The last few days we’ve seen gold trading below the $1500 mark. Yesterday though, gold’s price dropped just above $1465 per troy ounce.
It seemed as the market was overbought and a number of other issues affecting gold’s price seemed to defuse. Firstly, the Europeans offer to accept a delay in Brexit deal, which helped the pound gain 400 pips. Then, the news from the Fed meeting in September, indicated the possibility of another interest rate cut will be off the table. And last but not least, the trade talks between the United states and China were looking better.
Therefore, the worn out market was not met with great enthusiasm from the investors who were reading that gold at $2000 and silver at $25 was imminent. Yesterday’s gold’s and silver’s performance was a negative surprise for gold investors.
Although, the gold market doesn’t look good, the fundamentals are there for gold to become bullish again. The global recession is imminent, the stock market bubble is real, the European central bank will continue its negative interest rate policy and the Fed will follow with even lower interest rates too.
Conclusion
Gold’s price will go up, but it will not be on a straight line. Gold and silver price might drop even lower, (gold could get as low as 1400) but at the end gold will go up because, the fundamentals are all there. Remember, investing in gold is a long term investment and no investor lost in the long run.
The economic outlook is getting from bad to worse.
The global debt bubble.
The covid-19 effects on global economy
Gold Consolidates
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In my mind, gold will consolidate for a while as the formal withdrawal of the Hong Kong extradition bill, will remove fear from the global markets. Also, in Britain a bill is about to pass that will forbid a no deal Brexit. These two events will remove fear from money managers around the world, as they will see fewer risks coming out of Hong Kong and Britain.
As a result, gold will consolidate for a while until the various central bank meetings take place in September. Central banks will continue their monetary policy as it is, we all know that. In fact, Christine Lagarde, the next president of the European Central Bank, already announced the continuation of Mario Draghi’s policies regarding quantitative easing and negative interest rates.
Silver Soars
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Silver soars like there is no tomorrow, surpassing each of our target prices of $18,00 and then $19,00. On top of that, the silver to gold ratio has fallen from 90-1 to 79-1 and we expect the ratio to continue to narrow, while gold and silver continue rallying. Remember, it is widely accepted that the gold to silver ratio should be at around 60-1.
According to Frank Giustra, the chairman of Leagold we are heading for a recession worse than the one we had back in 2008 and I agree with him.
Global debt has actually doubled since the 2008 crisis. In fact, global debt value was fueled by “cheap” money such as quantitative easing and low interest rates.
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The overpriced and overvalued Stock Market, has also been fueled by massive amounts of easy money. The Stock Market has been moving up for an unusually long time and as a result, people have become accustomed to that type of behavior. They think this will keep going on forever, which is not the case and at the end they will be hurting themselves. A thirty percent fall in the markets will be normal to see.
We are long overdue for a recession, as this was the longest economic recovery ever. If we take a better look at the recovery we’ve seen, it was a fragile anemic recovery. The growth we’ve seen all these years was nothing more than 2% or 2,5% annual growth, compared to 5% and 7% healthy recoveries in the past.
If the bad scenario takes place, we could see massive unemployment, large corporation collapse, currency war, hyperinflation, and geopolitical uncertainty.
Conclusion
Although, a serious investor should always have some insurance in his portfolio, and the only insurance is gold, nowadays it will be reckless for an investor not to own gold. As the bad news continue coming in, many investors increase the percentage of gold in their investments. Best gold investment for me is to posses physical gold.
Silver too can be handy, as it is undervalued-underpriced and it also has the gold to silver ratio distance to cover. Furthermore, silver tends to follow gold as it rises and as it falls. A physical ownership of silver is always a better investment.
Are the markets overvalued? Is there a market correction looming? Is gold, silver and other precious metals undervalued? Is there a story between bitcoin and gold?
The Largest Bull Market in the History of the United states
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This is the largest bull market in the history of the United States. Now that’s a fact and it must set alarm bells at everyone’s head. Every time we hear about a record bull market, or about a stock that’s gone up 30 days in a row, you must ask yourself, could that be sustainable and what is there to sustain the bull market.
The Role of the Fed
When the Fed announced the further cutting of interest rates it did so to sustain the market as it is and keep the recession that might occur from not hapenning.
The way the fed is handling the situation at the moment is totally wrong. There is a number of bad news coming in right now. The economy and the GDP is slowing, the number of jobs available is dropping, and the Fed wants to get involved to stop recession from happening.
In fact, the fed acts as a market manipulator to interrupt the normal market cycles. In my opinion, the fed’s action might postpone the inevitable, but when the inevitable takes place, then its effect will be much worse.
The market cycles should be allowed to come back. After all, the market should be free. I am confident the market can handle it. Bear in mind, today isn’t 2008 where the Fed intervened and rightly so, to stop the financial meltdown. The Fed should not be allowed to stop these natural cycles from happening. Fed should be there to act when needed as it did back in 2008.
Market Correction is Looming
After a ten-year bull market, the longest in United States history It is only natural for a market correction to take place. A 30% correction is possible. Many will think an up to 30% correction will be a disaster.
This is not the case. The question is, where this disaster actually come from? When you see a stock up 150% and then down 30%, and all of that in a bear market, then this is not a disaster. It is a market correction. From 2009 to now if we get a 30% correction, then I call this healthy.
