import basic necessities for its 74 million residents. Desperately speaking, they have turned to the precious metal in hopes that they can pay for their imports. And this is all occurring before President Mahmoud Ahmadinejad’s referendum of economic policies.

Due to Iran’s nuclear program, new sanctions dictated by the United States as well as the European Union will penalize, but will not block firms from selling Iran food, they only make it complex to carry out the international financial transactions needed to pay for the provisions. According to a European grains trader, “Grain deals are being paid for in gold bullion and barter deals are being offered.” Many are embracing this manner of exchange such as the major trading houses. Everyone seems at ease because it is much simpler to get the imports with gold as the payment. This is the everlasting power of gold.

Despite Iran’s obvious need to sustain its people, any bank that makes transactions with the Iranian central bank will be disciplined by the U.S. They still command authority of the world’s dollars in New York notwithstanding the fact that the dollars are owned by others. Don’t forget that the United States can hold the dollar reserves of any country whenever they please.

As for gold, its price may or may not be affected by the acute circumstances in Iran. If there is a menace of other nations mirroring their conditions, then their currencies will devalue and the gold price will climb in the currencies of those countries. What Iran’s situation embodies is a typical representation of why gold is a final option, reserve asset. Across borders, Iran’s currency has absolutely no value which is why the fact that it has gold means it can continue providing for its people. Gold is functioning as gold does because its worth is very much recognized and respected across the world.

It is said that very cautious central bankers are stocking up on gold reserves as well as others who have the means to do so, too. It is the market which is preventing too much access.

It is a fact that the gold’s price in the Iranian currency has increased incredibly yet the country’s currency is worth nil when you step out of its borders which is why it really does not matter what the gold price is in a currency. What does matter is how much gold you actually have in your possession. The more gold investment you have, the better off you will be when times get rough.

Gold investment is returning to where it should be. According to the World Gold Council (WGC), the claim for gold rose 4% last year regardless of higher prices. Gold prices have risen roughly 28% every year.

In the jewelry and investment arena, it was China who led the pack throughout the last quarter of 2011. Demand in India declined after holding first place for 11 quarters. Despite this, throughout the year, India bought 933 tons in 2011 as opposed to 770 tons purchased by China. This tendency by China to be on a relentless track of buying gold has just begun. As reported by HSBC Global Research, gold imports from Hong Kong were 10 times the norm from January through November 2011 even though they were down by half in December. HSBC anticipates this rise to persist as Chinese incomes will continue their claim for gold. It will most likely be domestic demand which will incite at least 20% growth in the gold petition by China for this year.

Notwithstanding their heavy demand, India’s esteem for gold does not depend on external determinants which will place it again in the top spot very shortly. The WGC’s managing director for the Middle East and India, Ajay Mitra, stated that gold has always been a part of India’s history, culture, and tradition. She has personally observed the forte of this connection in many different circumstances. She even goes so far as quoting a traditional Indian maxim which expresses that if there is no gold before a wedding, then there will be no wedding. Period.

On the other side of reasons for investing in gold are the ones that are driven by the Federal Reserve when it openly indicated its plan to maintain inflation at unusually shallow levels for at least 2 more years. The Federal Reserve’s goal is to maintain a 2 percent inflation rate, which translates into a 33 percent loss in value of the U.S. dollar for the next 20 years. Approximately 10 percent of the value of Americans’ reserves will disappear into thin air in the next four years. This will be our reality. After the gold standard was halted, more or less 40 years later, the purchasing power of the dollar has been sinking. When we think we have a dollar in our pockets, what we really have is 18 cents. Sad, huh?

Warren Buffet blames the government and its universal powers for abolishing investors’ purchasing control. His justification is that stock investments present the greatest long-term investment prospect because interest rate levels do not affect the loss of purchasing power because of inflation. Nevertheless, there are those will be happy with the low interest rates because of their high debt. The governments of the developed world will now have the opportunity to deal with their massive levels of debt effortlessly. If we only look at 2012, the U.S., Japan, and Europe will relinquish $8 trillion in federal debt.

