The New Bull Market in Gold

By: James DiGeorgia
Publisher: 21st Century Publishing, Inc. (2002)

Book review by: Elizabeth Thompson

When the average person thinks of gold, visions of King Tut’s glittering tomb and Caribbean treasure chests probably come to mind. But what about gold as part of a retirement account or a mutual fund?

According to James DiGeorgia, author of The New Bull Market in Gold, investors ought to give serious consideration to including gold in their portfolios, and now is the perfect time to invest in the yellow metal because its value is set to surge. Due to world tension, financial crises such as the ballooning U.S. debt, inflation characterized by rising commodity prices and shrinking gold production, DiGeorgia predicts the price of gold eventually will skyrocket to $1,000 per ounce. In this uncertain environment, he argues that investors will flock to gold because of the stability of its worth. After all, everyone from Caesar to Bob at the corner pawn shop has accepted gold as currency, and that probably won’t change any time soon.

Even still, gold might be a tough sell for more conservative investors who, content with gains of major indexes over the last year, might pussyfoot around making such a seemingly exotic investment. It is for them, however, that DiGeorgia makes his case most clearly and concisely. After offering a history of gold both as a currency and as an investment, DiGeorgia devotes a third of his work to an explanation of why the price of gold will shoot higher in the next decade. While volumes could be written on each of these reasons, DiGeorgia covers the highlights and sums up the main points, making this book perfect for newcomers to gold investing.

Before he delves into the how-to of gold investing, he first explains what gold investments to avoid. Interesting. Steer clear of 100-ounce gold bars and private mint coins, he suggests. Buying gold in 100- ounce bars inhibits an investor’s ability to sell the gold in increments suitable for individual investors; private mints sell coins at values much higher than the price of gold and often resell for less than their grossly marked up purchase price.

After explaining the no-nos of gold investing, our author describes several ways to take advantage of what he believes will be a rush on the gold market with gold coins, gold bullion, gold stocks, gold funds and gold futures and options. As it turns out, coins are not just for collectors. DiGeorgia reviews the value and quality of the most popularly traded bullion coins and what to look for in each coin, giving most attention to U.S. coins.

For the more conservative investor, he explains both gold mutual fund investing and stock investing from top to bottom. Again, the simple approach he employs throughout the book is particularly useful for the hands-off investor. For example, DiGeorgia breaks down how an individual earns money in mutual funds through price appreciation, capital gains and dividends. With stocks, he explains basic stock value calculations such as the price/earnings ratio and price/sales ratio. While these explanations and calculations are not exclusive to gold mutual funds or stocks, a review of the basics is crucial to those who usually leave their investments up to a 401(k) manager or a stock broker.

Though DiGeorgia has written this book for the newcomer to commodity investing, he does not neglect the more advanced investors, as he also covers speculative Canadian resource stocks and futures and options.

We’re not recommending that you go out and buy gold or even that you necessarily buy the idea of $1,000-ounce gold in the near term (everyone has an opinion). However, if it does open your eyes to a commodity that has held sway for thousands of years, it’s worth the read.

Bottom line: you won’t have to dig through this book to discover usable ideas that could be worth their weight in gold if implemented into your portfolio.