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Gold is Still Undervalued
What is gold got to do with all this? Some will say gold has already done a big move with a pleasing 9% so far in this year. My opinion is that after a ten-year consolidation for gold, its price should have been much higher. Gold has the potential and the room to make up the lost ground.
Silver is Also Undervalued
Same applies for the rest of the precious metals. They are all undervalued as is gold. In particular, if we check the ratio between gold and silver, we will see it is not where it should be.
It is commonly accepted the ratio between gold and silver should be at 60, meaning that the value of sixty ounces of silver should be equal to the value of one ounce of gold.
Right now the ratio between gold and silver is at 88 meaning that silver is not only undervalued but it has some catching up to do. Silver has more room to move, than gold. Over the course of time the ratio between the two will come close to sixty.
In my opinion, the time for precious metals in general to break the ten year drouhgt is close and this is great news for the investors.
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The Enigmatic Bitcoin and Gold
And what about Bitcoin and gold? Well, they have nothing to do with each other. Investors can own both. Bitcoin could be a great balance investment as long as the investment remains small. In a portfolio the different types of investment (stocks, gold, government bonds, etc) should be at around 10% maybe a bit more.
When it comes to bitcoin, the commitment should be much lower. Bitcoin is an investment that blends high profits with high risks. The cryptocurrency market is an unregulated market and is subject to extreme volatility.
Numerous people made money and an even larger number lost their money. Remember what hapenned a couple of years ago when bitcoin lost over 10,000 points and many investors went to ruins. My advice is yes to bitcoin, but be cautious and invest small.
Today the yellow metal jumped over the $1500 mark. This is a six-year high, as investors are rushing to buy gold and government bonds, as fears of a global recession due to the trade standoff between United States and China grow more real.
Investors Sell Stocks
To top that, investors sold stocks. The Dow Jones fell by 589 points during the first minutes of today’s trading and stocks continued a weekly slide, triggered by fears of a trade war between the two superpowers.
Central banks around the world are reducing interest rates, in a bid to lessen the pain from tariff battle. The central banks of India, New Zealand and Thailand, all dropped interest rates yesterday.
Economic Trouble
It is obvious, investors and central banks are preparing for economic trouble. My opinion is that the conflict between the US and China, will take a long time to resolve. The longer the trade uncertainty, the greater the risk of something bad happening.
As a result, investors will be running to put their money into gold, which tends to do well during times of uncertainty. This will definitely be a safe heaven bid for gold.
Bond Yields Fall
An unexpected rush of money into bonds is another sign of investor anxiety.
With investors rushing to the bond market, the ten-year treasury yield took a nose dive on Wednesday, dropping below 1,63%. This market phenomenon is also the case in Europe. Germany’s ten-year bond rates have reached a remarkable -0,6%. That means, investors who usually get interest, are instead paying holders of German bonds to park their money.
The rush to buy bonds, has lifted the amount of negative yielding bonds around the world to a record 15 trillion, according to Bloomberg.
Conclusion
Gold has set a new target and that is the $1600 mark per troy ounce. Troubletimes are ahead, the China and the US trade standoff, the nervous investors. Moreover, the central banks are lowering interest rates, and the stock market is overrated in my opinion. However, it is possible for a correction to take place as gold has seen a rapid increase in its value.
The European Central Bank is ready to start a new round of quantitative easing, in order to get the European economy back on its feet again.
The ECB president Mario Draghi made it crystal clear that, all measures available to the ECB will be taken to stop the European economic slowdown.
The export driven European economy is experiencing a deceleration, due to German economy-posting disappointing figures in the last months, the feud between European Commission and Italy over Italy’s budgetary policy and the effects of a “no deal” Brexit.
Draghi will go beyond the 2,6 trillion euro program which ended in 31/12/18. The ECB does not expect recession and does not expect deflation either for 2019. On top of that, according to Draghi interest rates in Europe are likely to be cut.
So far quantitative easing in Europe has failed to produce results. Inflation was expected at 2% in 2019, but in May inflation was only 1,2%. However, the Europeans expect inflation to reach 1,3% this year, 1,4% next year and 1,6% the year after.
Successive rounds of quantitative easing from central banks did little to stimulate global growth and the markets are not enthusiastic about further stimulus.
Quantitative failure will lead the markets to refocus on elevated depth levels and ill economic growth is likely to increase volatility.
The central banks are certain quantitative easing will work and that is the reason they insist with that policy
This is music to gold’s ears as central banks will continue to invest in gold as they want to diversify their investments. De-dollarization is also another incentive to invest in gold.
Money periodically lost its value and became cheaper hundreds and thousands of times. This happened in many countries, across different continents. I have compiled the most revealing examples of devaluation of national currencies over five decades.
1967-1968. A crisis in Peru
Peru’s state budget was seriously depleted during the second half of the 1960s. The country’s gold reserve experienced a threefold decrease. Sharp inflation plunged the country into a crisis. Following the military coup, the incumbent president of the state was dismissed and replaced by another one. The Cabinet of Ministers changed four times over six months. However, it was impossible to overcome the crisis in the country.
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In the photo: A mass demonstration in Peru. Citizens of Lima took to the streets to express dissatisfaction with the policy of the authorities.
The prices of products and basic necessities increased, the number of poor and unemployed in the country grew by 22%. Due to inflation, the devaluation of the Peruvian sol was 45%.
CONCLUSION: Against the backdrop of economic problems and the fall of the national currency, the price of the precious yellow metal has risen. The average price of a troy ounce of gold in 1967 was $35, and in 1968 — $ 38.
