Do not wait for a pullback to buy gold! Every investor needs to know that gold is a hedge against inflation. The movements in the gold market have been monumental, and there are several reasons for that.

To protect yourself from out of control government spending and sky high inflation your money needs to be in gold bullion, gold ingots, and gold bullion coins

The demand for gold is going through the roof. The demand in 2008 was up 64% as scared investors searched for a safe haven for their money. Countries like China, India, Russia, and Arab states have been steadily increasing their gold reserves. India just made a huge purchase of 200 tons from the IMF.

The amount of gold per capita on the planet is currently 23 grams. That does not even amount to a one ounce coin. The available mined gold on the planet amounts to about $3.7 trillion.

The amount of gold above ground is–0,000 tons and that number goes up by 2,600 tons every year. With this 2% increase each year, it doesnt scratch the surface of demand placed on the yellow metal.

The demand for gold each year is about 4,000 tons, so the mines are coming up short by about 1,400 tons. Until the recent gold price highs, gold has been selling for around the cost of production.

The gold and silver mine supplies have plummeted by 10% due to the low prices. If you add up all of the fundamentals, gold should be much, much higher.

Any situation where demand exceeds supply means the price must go higher, but until recently it has not. The gold price has risen from $250/oz in 2001 to $1,140/oz today, but the inflation adjusted price shows that gold needs to be around $6800.

This price manipulation by our government has occurred to keep the dollar falsely propped up. Central banks have played a part by selling gold bars onto the market and sending the price of gold lower. These tactics are coming to an end because central banks are running out of gold.

Another factor that has suppressed the gold price is the advent of paper gold (i.e. exchange traded funds, futures contracts). These investment vehicles simply give you the price exposure to gold. The futures contracts on the COMEX will allow you to take physical delivery of your gold, but many investors are finding that the COMEX is defaulting on the delivery. The default is occurring because the COMEX does not have the gold that they claim they have.

You are left holding paper rather than gold in COMEX contracts or ETF shares. These paper gold investments serve a purpose for the government, and that is to help prop up the falling dollar.

This paper gold market is a bubble waiting to burst. Steer clear of these investments if you can help it. Keep your money safe by buying American Gold Eagle Coins, American Gold Coins, and gold bars.

With a crashing dollar, you will be sorry if you choose not to invest in hard assets. With the current price of gold at $1,140/oz, there is suddenly a reason to get out of dollars. $1,058 was the price of gold per ounce one month ago. You can see how far it has come. Gold will protect you and your wealth in this economy. Buy gold now to hedge against inflation!

Read my other articles about why gold is a hedge against inflation.