I THINK MINING

Will 2009 be the year that I finally break down and buy a gold bar?  Maybe I should seek out a Kruger Rand?  Or should I simply stick to gold mining stocks? 

True, gold is the only metal that increased in value in 2008:

Gold closed the year at $865 an ounce in London as the LBMA announced its final fixing,  It opened the year at $840.75.  Thus the yellow metal recorded an increase of around 3 percent in a year where global stock fell by over 40 percent on average, confirming gold’s status as at least a store of wealth in troubled times.

Bur does this paltry increase in value justify the purchase of a gold bar, gold coins, or more stock in gold mines?  In 2008, and even earlier, we read about $2,000 an ounce gold—and I am still waiting.  Silver is OK, but not spectacular:

Silver fared less well over the year with a final fixing of $10.83 an ounce, down from $14.93 – a fall of some 27.5 percent – somewhat better than the general stock market decline, but perhaps rather disappointing in relation with gold which remains the principal driver of the silver price.  This also affirms silver’s tendency to rather more price volatility than its sister precious metal.

Property has fallen, but at least I and the kids have places to live.  Maybe I should install those double-pane windows as an act of environmental enhancement and reduction of energy consumption?

There are other investments I have to make this year though.  I am still paying for one daughter to study civil engineering.  Maybe that is the best investment, although the dividends may be only educated grandkids and not more gold bars and coins. 

I do need a new stove in the townhouse, for the old one has lost its ability to regulate the temperature of the oven and this creates an alarming tendency to burn foods.  I like the idea of buying a new stove: one of those things with an all glass top and an oven the stays at the dialed & set temperature.  The value of the stove will not increase, but at least I can convince myself that the purchase promotes the general economy, starting with the mines that produce the metals, the factories that stamp the forms, and the shops along the way that make a little profit on every unit moved. 

I suffer a little from the ingrained belief that old people should save their money and not spend it.  You know the old story about the Puritan virtues of thrift and saving.   Problem is that 2008 seemed to indicate that saving and not spending is bad for the economny, for society, and for all those young people out there seeking to enjoy a good life-style based on consumption.  Or do I misunderstand: people should save, while governments spend? 

Maybe it is good to build new power plants and electricity transmission grid.  Maybe it is good to erect new wind turbines and solar panels.  But to make use of that power, we also need new stoves and fridges.  So maybe the decision to hold off on a new gold bar and buy a new oven instead can be considered an act of public policy on my part.  I wonder if I could get a tax deduction on that one.

Thus we enter 2009 with a set of conflicting imperatives and unresolved questions.   Should we invest in gold, education, double-pane windows, or a new stove—-that is but a tiny example of a more general dilemma.  In the past the answer would have been: do all four and borrow money to do it if necessary.  But now the money does not seem to be there to be borrowed, or it is considered unwise to do one or more of the trio. 

I will postpone any final decision until Monday when the work week and work year begin in earnest.  In the meantime, I would appreciate your input and advice and the story of how you intend to invest whatever spare cash you have.  Whatever, enjoy the weekend.