1970-1971. The decline in the quality of life in Argentina
In the 70s, Argentina was hit by the financial crisis. The price level doubled every two to three months. The government decided to save the situation and introduced a new national currency. The old peso was exchanged for a new “legal peso” at the rate of 100:1.
The crisis in the economy was accompanied by all the classic symptoms of the Lack of Financial Security virus: unemployment, a decline of living standards and strikes.
CONCLUSION: The old peso savings of Argentine residents have been decreased many times. The economic crisis affected the price of the precious yellow metal: in 1971, the price of gold increased to $43 per troy ounce.
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In the photo: participants of the street rally in Córdoba, Argentina.
1975 year. The military coup in Chile
Since the early 70’s, the government of Chile printed a huge amount of paper money – escudo, to plug the gap in the country’s budget. Besides that, the government decided to take food prices under control. Strict measures had a negative impact on the economy. There was a shortage of food products. Prices have multiplied. In just 2 years, inflation increased sharply from 22% to 353%. Prices for copper decreased, the devaluation of the dollar impacted the national currency. Strikes and mass demonstrations have become more frequent. In 1973, the military coup happened in Chile.
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In the photo: In 1975, after 15 years of using the escudo currency, Chile issued a new currency – peso.
One could exchange 5000 escudos for 5 new pesos.
As a result of the anti-crisis measures of the military government, inflation began to decline.
CONCLUSION: At a time when the national currency of Chile depreciated, gold became more expensive. In 1975, the price of gold was $139 per troy ounce.
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On the chart: changes of the price of gold per troy ounce, starting from 1975 to 1979.
1979-1980. The collapse of the national currency in Israel and Vietnam
Inflation in Vietnam began to increase since 1975. Money began to depreciate. The Government of the Socialist Republic banned the free sale of gold, therefore, the “black market” of gold was on the rise in the country.
The state of the united Vietnam abolished the monetary unit of dong. The replacement of the old dong with the new one was made at a rate of 500:1. The exchange limit of 100,000 was set for each family. By the end of the 1970s, hyperinflation in the country had reached three-figure numbers.
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In the photo: 500 old dongs of South Vietnam and 100 new dongs of the Vietnam in the 1980s.
Israel also experienced difficult times. The authorities tried to improve the situation and restore trust in the national currency. In a short time, three heads of state were replaced. In 1979, for the first time in the history of the country, inflation exceeded 110%.
In 1980, instead of a depreciating lira, a new monetary unit was introduced — shekel.
CONCLUSION: Due to the difficult economic situation in the world, the demand for gold sharply increased. In 1980, the price of the precious yellow metal reached $706 per troy ounce. The average price per year was $594.
1998. The fall of the Russian ruble
Since 1993, Russia was hit by inflation, which was followed by a default in 1998. Over 5 years, the price of some products and services increased by 100% or even more. The prices were in millions of rubles. Banks stopped giving cash to depositors. The market was empty. The workers received their salary in the form of food.
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In the photo: the queue of the Russian depositors to the bank, August 1998.
CONCLUSION: Many people who had money on bank accounts lost their savings. Against the backdrop of instability in the world, the price of the precious yellow metal has increased. In 1997-1998, the average price of gold per troy ounce increased to $291.
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On the chart: changes of the price of gold per troy ounce, starting from 1968 to 2000.
2001. Devaluation in Belarus, Ecuador and Turkey
Inflation in Belarus has progressed from the mid-nineties to the early 2000s. The Belarusian ruble has fallen in price so much that the government had to introduce a new national currency. Old Belarusian rubles were replaced by new ones at the rate of 2000: 1.
In 1998, following the decrease of oil prices, Ecuador was hit by the financial crisis. The government of the country declared a default on external debts. The Ecuadorian sucre depreciated 4 times. 70% of the population were below the poverty line. This caused a storm of protests and unrest.
The government tried to fix the situation and pegged the sucre to the US dollar at a rate of 25,000: 1. But such measures did not help. Since 2000, the state has finally transferred the country’s financial system to the US currency. Since 2001, Ecuador has no national currency.
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In the photo: The purchase of US dollars from an “illegal dealer” in Quito, Ecuador.
Turkey experienced severe inflation throughout the 90s. From 1995 to 2000, the lira depreciated 20 times. In 2005, the government introduced a new monetary unit. The exchange rate of the new Turkish lira for the old one is 1 000 000: 1.
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In the photo: The denomination of 20 million Turkish lira was exchanged for 20 new liras.
CONCLUSION: The above listed examples illustrate the depreciation of paper money. Against the backdrop of inflation, gold rises in price. In 2001, the price of the yellow metal was $276 per troy ounce, in 2005 — $513.
2008-2009. Hyperinflation in Zimbabwe
During the mid-2000’s, the financial crisis in this South African country reached alarming proportions. This happened as a result of the state land property redistribution. Prices doubled every half hour.
The Zimbabwean dollar was cheaper than the paper on which it was printed. In 2009, the authorities ceased to issue their own currency and began to use the monetary units of neighbouring countries.
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In the photo: A citizen of Zimbabwe exchanges a trolley full of banknotes for 1 US dollar.
CONCLUSION: Inflation in Zimbabwe has deprived the population of savings kept in the national currency. Gold continued to grow. In 2008, the annual average price of a troy ounce was $869, and in 2009 — the precious metal was worth $1087 per ounce.
