Archive

Posts Tagged ‘Buy Gold’

Gold Proves More Rewarding than Stocks Over the Past 10 Years

April 10th, 2013 No comments

As far as gold vs. stocks over the last decade, there’s been no contest. It’s been Lebron James vs. Mickey Rooney, Billy Slater vs. Ja’mie King and Gina Rinehart vs. Nathan Tinkler.

Here Are the Facts

Between 2000 and 2012, according to a report by Kitco, the DJIA went up by 17.04%. The NYSE increased by 22.25%. NASDAQ did better, having an increase of 117.73%

According to the Wall Street Journal though, in the roaring 2000s, stocks had their worst calendar decade performance in 200 years. Investors would have done better almost anywhere else, including stuffing their cash under a mattress.

But, during that same period, gold prices (USD/OZ) skyrocketed, increasing by 532.15%. Obviously, the smart money was invested in gold.

Of course, if you had your money in Apple stock, you would have done pretty well. Apple has been a phenomenon. But so was IBM back in the early eighties when PCs first became popular. Everyone thought IBM was going to own the world. Look what happened to them. So there’s no guarantee Apple will continue its dominance.

Even some of the richest men in the world lost billions of dollars from 2000 to 2010 as a result of the global financial crisis, the dot-com crash and not-so-smart business choices.

Bill Gates, for example, lost $50 billion, more than the GDP of Guatemala. Ted Turner lost $1.8 billion, Kirk Kerkorian $3.0 billion, Charles Schwab $4.0 billion and Summer Redstone $6.7 billion. So it doesn’t necessarily pay to be on the inside.

Why Did Gold Outperform Stocks?

The reasons why gold has done so well are pretty obvious. Times have been bad and precious metals, especially gold, have always done well in hard times.

Global economies are slowing down. Some are coming to a standstill. The global debt crisis is at an emergency level, and too many governments have responded by printing more paper money to service their debt. Investors have responded by taking action to buy gold as a protection against losing the value of their cash as inflation looms in the future.

Another factor driving gold prices and bullion prices ever higher during the 2000s was inflation caused by an ever increasing global demand for crude oil while global production of oil was falling off. As more global economies became dependent on oil as an energy source, more investors turned to gold as a hedge against inflation and as a way to preserve their money,

What’s in the Future for Gold?

Most large economies have only three ways to service their enormous debt – reduce spending, raise taxes and/or print more money. They seem to be totally unwilling to reduce costs and believe raising taxes to be political suicide, so they’re left with only one option – putting more money into circulation.

Very few, if any, economists see prosperity in the future. That’s why buying gold remains a better investment than stocks now and in the future. Gold is always the best thing to have in your possession in an economic crisis.

Is Gold a Safe Investment?

March 27th, 2013 No comments

For the past ten years, gold has been an excellent investment, rising from about $300 an ounce in 2000 to over $1,600 an ounce today. That’s probably why a recent US poll showed most investors believe gold to be the best long term investment, ranking it better than real estate, stocks and savings accounts. Many Australians agree.

One of the reasons for gold’s strength as an investment is the present global debt crisis. As economies slow down, there’s been an increasing pressure to service debt. Governments all over the world have responded by increasing the money supply. The potential of future inflation has driven investors to buy gold to protect the value of their money. This trend doesn’t seem likely to change, making gold prices very stable.

Another factor making gold a safe investment is the rising price of oil and the resulting inflation caused by greater global demand for oil and dwindling global oil production. As more economies around the world become increasingly dependent on oil as a primary energy source, more investors will turn to buying gold and other precious metals as a hedge against rising inflation and the devaluing of paper currency.

Gold vs. Paper Money and Investments

Sure, there will always be a difference of opinion between economists, each offering the pros and cons of their particular point of view. But, in the long run, gold has always done very well, seldom losing its value and never given away for free.

You can’t say the same for paper money. Too many times in history, paper money had no purchasing power and was better used as fuel for the furnace or for wiping a baby’s bottom.

The same can be said about many paper stocks and investments. Companies and industries flourish and disappear, making their investments of little to no value.

In 1970,General Motors, Exxon Mobil, Ford Motors, General Electric and IBM were the five largest global companies. Not today. Only Exxon Mobil is still in the top five. The US retail phenomenon, Wal-Mart, is # 3. In 1970, it was only a small local chain store.  

General Motors is # 19 today, behind Toyota (# 10) and Volkswagen (# 12). Ford Motors, General Electric and IBM are not even in the top 20.

As you can see, investing in stocks can only be profitable if you can predict the future and know who the winners and losers are going to be.

That’s never been the case for gold. Buying and selling gold is easy. Gold is always in demand and even more so today as mining production is becoming scarcer and even more costly, keeping gold prices stable or on the rise.

Most market analysts believe gold and other precious metals will continue to do well in the future, as long the global economy remains unstable. Some are predicting gold prices will go as high $2,000 an ounce in the short term.

Buying Bullion Bars or Coins: Which is the Better Investment?

