“How cheap can I buy gold?” and “Is gold safe?” are two of the most frequent questions gold brokers get. As a former gold broker, I know.

I also know first hand how safe some of the “safest” stocks have been over the last year…who would have thought AIG, Citi, Bank of America, GE and most of Wall Street would be where they are today. Unfortunately, I’ve come to understand how safe the equity in my home is as prices continue to decline and my equity along with it.

Even cash is shrinking. The dollar buys less than ten cents of the goods and services it did not too long ago. The paper — or money, only has value when others are willing to accept them for goods and services you need. The federal government continues to purposefully deflate the dollar as a strategy to help offset its tremendous debt (and they believe to help stave off total economic crisis — which is likely true in the short term.) They have printed more money over the last two years than they have in the history of our country combined! So these dollars become worth less for everyone who owns them…and guess what, almost everyone owns them. You own them, I own them, China owns them…lots of them. As the world’s reserve currency, almost everyone owns US dollars in one fashion or another; and those dollars buy less and less every day.

So is gold safe? Compared to what? If you have been following its prices over the last year, as the economic crisis deepened, gold’s price went up. Foreign Countries and their Central Banks used to be net sellers of gold. Not any more. They have all turned into buyers. Basically, they are hoarding it. Why? Why would China, who produces more gold than any other country, keep all it produces and still be aggressively looking to buy more? For the same reasons you should be learning enough to see if it is the right thing to do for you.

My answer – is gold safe? It is safer when other “safe bets” turn risky. Personally, I don’t care what the price of gold is right now. Maybe gold will drop lower and never come back. Again, I don’t care. Looking for a way to generate short term profit is not why I tell my friends to buy physical gold with a portion of their liquid assets. As long as economies around the world are struggling like they are now, I see little else that has the same upside potential protection that gold has traditionally provided. I want a hedge…some chance that I own something everyone recognizes, and will assign value to, if the economy imploded like it almost did in October 2008.

The real danger, or risk, for buying gold in my opinion; is to buy the wrong gold for the wrong reasons at the wrong price. I know that sounds elementary – but I can tell you, most of the thousands of potential gold buyers I talked to when I was a gold broker got this wrong. To avoid this…you need to trust someone and “learn enough to know what the right gold for the right reasons at the right price is for you and your situation…” Owning gold is not for everyone. If you can’t answer these questions, someone will answer them for you.

I have no crystal ball; but feel confident in making one strong prediction: the more money our government prints and releases into the economy; the farther away everyone is from knowing what will happen next… End of story.