2018 year. Paper money has been losing ground
The depreciation process of national currencies in some countries of South and Central America, Eastern Europe and Asia continues. The devaluation of the Bolivar occurred in Venezuela. Iranian rial fell in price. The Russian ruble survived the downfall, and the Turkish lira became cheaper.
Meanwhile, the price of the troy ounce of gold remained high – $ 1,192.
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On the chart: price change (in US dollars) per troy ounce of gold, starting from 1968 to 2018.
It should be noted that during a short interval the precious yellow metal could slightly decrease in price. But this wasn’t so dramatic and not as traumatic as the devaluation of the paper currency.
Gold has demonstrated a significant price increase over 50 years.
In times of political and economic crises, owners, as a rule, lost their savings kept in paper money. Gold, on the contrary, was in demand and rose in price.
The precious yellow metal remains stable at all times. It serves as a protection tool for people and their savings over hundreds of years. Gold does not depreciate as opposed to money.
So you’ve decided to take the plunge and put your money into precious metals. How to invest in gold and silver? What is the next step? Should you invest in paper gold rather than physical gold? Should you invest in bars or coins? What percentage of your total investment should be placed in gold or silver? If you invest in physical gold or silver, should you keep it at home, in the bank, or at a private vault? Would it be better to invest in the companies that produce gold?
These are some of the many questions investors have actually asked themselves when they decided to invest in precious metals. My aim in this post is to let you know what is the best option for the investor according to my opinion.
What to Do Before Investing in Gold or Silver
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Before you go ahead with your investment in gold or silver, there are certain actions you need to undertake, if you want to ensure your investment is safe. After all, investing in gold is just an investment, and requires money, many times the savings of a lifetime.
Gold is just an investment, an investment that can be profitable under the right circumstances. An investor must never be passionate, must always keep a cool head, because gold in a certain environment tends to do well, and in another market, the environment tends not to do well. The investor will have to examine whether this is the right time to put his/her money on gold or not to.
Reasons to Invest in Gold and Silver
There are several reasons to invest in gold. The most important are: a) to protect and preserve wealth from unexpected events. b) a hedge when the stock market is not expected to do well.
To an ordinary person, a good reason to invest in gold is when paper money is worthless. That has happened several times, especially in the seventies when due to high inflation, paper money even the dollar lost its value dramatically. Low or negative interest rates, is also another reason for an ordinary person to preserve his/her wealth.
What Type of Gold Investment
There are two types of gold investment, physical gold, and paper gold. Physical gold is tangible, jewelry, gold coins, and gold bars. While paper gold consists of the E.T.F.’s, gold exchange-traded funds, or gold-related equities in the stock market. The latter is risky, as there is no guarantee that the fund holds the amount of gold it claims.
Why Should Your Portfolio Include Gold
Gold is the best way to diversify your assets. When the price of gold moves the opposite way of other types of investments, it balances out your returns when the other investments perform badly.
How Pure Your Gold Should Be
Pure gold 100% is too soft, therefore it is mixed with other types of metals, (silver, copper, etc) to improve its strength. Based on the content of gold, it is divided into Karat configurations. 9K(37.50%) 14K(58.33%) 18K(75.00%) 22K(91.66%) 24k(99.99%) Make sure you are getting what you paid for.
What is the Real Price of Gold
Just like anything else, supply and demand determine the price of gold. Other factors include Interest rates, inflation, political instability, stock market prices, and currency prices.
Where You Should Buy Physical Gold
In many countries, you can buy gold directly from the bank. You can also buy gold coins or bars online after you find a credible trader.
Although there have been times when the gold market was bullish and thousands of investors made a lot of money, investing in gold should not be seen as a short-term investment, because it is not, it has never been and it will never be. For the long-term investor, it is always a good time to invest in gold.
However, the investor still has to do his homework before he goes ahead and places his money into gold. Gold is on a long-term upward trend, and there will be times when a correction will be knocking on its door. Therefore, there is no need to panic if the price dips 5% in one month.
Buying gold at uncertain times is also a must. Investors should always be on the lookout for major news and announcements from financial institutions such as banks, the government, Wall Street, etc. Negative economic and political messages including debt, currency, and unemployment, create unrest, particularly in the world’s largest economies such as the US, China, and the Eurozone.
How to Invest in Gold
In the old days, there was only one way to invest in gold and that was only by acquiring gold itself, mainly in the form of jewelry and gold coins. Over the centuries there have been many changes and nowadays, the investor faces a very difficult task, due to the fact that there are many options available. On this page, I intend to inform the investor about the ways he, or she, can actually invest in safe-haven gold.
Direct ownership, in my opinion, is the best way to invest in gold. Why? There is nothing like pure gold in your hands, it is certainly better than money. Its value cannot be changed or controlled by governments and that is the reason for governments to go off the gold standard.
Gold can be used as currency no matter where you are, and the owner could have a great advantage during hard times. The only disadvantage to owning gold is that it tends to tray with a wide spread between the bid and asked prices, so don’t expect to turn a fast profit. You should not view gold as a speculative asset, but as a defensive asset for holding value. Since your dollars, euros, pounds, etc. are going to fall in value, gold is the best place to preserve value.
Bear in mind If you live in a European Union country gold is V.A.T. or G.S.T. exempted, this is a great incentive. For any other taxation issues, my advice is to have a word with your tax adviser as taxation policies vary from country to country, or even state to state.