At this point in time, there is no turning back. And it is only gold that will offer the best security against long-term purchasing power as well as wealth preservation. This is why we must all continue our gold investments or risk losing everything.

It gets tiring to hear comments of how gold is nothing other than a shiny yellow metal to look at and admire…to invest in gold is synonymous to wasting your time. It appears that the majority of investors at this crucial moment in time only restrain from gold to criticize it just as Mr. Warren Buffet did in his most recent shareholder correspondence. It was actually a rather routine assumption that gold does not and will never have the ability to generate anything other than fear-driven investors. I still can not discern as to why Buffet would communicate these absurdities, but I am analytical and must look beyond the shallowness of some to find what lies beneath. And, I believe it could be related to Benjamin Graham, the man who guided Buffet and to whom Buffet will be eternally grateful for all the wise pedagogy he received.

I must be fair in saying that Benjamin Graham is a much revered investor. He is the person behind Security Analysis (1934) and The Intelligent Investor (1949). During his career, which lasted from 1915 to 1956, he developed his investment ideology turning into the person most would look for when defining investments and their values. What we understand today as modern portfolio theory we can thank Graham for. He is known to have understood best the reason for overvalued or undervalued stocks and bonds and why they would stray. Even Graham believed in varying portfolio allocations so they best suit one’s needs as well as yield pertinent profits. So what did he have to say when both stocks and bonds idled or simply dropped altogether? If we take into account what occurred four decades ago as well as what happened from 2011 up until now, it is very clear that portfolios which included only stocks and bonds have somewhat desperately tried to come out even or simply plunged. Any smart investor would have realized this and done something about it immediately.

What could have been done? The addition of gold to these portfolios would have turned their profits around. The overvaluing of stocks and bonds is best fought with the precious metal. But then, why is gold not included in Graham’s allocation design? There is a simple answer to this and it lies in the fact that while Graham was an adult and was in the prime of his career, it was not possible to own a lot of gold. Remember that in 1933 it was prohibited to own gold personally. Then in 1974, it was legalized anew. Unfortunately, Benjamin Graham passed away in 1976 and was never able to benefit from a life where gold was considered superior to stocks or bonds. And this is why in today’s investment forums, gold is belittled. Consequently, this is also why Warren Buffet gets his signaled crossed when referring to gold. In this day and age, the best strategy to use is recognizing that a profitable portfolio distribution is destined to be comprised of three large investment classifications which are stocks, bonds, and gold. Relative valuation should guide one in the distribution to each class. Those who heed this wise advice will advance across the board.

Don’t get agitated when the media puts gold down; just remember that you are living in the present and according to existing circumstances. Presently, one must invest in gold and be protected with the comprehension that it meets a vital and particular intention in a portfolio. At this moment it can be best expressed as real money that safeguards your wealth during times that are characterized by unreasonable government obligations and currency devaluation such as we are now enduring.

Global gold investment demand demonstrated substantial development in 2011. Conversely, jewelry and technology sectors were a little shaky, according to the World Gold Council. Despite their modest decline, they are still perceived as peppy in the perspective of elevated double-digit gains in average gold prices year over year in practically every currency of the markets that were tracked by the WGC.

What is foreseen? Good news and more good news. The current year brings with it the same elements that reinforced gold demand in the past year, except this time around they are stronger and more powerful.

The real interest rates, which are most of the time negative, will continue to induce power into gold demand. From this we will, once again, feel the inflationary strains which will also drive gold demand higher. These extremely ground-level or negative real interest rates along with the latest declarations by the Federal Reserve about maintaining rates very shallow until more or less 2014 will offer sustained support to gold demand world-wide.

Concurrently, in countries which suffer from high inflation such as India, China, and Vietnam, gold demand will be even more attractive when gold’s function is perceived as a hedge. Additionally, inflation worries in western markets will be another incentive for investment demand. It is there where a number of investors are apprehensive that the prevalent spread of monetary policies is furnishing stimulation for hidden rapid inflation expansion.

