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Posts Tagged ‘Gold Investment’

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.

The Best Ways to Store Your Physical Gold Holdings

January 21st, 2013 No comments
As your supply of physical gold continues to grow, you are going to want to make sure that you are prudent and wise as to where you store it. As you probably know, there are a few different options available and you may find that a combination of one or more will work best for you. Let’s look at the most common and most feasible options to ensure that you have considered them all.
Home Sweet Home
The thought of having physical gold safely stashed at home brings a sense of security and peace of mind to a lot of people. Others however, get nervous just at the very thought of it. We’ve all heard stories of burglaries and if a burglar did find your stash there would be no way to recover it. On the other hand, having a small supply of physical gold on hand could certainly come in handy in the event of an emergency. So it’s up to you as an individual to find that balance between risk and security.
If you do decide to buy gold and stash some at home, you obviously want to be very secretive about its location. Some considerations are: a concealed safe (preferably bolted into place), a false wall or secret cupboard, a food box in the freezer (also offers some protection from fire), a special can designed to look like a drink or food can, or even buried in your back yard. If you store your gold at home, you will obviously be the only one responsible for its safety – which can be a benefit or huge risk depending on your mindset.
Safety Deposit Boxes
One of the most obvious options for storing your physical gold is a safety deposit box at your bank. The advantage of this method is that it is simple and has less risk of burglary than your home does. However there are risks that you should be aware of. If the bank, for whatever reason, becomes insolvent, accessing your gold might become quite difficult. Even though the gold would remain your property, it could take a great deal of time before you have access to it again.
Bullion Dealers
Many bullion dealers and organisations will hold your physical gold in their vaults for a nominal fee.  This would provide much better security than storing it at home and would also make it easy to sell it back into the marketplace when the time comes. This also minimises the cost and risk of transportation from the dealer to your home.
Allocated or Unallocated Storage
Allocated storage means that your actual physical gold remains segregated from the gold belonging to other investors. Unallocated storage means that gold is purchased for you at an agreed upon spot price. You don’t actually own the gold but the purchase transaction serves as a promise to provide you with that amount of bullion when you request it. In essence you are an unsecured creditor with the institution with whom you are dealing. Obviously you want to do careful research before committing your physical gold holdings to someone else.
The nice thing about having some physical gold on hand is that no matter what might happen, it can always be used as a medium of exchange in the event of an emergency or catastrophic global event. So regardless of where you decide to store it, the main thing is to ensure that you do have a stash of physical gold securely tucked away, just in case.

As your supply of physical gold continues to grow, you are going to want to make sure that you are prudent and wise as to where you store it. As you probably know, there are a few different options available and you may find that a combination of one or more will work best for you. Let’s look at the most common and most feasible options to ensure that you have considered them all.

Home Sweet Home

The thought of having physical gold safely stashed at home brings a sense of security and peace of mind to a lot of people. Others however, get nervous just at the very thought of it. We’ve all heard stories of burglaries and if a burglar did find your stash there would be no way to recover it. On the other hand, having a small supply of physical gold on hand could certainly come in handy in the event of an emergency. So it’s up to you as an individual to find that balance between risk and security.

If you do decide to buy gold and stash some at home, you obviously want to be very secretive about its location. Some considerations are: a concealed safe (preferably bolted into place), a false wall or secret cupboard, a food box in the freezer (also offers some protection from fire), a special can designed to look like a drink or food can, or even buried in your back yard. If you store your gold at home, you will obviously be the only one responsible for its safety – which can be a benefit or huge risk depending on your mindset.

Safety Deposit Boxes

One of the most obvious options for storing your physical gold is a safety deposit box at your bank. The advantage of this method is that it is simple and has less risk of burglary than your home does. However there are risks that you should be aware of. If the bank, for whatever reason, becomes insolvent, accessing your gold might become quite difficult. Even though the gold would remain your property, it could take a great deal of time before you have access to it again.

Bullion Dealers

Many bullion dealers and organisations will hold your physical gold in their vaults for a nominal fee.  This would provide much better security than storing it at home and would also make it easy to sell it back into the marketplace when the time comes. This also minimises the cost and risk of transportation from the dealer to your home.

Allocated or Unallocated Storage

Allocated storage means that your actual physical gold remains segregated from the gold belonging to other investors. Unallocated storage means that gold is purchased for you at an agreed upon spot price. You don’t actually own the gold but the purchase transaction serves as a promise to provide you with that amount of bullion when you request it. In essence you are an unsecured creditor with the institution with whom you are dealing. Obviously you want to do careful research before committing your physical gold holdings to someone else.