Should I Invest in Gold or Silver?
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Many investors wonder what is better to own, gold or silver, in my opinion, the best is to own both. Although gold is the ultimate insurance and protection against uncertain economic times, silver is a more speculative investment. As a result, silver can offer substantial profits.
Investing in Gold Bullion Bars?
A gold bar is a quantity of fine metallic gold, that is manufactured by a bar producer meeting the exact standard conditions, such as labeling and record keeping.
Bars are the most traditional way of investing in gold. In many countries, they can be bought directly through banks. Bars are available in various sizes, 12kgr, 1kgr, 100gr, 50gr, 10gr, 1gr, etc.
The standard gold bar held as gold reserves and traded as such by the central banks, is the 400-troy-ounce. (12.400 or 438,9 ounces). The 1000gr bar or the kilobar is the most popular bar among investors, and it is used extensively for trading and investment. The premium of these bars when traded, is very low over the spot value of the gold, making it ideal for small transfers between banks and traders.
Nevertheless, bar purity must be 99.5% (24 karats) at least, whereas there is a number of manufacturers producing bars at 99.9% purity.(24 karats too)
Investing in Gold Bullion Coins?
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Bullion coins are coins made out of precious metals with one purpose only, that of investment or store of value, rather than used in day-to-day commerce. Many countries have their own bullion coins such as the British sovereign, produced by the British, the American Eagle series of coins available by the U.S. Mint, and many others.
Bullion coins are produced in many weights. They are usually in fractions of one troy ounce, but some bullion coins are produced in very limited numbers in kilograms or more. Bullion coins are usually available in gold and silver, with a couple of exemptions, (the Krugerrand, and the Swiss Vreneli) which can only be found in gold.
Bullion coins are priced according to their fine weight plus a small premium, based on supply and demand, as opposed to numismatic gold coins, which are priced mainly by supply and demand, based on rarity and condition.
Bullion coins sell, for a premium over the market price of the metal on the commodities exchanges. This premium is due to the underlying demand for bullion coins, their small size, and the costs of manufacture. In addition, the amount of bullion varies depending on the coin’s type, weight, and precious metal.
Gold IRA Investment
A gold IRA investment is an individual retirement account, an account that functions the same way as a regular IRA account however, instead of holding paper assets, it holds physical bullion coins or bars.
There are four precious metals allowed to be held in an individual retirement account, and these are gold,silver,platinum, and palladium. Certain criteria are required for precious metals, in order to qualify as precious metals that can be held in an IRA. The precious metals coins and bars must meet IRS fitness standards and must be held by the IRA trustee, rather than the IRA owner. Gold must be stored in an IRS approved depository. In particular, investors do not have to stash gold bars or coins in their homes or closets.
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Should I include gold in my retirement plan?
Gold is the type of investment that can protect when times are hard and at the same time will also offer significant gains to your nest egg. Back in 2001, an ounce of gold cost $271,00. Ten years later it reached $1896,00, an increase of almost 700%. During that time, banks and currencies collapsed, the real estate market collapsed, but the price of gold didn’t. In particular, gold fed from these calamities, it was the rediscovered idol, in the time when everything else collapsed, from mortgages, stocks, credit default swaps, and derivative products, all was too complicated to even understand.
As you can see, a standard IRA, an IRA invested totally in stocks bonds and other funds are actually putting your hard-earned money at risk. You are relying on the government, weak currencies, economies, and large corporations. Gold and silver can actually safeguard your investment.
Since the 2008 financial crisis, gold IRAs have become very popular. Record gold sales, combined with the appearance of many more, that simplify the transaction, have made investing in an IRA a one-shop stop. The result is robust IRA growth.
Nowadays, it is absolutely necessary for the investor to invest a portion of his/her savings in gold, as the dollar is still weak, there is geopolitical uncertainty, the country’s (US) trade deficit is out of control, and the potential inflationary impact of the Federal Reserve’s, stimulus programs.
How does it Work?
It works the same way as a regular IRA account, however, instead of holding paper assets, it holds physical bullion coins or bars.
Finding a reliable IRA broker.
It is imperative for the investor to find a reliable IRA broker. Choosing the right firm can mean success or failure as a gold owner. Choose the right firm and it will help you protect your assets from economic uncertainties. Choose the wrong firm, and your funds can be directed to an assortment of bullion-related investments, investments that are not truly asset preservation vehicles. For example, gold stocks, gold exchanges traded funds, and mint state and proof coins graded by independent services put the buyer at a disadvantage either by selling for high mark-ups or by putting the whole investment at systemic high risk.
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Check out the comments regarding the firm, especially the complaints, and see how these complaints were handled. If there is a long list of complaints, then this is a sign to worry about. Also, check the number of years the company operates, you want ten years of solid record. Finally most important is to choose a firm with a commitment to keeping you informed. Keeping you informed now and in the future.
In the past, the whole process was complicated and was mainly done by phone. Today, with the advancement of technology and many more, you can choose a gold broker online and automatically, be assigned an IRS-approved custodian. A custodian’s duty is to oversee the whole operation, from application to funding/rollover, purchase, and vaulting.
Remember gold IRAs require special expertise to value. Although gold has the potential for high returns it is easy to be blinded by its glitter. If you are considering a gold IRA my advice to you will be to consult a financial adviser. He will determine how gold would fit with the overall goals of your portfolio.
