Author: christhomas

Year after year you’ve probably heard advisers and analysts tout the advantages of investing in gold and other precious metals, and if you were one of the wise few who heeded that advice 5 or 10 years ago you’ve probably made a hefty profit by now. If you’re one of the skeptics who has been sitting on the fence the whole time because you’re afraid to take a loss, congratulations, your procrastination has earned you exactly zero dollars. Luckily, it is not too late to jump in on the gold boom if you act quickly. Consider the following three reasons why 2013 will be a good year to invest in gold:

Gold Prices Likely to Continue Rising

With the price of gold currently hovering at around $1750, after rising up from approximately $250 an ounce only a decade ago, many people are worried that the prices will not get much higher, and that investing now would be a lost cause.  Some analysts say that gold will peak in 2015, others say it will peak in 2020, but one thing that most of them have in common is that they all agree that the price of gold has not yet peaked. This means that any gold bought in 2013 will continue to rise in price, so you still have the opportunity to earn a profit and protect the value of your liquid assets by converting them to gold.

Possible Value Peak During the Next Two Years

According to the chairman of GFMS, the price of gold could rise to more than $2000 per ounce in 2013. Of course there are plenty of other analysts that disagree with this, as is usually the case with any type of financial investment, but overall the consensus is that gold will peak sometime between 2013 and 2015. If you get in on the gold rush before that time you’ll be one of the lucky investors who earns a profit. If you wait until gold has peaked and then try to get in on all the fun, you’re going to lose money.

Post-Election Year

With the U.S. presidential election coming up in November the political landscape could be changing, which could initiate economic concerns among investors. Regardless of whether a new president is elected or the current president stays in office, it is likely that gold will be a hot investment in 2013 as governments, institutions, and private investors stock up on this precious metal to safeguard their assets from the continuous devaluation of the dollar and other fiat currencies.

After examining all of the facts surrounding the market right now it is clear that investing in gold during 2013 could pay off, but what is even more evident is that the sooner you buy gold, the more of a profit you’ll earn when it does peak.

christhomas

Your 401k or IRA is there for one reason and one reason only – to ensure that you have access to adequate funding when it is time to retire. Employer’s typically offer these plans to employees as an incentive to continue working for them or to motivate prospective employees to apply for available positions. However, you can also open your own 401k or Individual Retirement Account (IRA) to begin investing in your retirement. If you’re considering investing in gold with your 401k or IRA but are not sure whether this would be a wise decision, consider the following benefits:

Make Your Retirement Money Grow

A lot of people never try to optimize their retirement fund by making investments, opting instead to simply accept the contributions their employer makes and wait until to retirement. Others make the mistake of withdrawing their 401k early in order to buy a house and wind up paying a 10% penalty and other fees, leaving them with no money for retirement. By purchasing gold holdings with a portion of your 401k you’ll be part of the wise group of retirees that is able to enjoy a relaxing and fulfilling retirement.

Better Performance Than Other Investments

Of course, you could choose to invest your 401k or IRA funds into another type of instrument such as stocks, bonds, or mutual funds; but gold has consistently outperformed these investment types over the past few decades as the price has consistently risen. A number of factors contribute to the rise and fall of gold prices. As long as there is economic uncertainty the price of gold will continue to rise. With the current state of global affairs it would be wise to protect your retirement funds with reliable instruments like precious metals, especially gold.

Converting a 401k Into Gold

Your options for investing in gold with your 401k or IRA will depend on whether you currently have a 401k with your employer, and what the conditions of the existing 401k are. If your employee does not allow for precious metal investments you may need to rollover the funds into your own IRA in order to begin investing in gold. However, some 401k plans will not allow you to rollover funds without forfeiting all future contributions from your employer. Once you’ve set up an IRA or 401k that allows for precious metal investments you can start depositing bullion in the form of Gold American Eagles.  You may also be able to invest in gold exchange-traded funds (ETFs).

christhomas

Buying bullion is the easiest and safest way to invest in gold. Unlike other gold investment instruments you actually get to have the gold in your possession if you desire, and you can start by purchasing a small amount that will fit your budget. However, not all gold bars are the same, and there are a few things you’ll need to know before entering into the field of bullion buying. Consider the following tips when purchasing gold bars:

Consider Purity and Weight

Gold bars vary in size from 1/10 of an ounce to 400 troy ounces in a single bar (a denomination that is probably out of your price range). Although 1/10 ounce gold bars are the cheapest, they are actually more expensive per volume because it takes a lot of money to manufacture them. Thus, it is best to start with quarter ounce, half ounce, or whole ounce denominations as a novice investor, in order to get the most for your money. It is also important to only buy bars that have a purity of .9999% gold, or “four nines” as it is commonly called.  Since it is easy to find and acquire gold bars, storing the gold in a safe pace is the biggest challenge. Consider asking your local bank about their safe deposit options, or you can purchase a high-tech safe that can be kept on your residence.