We cannot exclude Europe when examining the upcoming year’s investment sector. Their predicament affects a large portion of the world of economics. An additional incentive for investment demand will arise from the questionableness over where the euro will end up due to the continuing hindrances in the region. If we turn back to investment demand before 2008 and compare it to now we find that although it is not as high, its gamut is considerably superior.

The position by central banks to swell their gold reserves will be another important factor in the precious metals future investment projection. These reserves have risen by more than 500 tonnes since 2010 mostly coming from the emerging markets. The elements driving this fortitude are not going anywhere anytime soon so the projection holds firm. One factor is the sustained expansion in foreign reserves that are already rather large and for others it is the desire to become more a part of the gold arena which would aid in not being only contingent upon one or two foreign currencies. Reestablishing the equilibrium between gold and foreign currencies was another issue behind the purchases. The ultimate determinant, though, would have to be the benefit gold offers in terms of safeguarding the wealth of a nation and fostering economic equilibrium.

And then, of course, China and India will continue their substantial bulk of consumer demand because of their connection with the metal as a traditionally close element to their being. Despite this, though, China is somewhat tempered economically and if we affix the intensification of market security what will likely occur is a stagnation of the latest growth rates. This is actually in progress based on the numbers that have come from the previous quarter. India, on the other hand, does not have many days that are considered encouraging in this year’s calendar which will result in a leveling of gold demand.

But, overall, gold investment should have another positive year.

Interesting how President Obama and the Federal Reserve programmed their meetings in, precisely, the same week. That was probably the only similarity, though. The President, on one hand, depicted the nation as getting back on track, while the Federal Reserve reminded us of their shift to 0, but now it will last for, at least, another two years. The reaction of gold was very positive as it stepped up to approximately $1,710 an ounce making gold investments a better alternative even before we feel the final effects of the Fed’s arrangement.

Gold has been going up and down within the last six months and investors have, thus, displaced their perception of the long term fundamentals supporting gold: the western world continues stalled by debt, and the painless way for governments to deal with this predicament is to maintain shallow interest rates while running the printing presses.

Gold investing should come second nature to those who are on the path to unveiling the certainty of the debt conspiracy that is occurring throughout the world. But do we truly comprehend the reasons gold has to go up and down? Most investors believe that gold is a hedge against dreary stock market performance as well as financial anxiety. It’s not a distortion that these assumptions could be true; it’s just that one must go further to appreciate what it is which incites the shift in gold. The yellow precious metal’s connection with stock prices and financial stress is just an incidental reaction. Indeed, notwithstanding the common premises, the price of gold can increase during bullish stock markets and plummet at some point during financial apprehension. Forget about all of that because what is really behind gold’s fluctuations is the significance that is placed upon paper money.

If we use that point of view and reflect a moment on the main secular tendencies of the last ten years, we note that three stand out. During the equity bull market from January 2003 to December 2007, the increases of the S&P 500 were of 69% and gold of 153%. The US dollar, on the other hand, declined a quarter of its worth. Amid the equity bear market from January 2008 to March 2009, the S&P 500 relinquished 52% and gold increased 9%. At the pinnacle of the financial crisis, gold only suffered a 16% loss while the US dollar index increased by 18%. During the final trend, the equity bull market, from March 2009 to April 2011, the S&P 500 rose by 86% and gold by 66%. The US dollar index descended by 18%. Gold has the propensity to do well opposite the dollar as can be noted from the first and last trends. The yellow precious metal is very successful as a hard currency and, as such, is a mirror against other ones. In reality, the same easy-money policies that are the reason that the dollar declines in value and for gold prices to go up are also likely to make the stock market go up, too. Technically-speaking, inflation has encouraged real interest rates to go so low that they are negative, nudging investors opposite the dollar. I am under the impression that this is common sense to most people at this time.