The nice thing about having some physical gold on hand is that no matter what might happen, it can always be used as a medium of exchange in the event of an emergency or catastrophic global event. So regardless of where you decide to store it, the main thing is to ensure that you do have a stash of physical gold securely tucked away, just in case.

How to Invest in Coins: Three Key Steps to Coin Investment for Beginners

November 30th, 2012 No comments

If you are like most investors, at some point you are going to become attracted to, or at least intrigued by, the investment potential of coins. Rare coins have consistently been a great investment vehicle for the simple fact that there will always be a greater demand than there is a supply in the market place. That is the fundamental nature of rarity.

Step 1: Understand the Basics

The first thing to understand is that it is all about high quality and rarity. In order for it to have true investment potential, the coin has to be of the highest quality and/or it has to be extremely rare, preferably both. If you have to choose between the two, it is good to remember that circulated rare coins will typically command a higher price than non-rare uncirculated coins. In regards to rarity, it’s all about how many were minted, or how many still exist. An extreme rarity is a coin that came from a very limited production. Try for rarity first and then if you don’t have access to rarity, try for the highest possible quality. High quality means that the coin has remained in brand new (uncirculated) condition. High-quality rare coins are, of course, the most valuable.

Step 2: Find an Expert You Can Trust

Successful coin investing requires a high level of skill and experience. The selection process involves a thorough understanding of rarity and quality as well as sufficient market experience to be able to predict future demand. Knowing when to buy and sell is also vital to your success. This may seem a little intimidating to a beginning investor but thankfully there is an easy solution to this problem. Instead of having to spend years in the marketplace and countless hours studying, simply align yourself with a coin expert from a reputable company. A professional coin dealer with decades of market experience will be adept at choosing the coins that are the most likely to appreciate. With this relationship in place you will be able to build your coin collection and remove a lot of the risk so that you can make more informed decisions.

Step 3: Buy and Hold

It is generally recommended that you wait at least five to ten years to sell a coin after acquiring it. Actively trading coins is usually not the best strategy because you’ll probably only get minimal appreciation in the first 2 years of an investment. Also, appreciation is a lot more unpredictable in the first few years, more predictable over 5 years and very, very predictable over 10. The 5 to 10 year period is the optimum period to hold a coin. Of course, as with anything else, there are exceptions to the rule. There are times when the optimum capital appreciation might occur in just two or three years and it is a good time to sell a particular coin or group of coins. If you have a good working relationship with an expert broker, they will likely advise you when these conditions occur. Typically the longer a coin is held, the more valuable it becomes. If you look at coins over 40 years, the average rare coin has increased at a compound growth rate of 16.1%.  That’s a tremendous capital appreciation.

So with these kinds of consistent returns, it certainly seems to make sense to include rare coins as a part of your investment portfolio. You can start with as little as $1,000, although most experts would agree that it is ideal to start in the $50,000 range if feasible. Regardless of where you are starting, the important thing is to get started.

Common Myths about Gold Investment

November 15th, 2012 No comments

Few investments attract more myths and folklore than gold. With gold long considered valuable, it’s been the subject of legends and tall tales for hundreds of years. Let’s take a look at some of the myths around gold that are still alive today and examine whether they’re busted.

Gold is Overvalued

For the past several years, this is probably the most heavily and hotly debated discussion around gold. The fact of the matter is that no one knows. For that matter, no one even knows what it is truly worth other than what it is currently trading for. Beyond that it is a fruitless discussion, but a popular one nonetheless.

The Smart Money Exited Gold Long Ago

People have been claiming this for over five years now. But the fact remains that some of the largest and most successful investors in the world have their portfolios diversified with a strong gold position.

Gold is a Safe Haven

Between 1980 and 2000, the purchasing power of gold dropped dramatically. Since then it has enjoyed incredible growth other than during the crash of 2008 when it fell by nearly a third. Of course, many investors would argue that its safety lies in the long position and that the relative volatility can be ridden out.

ETFs Are More Profitable Than Physical Gold

ETFs are sometimes more profitable but sometimes less so. It really depends upon when you buy and sell and what price you pay. During the crash of 2008, ETFs dropped even more than the metal did. ETFs are also usually considered more risky than physical gold and it’s often argued that more “paper” gold is sold than exists physically.

Gold is a Better Investment than the Other Precious Metals

Historically, over the long haul, silver and platinum have marched pretty much in step with gold. At various times both metals have outperformed gold, and at other times gold has excelled. At different times, one precious metal has risen much more than another. Timing and investment strategy make a big difference, no matter what you are in investing in. Speak to a specialist if you are unsure, and pay attention to market trends.

