They think they know the dollar won't be with us forever. I'm not sure there's too much more to it than that.

 
Isn't the reality that the Gold market is still so tiny that only i in 10,000 investors even know you can trade it now from home via such vehicles as bullion vault. Otherwise it is still coins in people's minds. And isn't the chinese interest only just awakening? History is full of gold rushes - a question of the word getting out! Finally central banks are turning net buyers - non more so than China who are converting USD as quickly as they can without upsetting the price - yes/no?

 
I WOULD LIKE TO KNOW IF WE SHOULD BUY GOLD COINS AND HOLD OR BUY FUTURES AND ROLL THE CONTRACTS WHICH IS BETTER

 
Well, that would require us to provide individual investment advice, something we don't do.

Still, we can point out the relative advantages and disadvantages of your options.

Your decision will be largely weighted by your objective: do you want gold as an investment (or hedge) or are you looking at gold as an alternative to holding currency?

Gold coins have the advantage of portability and physicality. They're REAL gold you can hold in your hand. You'll pay a premium over their bullion value to acquire them and, when sold, have to take the dealer's bid which will reflect a haircut from market price. You'll have to decide where to store your coins, too. Insurance costs may have to be borne as well as storage fees.

By and large, coins are sold in cash transactions, meaning there's no leverage avaialable. If you have $10,000 to invest, you going be able to buy only $10,000 worth of gold exposure.

Futures, on the other hand, afford you a choice: buy leveraged gold exposure or go the fully collateralized route by depositing the full contract value at the trade's onset.

If you buy on margin, your subject to variation calls due to price setbacks. The lower your margin deposit, the more likely a call. Exchange minimums on gold futures now run 4.4%, or about 23-to-1.

Unless you make regular deposits to your futures account to build equity, your cash flow is largely determined by the market. You may have to support other open positions in your futures account with your gold equity, too, if you're an active trader.

Then there's the roll. Gold is virtually always in contango, so there's a cost to roll expiring futures forward to maintain exposure. That contango has been shrinking over the past year, but it's still a fixture.

The spread represents the costs (financing, storage and insurance) of carrying bullion to the contract's delivery date.

If you stand for delivery through futures, you get--ultimately--bullion bars, not coinage.

After moving the metal from exchange-sponsored valut storage, each subsequent bullion transaction will be subject to assay/certification.

Keep in mind that "taking delivery" through futures doesn't automatically put bullion in your hands. You'll actually get a vault certificate delivered through your futures account. Keeping the certificate subjects you to monthly storage charges. By paying a per-bar fee and an insurance premium, you can take physical delivery of your bullion.

Procedures for taking delivery of kilo-sized gold futures through NYSE-LIFFE can be found in the HAI article "Precious Metals: I Can Get It For You Wholesale" at www.hardassetsinvestor.com/component/content/article/1257.html.

If you're just looking for gold EXPOSURE, not physical metal, of course, you needn't bother with delivery. Futures trading doen't require delivery, so you can deal gold in "paper" form through your futures account.

That brings us to the account business. You'll need to find a futures commission merchant or introducing broker willing to take you on as a customer to access the NYSE-LIFFE or COMEX markets.

If you're not suitable for futures trading and still want gold exposure, rather than physical delivery, you might opt for one of the bullion-holding exchange-traded grantor trusts such as GLD, IAU or SGOL.

 
This week, gold's upthrust was capped as sellers emerged at $1,020 and $1,000, basis the December COMEX delivery. December futures settled at $991.60 on Friday, Sept. 25, down $18.70, or 1.9%, for the week.

Technically, the market's reversed course and seems poised to trade in the lower half of its volatility band (the base of which is now at $958). MACD and RSI have turned bearish while stochastics indicate the market isn't yet oversold. Most significantly, volume notched a life-of-contract high on Thursday's downside reversal. Since open interest remained high, most of that volume appeared to be fresh selling.