Gold options and futures currently trade on various exchanges around the world and over the counter directly in the private market. They are suited to the sophisticated and experienced, who can speculate on price movements in either direction. The risk is high, and so are the profits and losses too.
The companies that produce the gold themselves as shares in gold mining companies. If the gold prices rise, so will the profits of the gold mining companies and as a result, the share price will also rise. However, there are certain risks here an investor has to take into account. Mines are commercial enterprises, with problems such as flooding, subsidence, structural failure, mismanagement, negative publicity, nationalization, theft, and corruption. Such factors can lower the share value of mining companies.
Gold Exchanges Traded Funds (E.T.F.s) are a very interesting way to invest in gold. An E.T.F. is a type of mutual fund, that trades on the stock exchange like an ordinary stock. The E.T.F.’s exact portfolio is fixed in advance and does not change, therefore the E.T.F. holds gold bullion as its own asset. E.T.F. offers a practical way to invest and hold gold.
Choosing the Right Gold Broker
Choosing the right gold broker is always a difficult decision. It doesn’t matter where an investor is prepared to invest, it is absolutely necessary to research and make sure his/her hard-earned money doesn’t go to waste. In order to ensure the above and at the same time maximum earnings, it is important for you to read this page.
Check out the comments regarding the firm, especially the complaints, and see how these complaints were handled. If there is a long list of complaints, then this is a sign to worry about. Also, check the number of years the company operates, you want ten years of solid record. Finally most important is to choose a firm with a commitment to keeping you informed. Keeping you informed now and in the future. If a salesperson gives you a short shift or hits you with a high sales pitch, then this is bad news.
LBMA Members
The LBMA, London Bullion Market Association is the competent authority for the world bullion market, and it is overseen by the bank of England. It is imperative for the bullion to be produced by an LBMA-approved refinery. This way, the gold bullion coins or bars are meeting the standards set by the LBMA. In a few words, you are getting what you’ve paid for.
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Direct Storage Outside the Banking System
Storage of bullion should be outside the banking system, this way the possibility of confiscation due to bank bankruptcy (bail-ins), or government confiscation is eliminated. Storage should be direct to the client’s name with no intermediates. This way there is no risk of the investor losing his/her investment, in case the broker goes bankrupt. The investor should be provided with a storage certificate by the independent storage company.
Buyback, Shipping, and Pickup Services
The gold firm should be able to provide the client with several important services that include: a buyback service a pickup service, and a shipping service as many clients would prefer their gold kept at home. At the same time, it is important for the dealer to be accessible to its client’s questions and queries, and give answers and solutions promptly.
Gold Bars or Gold Coins?
Before we examine what is better investment gold coins or gold bars, we must remember one thing. Any type of precious metal bullion is a better investment than paper currency.
Gold bars are suited to the serious, large-scale investor who wants a simple and efficient way to invest in gold. The larger bars are always available at the lowest premiums over their intrinsic gold value, smaller bars tend to cost substantially more.
On the other side, it is difficult to sell a 1-kilo gold bar as most investors are not familiar with gold bars, and you will need to find a larger dealer, as finding a private buyer is going to be a difficult task.
Gold coins is the type of investment suited to the smaller investor. I personally prefer to invest in an ounce gold bullion coin, rather than an ounce gold bullion bar, as coins are massively produced and can be purchased at very competitive prices, compared to gold bullion bars.
The quality of gold coins is also guaranteed by the government, rather than a private refinery. At the same time, coins are very easy to resell. Many investors, only examine the premium price, (the percentage over and above the current gold value at which an item trades) when they buy gold, but do not realize that coins can have a premium at the time of sale, which is can be beneficial to the seller. A premium price can vary from 1% to 10% or even more.
Older coins, such as the British sovereign carry a higher premium, rather than a modern coin such as the Krugerrand. At the same time a large-scale investor, who will actually invest in a large number of coins will actually pay a small premium.
My recommendation for the large-scale investor is to invest in gold bullion bars, as bullion bars are the most efficient way to invest in gold. Bare in mind, I am not talking about a 1-ounce gold investment but I am talking about a 1-kilo investment.
A smaller investor is better off investing in gold bullion coins, preferably older coins such as the British sovereign, as the sovereign carries a high premium. In addition, coins are easy to resell.
Storing your Precious Metals
Storing gold could be a headache for the novice investor. What are the options and which option is the best? Basically, there are three options to store gold.
1-At home (in a safe or well hidden) 2 -In a bank’s safe deposit box 3-In a private storage firm
There are pros and cons to all options, but home storage or a private vault is the best option. Before we analyze those two options, I will have to explain why the bank’s safe deposit box will have to be excluded.
Storing Gold in a Bank’s Safe Deposit Box
Banks do offer an excellent level of security and peace of mind, but storage fees can be high, as they can range from $100 to $500 annually. Accessibility is another issue, as the investor can only have access to his gold, during business hours, which coincide with most people’s work schedules. Also, investors will not be able to access their gold during public holidays. These restrictions can cause large problems in the event of a national emergency.
A gold investor puts his money into gold, to protect himself from the risks associated with the fragility of our financial system. To buy gold and then store it in a bank safe deposit box, will be at least inconsistent because, storage of bullion in a bank’s safe deposit box runs the risk of confiscation, due to bank bankruptcy (bail-ins), or the risk of government confiscation.