November 8th, 2012 No comments

Many investors have decided that it is safer to have precious metal in hand than it is to invest in precious metals Exchange Traded Funds (ETFs). Granted, the cheapest and most convenient way to invest in and trade with gold and silver is ETFs, but they also come with more long-term risks. Risks such as, but not limited to, counter party risk, which means that the precious metal is not actually held by the ETF provider. It’s typically held by a large bank and if the bank goes bust, your investment could disappear as well.

Besides, how do you know they’re actually holding the precious metals that they claim to be holding? Along with this are the U.S. Commodity Futures Trading Commission and the Gold Anti-Trust Action Committee that reported that the actual physical gold that exists globally above ground is only 1% of the ‘paper gold’ that is being traded.

The Shiny Stuff

Buying physical gold and silver is undoubtedly more expensive than purchasing ETFs. First you have the dealer’s premium that you will incur when you buy it. You will also have to factor in delivery, storage and even insurance costs. Then when you sell, there is typically a dealer fee as well. Of course, buying and selling gold and silver is also not without risks either.  Gold and silver prices could drop through the floor resulting in a loss on an asset that may not be easy to sell. However, when you look at current market conditions and global economic trends, investing in physical precious metals definitely warrants close consideration. So what form of precious metal do you buy? Bullion and coins each have their own merits and drawbacks and both should be assessed as to how they fit your unique needs and investment strategy.

Coins

Coins can be quite elaborate and attractive and easy to purchase in small amounts. Since they are something with which most of us are familiar, they can also be a little less intimidating than bullion, at least at first. Some coins are rare and collectible which can add even more complexity to the investment. It should be noted that the added value of being a collectible is often in the eye of the beholder. Collectible and antique coins are very specialised markets and should probably be avoided unless you really know what you are doing. Collecting coins can be fun and rewarding but for true investors, most would agree that bullion is a wiser choice.

Bullion

Precious metal investors focus purely on the metal value rather than getting caught up in collectible values. Bullion is easy to sell, hard to fake, and is typically more pure than coinage and the premium is generally lower as well. For the serious investor, gold bars are the simplest and most efficient way to invest in precious metals. Larger bars are generally available for the lowest premiums over their intrinsic metal value. The trade-off is that they are not quite as flexible as smaller bullion portions when it comes time to sell.

Even though most investors would agree that bullion bars make the most sense, like most things, investment strategy is an individual pursuit and only you can determine what’s best for you.

How to Buy Gold in Australia: 9 Methods

September 18th, 2012 No comments

Buying gold is certainly a flexible process. Those who invest in gold also like the fact that there are so many methods to choose from when buying this precious metal. Since buying gold is a more and more popular choice for those who are looking for ways to invest their money, the choices for buying gold have increased greatly.

No longer are gold investors limited to only buying gold coins or gold bars (although these are still two of the more popular choices). Instead there are plenty of different methods that can be used to purchase gold, depending on your investment goals and strategy.

How to Buy Gold in Australia

The following are the top 9 methods one can choose from in order to invest in gold in Australia:

1. Gold Bullion – Refiners produce gold bars that range in weight from 1 gram to 400 ounces. Gold bullion is generally considered the most effective and least risky way to purchase gold.

2. Gold Coins -The American Eagle, the Canadian Maple Leaf, the South African Krugerrand and the Austrian Vienna Philharmonic comprise the most popular 1 ounce gold coins. Gold coin investment is also a highly effective way to invest in gold.

3. Numismatic Coins – If a coin is considered a collectible, the value of gold in these coins are at a premium. However, they can be harder to sell as collectors are the only buyers interested in paying the premium of a rare coin.

4. Gold Certificates – An extremely easy and convenient option, many people like the idea of owning certificates that state they own gold bullion. The actual gold is kept safe in a financial institution, of which there is a fee.

5. Gold Futures and Options – Since gold futures contracts are traded on future exchanges, high price movements are expected. These method also allow one to sell short, or to benefit from an increase in gold prices.

6. Gold Mining Stocks – This method refers to stock ownership of a company that’s traded in an exchange.

7. Jewellery – The most utilised gold buying method. Probably because buying gold jewellery normally requires a smaller investment. Especially popular in developing economies where people often use this method for savings.

8. Exchange Traded Funds (ETF) – This method requires shares to be purchased from a fund that’s only based on the current market price of gold. It’sconsidered the safest because it removes any leverage or storage problems.

9. Gold Mutual Funds – This is a fairly safe method that allows buyers to diversify their stocks and then let a professional investor make all the decisions.

Bottom Line

The choice to buy gold as an investment is a popular one. Especially since the value of gold has been steadily increasing over the past 10 years, making it of great interest to both old and new buyers. This interest has made it so that a variety of people are looking for a variety of ways to invest, and that’s why there are so many methods for buying gold these days. If you are interested in buying gold using one of the above methods, be sure to do your research first. This way you’ll have the knowledge to understand what methods are going to work best for you.

When Is It The Best Time To Buy Gold?

February 24th, 2010 1 comment

When should you buy gold? Well, the short answer is ‘now’. When you understand how and why to buy gold, you can begin to buy it.

