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Chapter Four Today, I see the frenzy in gold. Everywhere I go, I see signs, “We buy gold.” You know the buyer will pay $300 an ounce, not $1300 an ounce to the seller, desperate for cash and selling his or her mother’s jewelry. Even when a person invests in gold coins, many new investors are fooled by fool’s gold, buying “rare gold coins,” aka numismatic coins. A friend of a friend was all excited about buying a rare gold coin from the last depression. He paid nearly $3,000 for a coin that was worth $1,200. I believe it is possible for gold to hit $3,000 an ounce in a few years, and I don’t think $7,000 is out of the question. Does this mean you should go out and buy it? My answer is no. You still need to be educated on the gold markets, especially at these prices. In overly simple terms and in theory, the price of gold is equal to the money supply. The more governments print money and increase the money supply, the more the price of gold goes up. Gold goes up as the purchasing power of the dollar goes down. This is why I think it’s funny that Fed Chairman Bernanke stated on June 9, 2010: “I don’t fully understand movements in the gold price.” This is the guy who is printing the money. He graduated from MIT, taught at Stanford and Harvard, is the expert on the last depression, now heads the most powerful bank in the world, and he does not understand the movements in the price of gold? This is disturbing, but his lack of understanding makes him the best friend of gold investors. The more confused Chairman Bernanke is, the more I buy gold, silver, and oil. Fed Chairman Bernanke reminds me of my poor dad, a college professor, a PhD, gazing out at the world from the mind-set of the E quadrant. If Bernanke worked out of the I quadrant, he might understand why the price of gold goes up with every dollar he prints, aka quantitative easing. 126

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Unfair advantage ebook  

by Rich Dad, Robert Kiyosaki

Unfair advantage ebook  

by Rich Dad, Robert Kiyosaki

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