The problem is during an apprehensive monetary predicament. Looking at the second trend, while the S&P 500 lost 52%, gold only gained 9%. Indeed, during the worst point of the Lehman Brothers implosion, gold was, at one point, down 16%. Once more, the genuine propeller behind gold’s performance during this example was the US dollar, which gained 18%. The US dollar seemed to be best of the worst at that moment. Gold resonated with this and dropped. As such, gold priced in euros and Canadian dollars did not renounce as much.

But this assumption of the US dollar as a safe have will come to an end. In reality, from 1900-2010, the US dollar relinquished about 95% of its purchasing command. As $120 trillion of unfunded liabilities come knocking at the US Treasury’s door, insistent reliance upon the printing presses could ultimately take us to a hyperinflationary level. Whereas gold prices wane amidst financial stress and although it can be troublesome to gold investors, they should always keep in mind that the larger the financial disaster, the greater the monetary retort by central banks. In November 2008, the Fed’s answer to the financial crisis propelled gold prices in all currencies from the lows they all endured during that time.

Times of financial crisis should be perceived with the likelihood that central banks are more prone to disclose reports similar to the most recent zero-rate pledge which will have as one of its effects to propel gold’s ascension. One should be taking advantage of every dip in gold caused by temporary spikes in the US dollar throughout the extent of this gold bull market. Indeed, gold has currently increased over 10% due to the recent slip brought about by financial stress over Europe. As the US economy continues fraught with debt, real interest rates will stay negative for the projected outlook. Should the fundamentals change, then the long-term bull market for gold will change…until then, enjoy!

What do we have to look forward to when a country as little as Greece can not take control of its debt affliction? The overwhelming critical situation throughout the world will continue its treacherous path in the financial markets. As we know, this isn’t only a problem within Greece’s borders which is why investors on a global scale are desperately searching for instruments such as cash and precious metals which have the potential to offer more security than most assets. On the other hand, with so many alterations being made within the markets and regulations, investors are obligated to contemplate which would really provide more security. Most investors truly believe that cash is the way to go at this time, but there have been too many changes to continue believing in this farce. Gold investment has far surpassed the security measures offered by the dollar.

Presently, the dollar is legitimately the world’s reserve currency and is recognized to be the best alternative of the two. At the present time, investors can receive interest on the dollar through the investment of U.S Treasury obligations. This is now in question, though.

The Treasury is debating whether or not to allow negative interest rate bids in auctions for Treasury bills. Dealers and Treasury officials, in a private meeting, deliberated promoting T-bills above par value. Using common sense and just a little brain work will lead you to understand that this is one more reason to place gold above the dollar when thinking in safe haven terms. Profits are not earned with gold, as the naysayers bellow, but here the dollar is losing its sacred position without even bearing in mind the inflationary effects that are nearing. The dollar is so quick to be devalued via the printing presses. They can’t affect gold in that way. Its value is what it is. Period.

Another manner in which the dollar is being displaced is by way of its liquidity benefit in the money-market fund industry. The Securities and Exchange Commission finally plans to disclose a proposal to provide confidence to the $2.7 trillion industry following more than three years since the disintegration of Lehman Brothers. After Lehman went bankrupt, one of its debt holders, Reserve Primary (a money-market fund), broke the buck by dropping below the $1 per share value. Money market funds don’t normally sink beneath a dollar which triggered fear amongst investors and they removed their dollars quicker than lightning. Because of this, the new SEC regulations will have as its goal prohibiting investors to take out all of their capital. “Investors who wish to sell all of their holdings at once would be able to get only about 95 percent of their money back immediately, with the remaining 5 percent returned to them after 30 days,” clarifies WSJ. These days, investors having to wait a month to receive all their money are not likely to be comforted in a world where countries like Greece could default at any moment.

