TORONTO - There's Little Disagreement That Massive Government Stimulus Has Stopped An Already Tough Recession From Getting Even Worse. There Is Some Disagreement, However, On The Price That Will Be Paid For This Stimulus, Which Has Only Been Made Possible Massive Government Borrowing. Some Pessimists Maintain That Much Higher Inflation Will Result From This Huge Increase In The Money Supply And The Best Way To Protect Yourself Is Through Buying Gold. Nick Barisheff, President And CEO Of Bullion Management Group Inc. In Markham, Ont., Anticipates Inflation Will Run Into "The Double Digits At Least", Pointing Out That "Governments Haven't Printed This Much Money Since The Early '80s." Barisheff Is A Strong Believer That Gold Is An Asset Class That Should Be Part Of Everyone's Portfolio. Many Investors Will Agree With That Assessment But Have Trouble Deciding How To Expose Themselves To Precious Metals With Gold Prices Around US$900 An Ounce. The Mutual Fund Route Could Be The Way To Go. Barisheff's Company Runs The BMG Bullion Fund, Which Invests Exclusively In Precious Metals - Gold, Silver And Platinum Bullion. "Ours Is The Only That Would Be Classified As An Open-End Mutual Fund Trust In The World That Holds Physical Bullion," He Said. There Are Canadian Mutual Funds With Exposure To Gold Through Gold Companies But "You Won't Have Any Bullion, You Will Have Maybe Some Mining Stocks." "They're Two Different Things - One Is An Equity In A Producing Mining Company And The Other Is The Bullion Itself," He Noted. "And That Would Be Like Comparing Buying A House Versus Buying Shares In A Developer That Builds Houses." Barisheff Said A Problem With Gold Mining Stocks Is Their Volatility. "They're An Equity, So If The Equity Markets Are Selling Off, Mining Stocks Will Get Sold Off With Them, Even If The Price Of Gold Is Rising," He Said. "Mining Stocks Would, In A Down Market Like We've Experienced, Typically Experience Higher Levels Of Losses Than The Broad Equity Markets, Even If The Price Of Gold Was Rising." He Likens Holding The Actual Bullion To Holding Thousand Dollar Bills In A Safe. "Granted They Can Fluctuate, Those $1,000 Bills May Vary In Value Against Another Currencies, Which Is The Same Thing That Happens With Gold - But At The Same Time, They're Still There As $1,000 Bills", He Said. "It's Not That Someone Owes You The Money, Or That You've Invested It, You Might Lose It But The $1,000 Bills Are In The Safe." A Positive Aspect Of The Barisheff Fund Is That You Only Need A Minimum Of $2,500 To Get In. Annual Management Expenses Come In At Just Under Three Per Cent And You Would Incur A Penalty If You Redeemed In Under 180 Days. There Could Also Be Commissions Involved That You Would Have To Pay If You Redeemed In Under Six Years. However, Barisheff Pointed Out That You Could Avoid Those Particular Fees Using A Discount Brokerage To Buy The Fund. In Any Case, Make Sure You Ask Your Financial Adviser To Spell Out All Commissions Involved. Barisheff Added That The Canadian Dollar Class A Units Of His Fund Have Averaged A 5.5 Per Cent Return Per Year Since Inception In 2002. Another Way To Invest In Gold Is Buying A Futures Contract On The New York Mercantile Exchange. A Contract Will Cost The Equivalent Of 100 Ounces Of Gold. However, You Can Buy On Margin And Put Up About US$10,000 Up Front If You Have Particularly Strong Nerves. Bob Tebbutt, Vice-President At Peregrine Financial Group, Said This Can Be Mitigated. "If Buying On Margin, You Put Up $30,000 Or $40,000 Instead Of The Minimum," He Noted. And That, He Said, Is Still Better Than Going Into A Mutual Fund Where You Have To Pay The Full Price Up Front. Or You Can Consider Buying Gold Options. Buying An Option, You Have The Right, But Not The Obligation, To Be Long Or Short On A Futures Contract At A Specified Price For A Specified Period Of Time. There Is Also The Exchange Traded Fund Route. For Example, Ishares Canada Offers A Canadian Gold Sector Index Fund (TSX:XGD) With A Low MER Of Only 0.55 Per Cent. It Aims To "Provide Long-Term Capital Growth Generally Replicating The Performance Of The S&P/TSX Global Gold Index." The Index Is Comprised Of Securities Of Global Gold Sector Issuers Selected Standard&Poors. But Either Way, Tebbutt Is A Believer That Inflation Is Coming And That Having Gold Is The Way To Deal With It. "The Reason Why We Don't Have Inflation Now Is Because The Banks Aren't Lending Those Stimulus Funds," He Said. "They Are Saying This Is A Great Deal, We Got All These Stimulus Funds That Have Helped Us, Solidify Some Of Our Bad Investments, And We're Just Going To Sit On It With All This Money, Make All This Interest. The Inflation Is Coming, When They Start Lending Money And That Money Starts Flowing Into The System. That's What Causes Inflation."

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