Physical Gold is Subject to Confiscation

This myth is perpetrated by unscrupulous dealers that want naive investors to invest in older gold coins with higher premiums. It is based on a time during the Great Depression, when U.S. President Roosevelt required all gold, except older coins, to be turned in. The older coins received special treatment due to their value as collectibles. The fact is that there is absolutely no evidence that any government has any plans of this nature or could even conceivably pull off such a dramatic feat.

Gold Should Comprise 7% to 10% of Your Portfolio

Why only 7% to 10%? Think about it. If the other 90% of your portfolio collapses, the 10% that your holding in gold isn’t going to make up the difference even if it doubles in value.

If you really want to know the truth about gold, rather than listening to myths perpetrated on the internet or by friends or family, you’re better off consulting with a reputable and professional company that has been dealing in gold for many years.

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.

6 Reasons to Invest in Gold

September 27th, 2012 1 comment

If you’re looking for a good return on your investment, buy gold. Why? Because gold has a strong history in preserving value even when national currencies were losing value. If the value of your current investments is being determined by depreciating currencies then it may be a good time for you to start thinking about investing in gold.

Wondering where you fit in when it comes to the ‘type’ of people who have decided to take their hard-earned money and invest it in gold? They are the people you meet in your everyday life, i.e. doctors, carpenters, teachers, and bank tellers. In fact, the next time you see your next door neighbour, ask them if they happen to be a gold investor. You just may be surprised at their answer. What we’re saying is that anyone who has an interest in investing in the gold market can become a gold investor.

6 Reasons to Invest in Gold

The following are 6 reasons why it’s a good idea to invest in gold:

1. Gold utilisation is not keeping up with global gold production. This means the price of gold is going to continue to rise as demand increases.

2. Gold is a universal form of currency. For instance, the US dollar is currently weak with no apparent end in sight due to existing economic policies. Investing in gold is a great way to increase the value of your portfolio because it is much more stable than national currencies.

3. Gold is a form of insurance, and can be separated from most capital assets that rely on someone else’s ability to pay.

4. It’s not difficult to buy or sell gold. In fact, gold can be seen as somewhat of a portable investment that you can buy and/or sell whenever you want.

5. There are lots of choices when it comes to buying gold. There are gold bars, gold coins, gold stocks, gold bullion, gold mining, etc. from which to choose from. It’s important that you recognize there are pros and cons to buying each form of gold, so be sure to do your homework so you can fully understand exactly what you’re buying.

6. Gold forms a properly diversified portfolio. At least 10% and no more than 30% of your portfolio should be comprised of hedge funds, making gold a great choice for creating a highly diversified portfolio.

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.

Gold Price Update: TV Interview

November 15th, 2009 1 comment

The Australian Bullion Company‘s very own Peter August was interviewed on television recently. Watch the YouTube version of the interview to find out why the Gold Price is on the rise and why it’s expected to keep increasing based on expected global demand…

Peter August On The Gold Price

VIDEO TRANSCRIPT: GOLD INVESTMENT TV INTERVIEW

It has soared to record highs on news that India’s Central Bank has bought 200 tons of it from the International Monetary Fund.  The 6.7 billion dollar purchase over the last 2 weeks of October surprised the markets.

It was the biggest single central bank purchase over such a short period in the last 30 years.  The price of gold jumped by more than US$30 to an all time high of $1,087 an ounce.  The country has until now has been the biggest consumer of the precious metal, primarily because of its deep seated affection for jewelry and gold ornaments.  Experts say India’s interest in diversifying into bullion is a sign that gold’s run has only just begun.

For a while there had been a sort of a philosophy that gold no longer was relevant in a modern society, but with all the printing of money that is going on around the world gold has become the ultimate safe haven and has become the safe asset of choice, not only by individuals but by central banks.

The change of attitude appears to be due to a shift in strategy by investors to hedge against a weaker dollar and the threat of inflation.  It also heightens speculation that there may be more official purchases.

The Chinese we know are very worried about holding so much US denominated debt and cash.  You’ve got the Middle East petro dollars that need to be recycled into a store of wealth that they can rely upon.  There’ll be no shortage of takers.

The IMF plans to sell about 400 metric tons of gold this year in an effort to shore up its finances and increase lending to developing countries.  India’s purchase represents about half of that amount.  The question now is who will buy the rest of the IMF gold.

Neena Mairata, World News, Australia.