The money-market fund industry is not too happy with the plan of SECs idea to eliminate the fixed $1 per share value of money-market funds, and make it float-able like other mutual funds. Investors would also be susceptible to more unpredictability. Investors may even have to pay more fund fees in order to deliver a larger capital pillow to money-market funds. This is yet another reason not to stay with the dollar. As Mr. Donahue of Federated states, “The generosity of giving you the choice of which way to die is really not much of a choice.”

Holding dollars as safe haven assets is equivalent to low or negative interest rates, liquidity controls, and increasing fund fees which doesn’t hold too well with anyone. Add inflation and quantitative easing programs and negative real interest rates becomes a greater hindrance for investors. Investors should hold gold for its time-tested evidence of preserving wealth instead of seeing it as an ancient artifact. Gold functions as an exceptional inflation hedge, according to a recent report from Credit Suisse and the London Business School. The report elucidates that in the past 112 years, “Gold is the only asset that does not have its real value reduced by inflation. It has a potential role in the portfolio of a risk-averse investor concerned about inflation.”

Albeit in periods of deflation, characterized by a contraction superior to 3.5 percent, gold’s earnings were an average of 12.2%. Gold investment…say no more.

Are we in the process of economic improvement or not? The housing sector is in shambles and consumers are making less money, so where does the truth lie? All I know is that my gold investments are secure and I am ready for anything.

However, if the economy is not getting better, then we should not be experiencing inflation and there shouldn’t be any strain on the gold price. What if investors don’t really expect the economy to return to normal and they are acquiring gold because they anticipate it to get more distressing? It is normally assumed that the gold price rises with inflation. Yet, the precious metal is much more flexible than we can ever imagine. How is it that it has the potential to safeguard your wealth when the financial worth of paper money descends and, at the same time, when value goes up, and ultimately, has the same power to shelter you when things are going as planned and simultaneously when they don’t?

One clarification might be reached with a brief discussion of the Great Depression. During the Great Depression, for instance, the price of gold went up against dollars even though the prices of food, clothing, and other consumer items as well as the prices of investment assets were declining in terms of the dollar. The value of money increases, relative to objects, during a depression. And being that gold is money, it has proved itself worthy time and time again.

There is more to this, though. At some point in a depression, investors begin to question their adversaries’ motives and movements. Banks are unsuccessful, investors go bankrupt, and you are the proud owner of a mortgage. Then the homeowner disappears and the house descends in financial worth by 50%. You own a note, and then you discover that the payer is penniless and your note is devoid of value. And, finally, you own shares in a company and then the company dissolves. Your position of de-leveraging offers practical advice: what you thought was profitable turns out to be a dud. In the meantime, having a gold stock will make you feel safe and sound. As we ride the upward escalator of skepticism, the gold price happily rides alongside.

The price of gold doesn’t backslide when the return on other assets do! At 1.82%, the real yield on a 10-year T-note is negative and costs for consumers are up. Accordingly, you would receive a compensation of less than zero if you assist the government financially.

On average, you pay money on holding gold. The return you could get from ‘risk free’ investments (Treasury debt) is surrendered. Now, you forgo the risk from reward-free investments. Gold goes nowhere, generates no yield, pays no dividends, and makes no profits. You can’t dwell in it or drive it. Nevertheless, when the return on Treasury debt is negative, what do you relinquish by being a gold owner? You give up a great disadvantage. You also opt out of the risk of a much larger mishap. The Fed is obligated and inclined to increase the rate of inflation. Bernanke has advised that he will probably affix the inflation goal higher than 2%. The Fed Chairman has reported that he will keep the Fed’s chief lending rate near zero for the next 3 years. He has indicated that he will warm up and put the printing presses on alert should he need to do so. Being a gold owner safeguards you from Bernanke’s triumph. Should he accomplish his goal of raising the rate of inflation, gold will rocket unquestionably. And it seems quite certain that he will be no better at producing moderately more inflation than he has been at generating fairly more GDP development. More than likely he will go overboard. And when this happens, I will be happy that I have my gold investments where I can reach them in haste.