If you hold gold in a bank, and the bank goes bankrupt as was the case in Argentina, then you lose the advantage of immediate access to a means of payment for your basic needs in times of trouble, when access to traditional means of payment like cash or bank cards is hampered. The risk of bank failure is real and it was repeated a few years later in Cyprus.
There is also the risk of government confiscation and it actually took place in the US in 1933 with President Roosevelt’s executive order 6102. The risk of government confiscation is small but is still there. Confiscation could happen if there is panic in the banking system or just before a new monetary system is announced.
Storing Gold at Home
Storing gold at home is the least expensive for storing precious metals, as customers benefit from the absence of storage fees. This form of storage is ideal for customers with small to medium-size collections of precious metals. All you have to do is find a secure spot in your house or property and store your valuables.
Before you do anything you must know that keeping gold at home has also a few drawbacks. Investing in precious metals is a completely private decision, the fewer people who know about it the less of a potential target you will be. So don’t tell anyone you keep gold at home, and at the same time make sure it is well hidden.
If thieves find it or if you lose it, it’s gone and it’s gone for good. You see gold bullion coins are easy to sell, as they are bought and sold by individuals, coin dealers, banks, and commercial dealers without a question.
Attention, with storing gold bars at home, as in order for the dealer to accept them, you might need to get your gold bars refined, so the dealer can verify the gold content, which costs money and takes time.
Is buying a safe solution? No, I do not think so. An upright safe is always visible and it does send the wrong message. A hidden safe is also not a good idea either, you see a burglar can find it and if he cannot open it he will come back with his friends. In addition, a punk with a pistol can easily convince you to open the safe.
A sunken floor safe could be a better idea, a safe you can install on the floor of your closet or garage. These safes are generally small but invincible, as the door to them is actually below the level of your floor, often hidden under the carpet.
In my opinion, the best place to hide valuables is up in the attic. A few pounds of gold can easily be stashed in the far corner of your attic and there is no chance that any intruder, is going to go up there and search.
Private Storage Firm
On larger quantities of gold, I recommend the use of a private storage firm (precious metal depository). Precious metal depositories offer top-level security, as they are highly guarded establishments that are under constant surveillance, with all activities inside the depositories monitored and recorded.
Some precious metal depositories offer two forms of storage, segregated and communal. Segregated storage, allows customers to keep their valuables in an individual storage compartment, preserved for private use. In comparison, communal storage, allows customers to keep their valuables in a shared storage area along with other people’s bullion. Both types of storage offer excellent security. Unfortunately, not all depositories offer both forms of storage, so it is important to verify the information in advance before committing to a particular depository.
Furthermore, many depositories offer further means of protection through their accounting-auditing and insurance policies. If after an inventory inspection, an amount of gold is missing, customers should remain confident it will be covered by the insurance policies.
Storing gold should not be a headache, after all the purpose of buying gold is to ensure peace of mind and financial stability. Choose the type of storage you feel most comfortable with and that should be enough.
Conclusion
I hope in this post I provided enough information for the investor who is actually considering investing in precious metals. I wanted not to keep it short and provide only the necessary information. If you have any questions please leave a message, I will be more than happy to answer back.
An investor will always come across the terms bull market or bear market. Phrases such as, we are now entering a bull market period, or the bearish market will soon be over, are common. It is important for the investor to know exactly what the difference is between bull market and bear market.
What is the Difference Between Bull Market and Bear Market
Bull Market Definition
A bull market is a period of several months or even years when prices rise. During those months or years, prices will rise by at least 20%. The term is usually in reference to the stock market, but it also applies to foreign exchange, real estate, bonds, commodities, precious metals, etc.
Bull Market Characteristics
Bull markets are characterized by optimism, investor confidence, and expectations that strong results should continue. At the same time, you need a strong economy indicated by high employment, high disposable income, and high business profits. However, investor confidence is more powerful than any economic indicator. When investors believe something is going to happen ( a bull market) then it will happen.
Is Bull Market a Money Making Opportunity?
Bull markets present a great opportunity for investors to make money. Usually, in a bull market situation prices rise across the board. Nevertheless, bull markets do not last forever and they never give notice prior to their arrival. Therefore, the investor must know when is the best time to buy or to sell in order to maximize his or her profits. In fact, the investor must attempt to time the market when a bull market begins and time the market when a bull market ends. Timing the market is imperative for making profits. There have been many examples of people who lost their money because their timing was totally wrong.
What I am trying to say here is the following. Just before a bull market is about to start, an experienced investor goes ahead and invests. When a bull market is about to end, the investor sells and puts his or her profits in his pocket. This of course is very difficult because predicting when a bull market is about to start or to end is not easy at all.
Bear Market Definition
On the other side, a Bear market is an exact opposite with market prices falling for a number of months or years, creating a background of negative sentiment.
Bear Market Characteristics
In a bear market, investors lack confidence, and market expectations are low or negative. A bear market appears after negative economic results, such as high unemployment rates, reduced disposable income, and problematic business profits. Most importantly though, investor pessimism plays a larger role than actual poor economic results.
Can I Lose Money in a Bearish Market?
An investor should have his or her eyes open, to get out of the market before it turns bearish. Investing in a bearish market is out of the question. You will lose your money. Experienced investors get back in the market just before it turns bullish. This way they buy low. This is also not easy at all.
What is the Difference Between Bull Market and Bear Market?
The difference between the two is that when the market is bullish you can actually make a lot of money by investing in it because the market is on its way up. The market euphoria will last several months or years and this time will be the best time to invest.