One of the beauties of gold is the fact that you can buy it whenever you need it. Unlike stocks and other investments, you can buy gold whenever you need it, timing is never an issue.

Ask yourself “Do I believe that I need to own gold?”, if you answer ‘yes’ then there is no reason to delay buying gold. Every day that you wait you are holding off on diversifying your portfolio. Economic crisis could come swiftly, wipe out your assets, and then you would be kicking yourself for not making the gold purchase you were thinking about.

Waiting to need to buy gold is poor strategy. There was a rush to buy gold during last year’s economic downturn, national mints could not keep up with public demand, and premiums went through the roof.

Gold can be almost impossible to buy when it is in high demand. During these times, you cannot just call a gold warehouse and place an order for gold. Even national mints cannot keep up with gold when their is a rush of demand like the ones in 2008 and early 2009.

In fact, Times Online posted an article in February discussed buying gold during a recession.

Even people who collect numismatic (high quality and rare coins) gold will have a hard time buying during these rushes to buy gold. Great demand can make people hold tight to their personal stores of gold. In some cases, the supply of gold can just simply disappear.

That’s why the best time to buy gold is now, global markets are still in an economic downturn, but the increased demand for gold has subsided. Gold will be easier to buy and at a lower premium than it has been recently.

Why Gold Is A Smart Investment

February 3rd, 2010 No comments

Investors who are new to gold will surely feel the thrill of seeing and holding their first stock of physical gold. Valuable coins and bars have a beauty and lure that that has dazzled monarchs and common folk alike.

Like any commodity, the value of gold rises with demand and falls with supply. But, unlike other commodities, there is a limed supply of gold, you can’t just make more of it. Yes, more can be mined, but not at the rate that it is demanded. And, there is a virtually unlimited amount of demand for gold because of gold’s historic and ever-rising value.

Gold is usually in a strong bull market. The definition of a bull market is one that has gains of 20% or more a year. Since 2000 alone the gold market has had on average gain of 202% per year. Gold has made a fortune for those wise enough to invest.

In 2006 CNN Money did an article on the current ‘gold rush’, but that was nothing compared to the demand that we have seen over the past few years. Anybody that bought during the 2006 ‘rush’ would have made a lot of money during the next rushes that occurred in mid-2008 and again earlier this year.

Why does gold’s value rise so fast?

Well, part of it is the mining issue I mentioned earlier. The world’s mines produce about 2,500 metric tons of gold a year. The world demands between 4,000 and 5,000 metric tons of gold a year. Gold demand outstrips demand by 60% to 100% every year.

The world’s banks were allowed to sell there supply after the end of the gold standard, which was a system that forced countries to back their currency with physical stores of gold. From the mind 1960s to the late 1990s, banks released enough gold to marginally keep up with the worlds demand. By 2001 the banks had run out of their massive stores, and the demand for gold skyrocketed.

Right now is a strategically critical time to invest in gold. The arrival of online trading and increased interest in gold as an investment may eventually bring the market into an equilibrium that results in a higher gold price. Jumping into the market right now means buying gold at price that should prove to be historically low.

Gold can be seen as insurance, it will always be worth something, no matter what else happens in the world. Mighty stocks can plunge to zero, inflation can render the dollar worthless, bond interest rates can fluctuate, but gold will always be valuable.

The gold that you buy today will be able to buy the same amount of goods, if not more, in the future. Your grandchildren and great grandchildren will be able to reap the benefits of your gold investment.

Gold Versus Silver Investment Part 1 of 2

November 25th, 2009 3 comments

Investing in gold is popular these days. People are investing in gold like never before, but a little known fact is that silver bullion investment is also gaining in popularity. Watch this short 5 minute YouTube video that explains the differences between gold versus silver investment.

VIDEO TRANSCRIPT

Hi, I’m Dr Marc Dusault, I’m here with the Managing Director of the Australian Bullion Company Mr Peter August and we’re sitting here with gold, and this is 105 ounces of gold bars and this is another ounce of a coin.  And I just wanted to show you what it actually looks like; and it’s actually as heavy as it sounds.

Now just so you can see, this is a regular blackberry mobile phone and we have a series of YouTube videos that explains why you should invest in gold.  But what I wanted to do in contrast, and I’m just gonna move the phone over here just so you can see the difference in size.  Again this is just a regular, this would be about the size of a 20 cents piece wouldn’t it?

Yes.

Okay, so a 20 cent Australian piece, and it’s actually you know very attractive because once again it’s a coin, whereas these are bars which have a little bit more of a rough texture.  But the contrast I want to show you is with silver.  Now this is 1 kilo which is about, it’s about all of this isn’t it?

One kilo is that.

Is that.  So this, is that.

It’s a dramatic difference isn’t it?

Yeah, it’s a huge difference.  Now this is silver and I, you have to sense how heavy this is and when you look at it it’s got that rough texture we talked about in the other YouTube video about bullion, and it’s stamped, and it’s actually when you touch it it’s got a really nice feel to it.  I want to show you another one, this one is how much, 5 kilos.

That’s correct.

Now I’m not gonna drop it from too high up okay, but… Read more…