Should I buy gold?

It is almost impossible to turn on the television, listen to the radio, even surf the web, without some advertisement from a company offering to sell you gold. Usually the pitch centers around the fact that gold has doubled or tripled in value over a certain period of time and you should get in on the next big gain. Most people, not just investors, ask themselves should I buy some gold since it seems everyone else is doing it. The answer frankly depends on what value you personally place on gold.

First off, let me say, the following comments are my personal opinion and not necessary what might be right for you. Gold has been around for centuries as either use as monetary exchange or as a storehouse of value. Many years ago most countries on earth stopped using gold as a currency of exchange and more as as storehouse of value. The US government has the world's largest gold holdings, most held at Fort Knox in Kentucky. If you look at your money you will find it is says "federal reserve note". Those of old enough to remember when there were bills that said "silver certificate", that was a time when silver backed the money and you could exchange paper money for actual silver. People personally buy gold for jewelry and for protection against inflation since gold price will generally go up with the rate of inflation as it is a commodity with finite resource. Gold also has other uses, such as in the air bags in your car where the fact gold does not tarnish makes the circuit that activates your airbag almost guaranteed to work regardless of age.

I personally own no gold and likely do not expect to do so in the future. Frankly I believe there are many other better ways to protect yourself against inflation. Here I will list three investments I consider better than gold, but will provide you with similar inflation protection.

The reason I like them better than gold is they pay dividends and provide something gold does not and that is we NEED these products to make the world work daily. Gold is a concept, a price, has not PE and no dividend to quote James Grant.

Oil is something no country on earth can do without. You need it for transportation, we need for many things you likely would be surprised come from oil. Google it and take a look. Anyway if you not liking the increase in gas prices, buy some oil stocks and participate in the money making. Oil itself is supposedly a finite resource and therefore it's price should behave as gold when inflation is high. Oil also being priced in dollars will also increase when the US government prints money, as it is doing right now. So again there is built in protection for you as an owner of oil. How do you buy gold, oil companies, drilling companies, and oil well trusts. I tend to like Canadian oil companies, mentioned in a post earlier here, but there are other ways to participate. Some are well known, like the Prudhoe Bay oil trust in Alaska, BPT. Other companies by symbol are, CRT, SJT, and SBR. There are numerous other trusts that literally own the oil or gas well and payout a monthly percentage to the owners depending on price and success of extraction. Most pay around 6% or so and note they all will complicate your tax return with K-1's

Another way to protect yourself against inflation is with another metal, copper. Copper is essential to today's computers, the building wiring in housing, and most electrical divices. Copper has become so valuable due to a lack of supply. Hence the reason you hear daily of air conditioning units getting stolen. There are many ways to play copper, but hands down my favorite is SCCO, Southern Copper. the copper mines they own are in Mexico, Peru, and Chile. China, due to it's rapid growth, is the world's largest buyer of copper and SCCO sells a lot to China. SCCO pays a 5% dividend and the stock price and dividend go up and down with the price of copper. No where else can you be exposed so directly to copper and the chance to protect yourself against inflation with this scare resource.

If you have been to the grocery store lately, you know the price of meat and bread are up and going up. Interesting the US government says there is no inflation, the people who do the figures need to go to the supermarket once in awhile you think? The reason for this increase is the cost of fertilizer. Fertilizer is increasing, due to several factors. One is the people in particularly Asia are eating better food and more meat, so they are needing more corn to feed stock animals. Also again, the US government has mandated use of ethanol and ethanol is made of corn, which farmers are raising more of, but the demand for food and ethanol is outpacing supply. The key here is being the so called arms dealer to people growing corn and food crops. POT, Potash corporation, based in Canada, is in my mind the best play here. There are other companies participating in this business, but nowhere else do you get direct exposure to the key ingredients of fertilizer production than POT. If you want to look at a pretty stock chart check out POT 2 year. Two year is basically a ride from $80 to $190. Their most recent report was a doubling of earnings, 3 for 1 stock split, and a doubling of the dividend, what's not to like.

Presently I am not long any security mentioned, but have in the past owned SCCO and will not do so within