On the other side, a bearish market is when bad economic news, and performance take over which results in negative sentiment. The market will take a downturn and you will have to get out of the market or invest in non-correlated assets in order to avoid further losses.
Conclusion
Analysts spend thousands of hours trying to determine what will trigger the next bull or bear market and how long it will last. The basic idea behind investing is to buy low and sell high. This will maximize profits. Therefore, to make money you invest at the beginning of a bull market end sell at the end of a bull market. If we could predict when is the best time to buy or sell, then we all would have been millionaires by now.
I hope my, what is the difference between bull market and bear market article has been of great help to you. If you still have any questions feel free to ask in the comment section.
Imagine having $100,000 to invest and your choice was one of the two. Buy gold or buy bitcoin? Now that is definitely a headache. Bare in mind, that a number of people have to deal with this problem as they sense that the world’s banking system is at risk and are thinking about alternatives. The fact of the matter is that gold and bitcoin, at the moment look very attractive to investors.
1) Gold has always been a store of value. In fact, for thousands of years, people used it to preserve their wealth.
2) Gold is indestructible, all gold from ancient times to now, is available right now!
3) Gold is anonymous and easy to transport and carry. A gold kilobar easily fits in the pocket and is worth about $40,000.
4) The markets expect gold to climb over the $1,400 mark by the end of the year.
5) Gold is risk-free for the long-term investor.
6) All investment funds recommend to investors at least 5% to 10% of their portfolio to be invested in gold.
7) Due to its stability gold can be used as a basis for pricing or long-term contracts.
Gold Weaknesses
1) Gold is not easy to transact. You cannot send gold bars to someone’s bank account.
2) Gold is taxed.
Bitcoin Strengths
1) Bitcoin can be subdivided and is easy to transact and use for short-term contracts.
2) Bitcoin could offer high profits because its supply is over. There will be no more bitcoins mined anymore.
3) It looks as if bitcoin is becoming the reserve currency for other cryptocurrencies such as Ethereum, Ripple, Litecoin, etc.
Bitcoin Weaknesses
1) Bitcoin is unstable. It could be worth thousands of dollars now, and in a couple of months, it could lose 80% of its value.
2) Many analysts argue bitcoin has peaked and the time for correction is approaching.
3) Governments will crackdown on bitcoin. Drug dealers, terrorists, and other groups are using bitcoin to finance their activities.
Conclusion
Many analysts argue for a consolidated approach based on gold with bitcoin serving as the means for small transactions. My opinion is for the investor to play it safe. Yet investors have poured hundreds of millions of dollars into the digital currency market this year alone, with the dollar value of the 20 biggest cryptocurrencies around $150 billion, according to data from Coinmarketcap.com.
At the moment bitcoin is close to $4,000. Now, this is three times over an ounce of gold. And yes bitcoin could rise even higher. If we take a closer look at bitcoin, its price shot up 328% this year alone. To my mind, this could be a sign to worry. If you wish to invest in bitcoins then my advice would be not to put all your eggs into one basket.
On the other side, gold’s prospects look good with the yellow metal set out to climb over the $1,400 before the end of the year. There could be a short-term correction, but the fundamentals are all there for gold.
Gold surprised many investors this year with gold’s prices up 16% outperforming several US stocks. Although so far this is a strong result for gold, the yellow metal is vulnerable to a price correction before gold pushes towards the 1400 mark.
Gold is vulnerable to Short Term Corrections
Although gold prices are reaching September 2016 highs, they have not been accompanied by broad investor demand and the physical market remains soft, making the rally susceptible to short-term corrections.
The latest gold price hike has been largely driven by buying from futures speculators. Inflows into exchange-traded funds have already hit 29 tonnes for September, but retail demand remains soft, with coin sales lagging on a year-on-year basis.
There is no doubt gold is susceptible to short term corrections because of the lack of broad investor demand. In my opinion gold will pull back to 1300 mark before it bounces up again.
Gold Will Bounce Back
The fundamentals for gold to push towards the 1400 mark are there and cannot be ignored. The possibility for an interest rate hike in the US before the end of the year is very low. On the other side of the Atlantic the chairman of the European Central Bank is not willing to increase interest rates too.
Tensions in the Korean peninsula continue and no one can predict the outcome. Geopolitical uncertainty is here to stay.
The dollar will continue to weaken and at the same time there are questions raised on Trump’s administration ability to pass legislation.
Economic expansion, especially in Asia and fear trade is another reason for driving gold’s price.
Conclusion
The precious metal is definitely catching the eye of many investors these days, as more people use gold as a hedge against risks.
“Gold provides diversification. Its returns usually come when the stock market pulls back. That benefits investors greatly because when they feel pressure from stock exposure, their gold allocation does well.
Gold will fall back, but there is nothing to worry in my opinion it will bounce back.
efficient way to invest in gold. The larger bars are always available at the lowest premiums over their intrinsic gold value, smaller bars tend to cost substantially more.
refinery. At the same time, coins are very easy to resell. Many investors, only examine the premium price, (the percentage over and above the current gold value at which an item trades) when they buy gold, but do not realize that coins can have a premium at the time of sale, which is can be beneficial to the seller. A premium price can vary from 1% to 10% or even more.
bullion bars are the most efficient way to invest in gold. Bare in mind, I am not talking about a 1-ounce gold investment but I am talking about a 1-kilo investment.