Choose a Reputable Refiner

Once you’ve decided what size and purity you’re looking for, you’ll want to deal with a reputable refiner. Some of the most well-known include Engelhard, SilverTowne, Credit-Suisse, and Johnson-Matthey. Credit-Suisse bars are produced in Switzerland at the Valcambi refinery and have been listed on the London Bullion Market Association (LBMA) “Good Delivery” list. There are also other Swiss refineries that have a reputation of excellence, including Cendres and Metaux, Metalor, Argor-Heraues, and PAMP. Many people regard Swiss refineries as being the best in the world.

Reasons to Choose Bars Over Other Types of Gold

In comparison to gold coins, bars have a much lower mark-up because they don’t have to be minted with special designs, so they are cheaper to manufacture. For this reason they are the cheapest way to acquire pure gold, and are therefore the ideal instrument for investors. Other gold investment types like mining stocks and ETFs don’t actually give you physical possession of the gold, so they don’t offer as much security.

christhomas

So based on your research you’ve decided that investing gold bullion would be the safest and easiest option, but you’re not sure whether to go with bars or coins? Unfortunately, there is no cut-and-dry answer; so we’ll help you understand which one is more advantageous for your portfolio by discussing the following three attributes:

Cost and Premiums

The spot price of gold defines the base value of the metal on a per-ounce basis. However, due to the cost of manufacturing and distributing every refinery and dealer charges a small premium, which is a mark-up from the current spot price. Coins cost more to manufacture because they contain designs and are more elaborate than a simple bar, so they have higher premiums. Gold bars on the other hand have the lowest premiums of all types of bullion because they come directly from refineries and require less energy and equipment to manufacture.

Flexibility and Ease of Liquidation

Gold coins are available in small denominations and are therefore more ideal for the investor with a lower budget, and making them a more flexible option. For example, if you had one gold bar and you wanted to sell a fraction of it, this would be very difficult in comparison to selling a fraction of your gold coin collection, since the coin collection would already be separated into smaller individual pieces. Also, you’d probably be able to find more dealers that would be willing to trade cash for gold coins.

Value Retention and Appreciation

Gold bars retain and gain value depending on market conditions – the current spot price of gold dictates the value of a gold bar (taking into account the premium as well). In most cases this is also true with gold coins; however some government-issued coins will appreciate in value if they increase in rarity over time This is not guaranteed to happen though, and it typically takes a period of 30-100 years, so banking on the value appreciation of your gold coin collection is probably not the wisest move, unless you’re passing them down to your descendants.

Conclusion

If you have a very limited budget and want maximum flexibility, spend the higher premium and go with gold coins. If you’re a serious investor who wants to buy in bulk or add gold to your portfolio, gold bars would be more ideal. If you’re stockpiling gold to protect yourself from economic uncertainty it would be good to have a balance of both, with mostly coins, as these would be easier to use as currency in times of economic disaster.

christhomas

Keeping your investment portfolio diverse is the best way to ensure ideal returns while protecting yourself from excessive losses. However, not all diverse portfolios are as safe as others. If you invest in a bunch of stocks, funds, and other instruments that wind up losing value you’re going to take a loss regardless of how diverse your portfolio is. Fortunately, gold is a consistently reliable investment instrument that is used commonly by investors to balance and protect portfolio assets.  Instead of simply discussing the benefits of diversifying with gold, we’ll cover several methods that will help you do so:

Allocating Gold Investment Funds

The best way to maintain a balanced portfolio, regardless of what type of instruments you use, is to allocate a predefined percentage of your annual investment budge. Experts recommend devoting 10% – 20% of your portfolio to gold each year. Utilizing various types of gold investments spread out over the course of the year is a good way to further increase risk mitigation. For example, you could commit to investing 5% of your yearly investment budget during each fiscal quarter. The simplest way to invest in gold is to purchase bullion or coins from a reputable refiner.

Using Gold ETFs For Analysis

Gold exchange-traded funds (ETFs) are a great way to track the price of gold and mitigate risk. These funds give you the opportunity to gain valuable insight into the gold market, thereby letting you know when to buy and when to sell. You can also use an ETF to hedge risks if you’ve already purchased a significant amount of gold bullion or coins. You don’t actually own any physical gold when you invest in an ETF, it is just a contract that keeps you up-to-date on market conditions. However, you can sell the contract for a profit if conditions are right.

Consider Mining Stocks

Devoting a percentage of your portfolio to gold mining stock is a solid strategy in most cases because these companies are responsible for fulfilling the ever-rising demand for gold. As the demand rises and the supply decreases (being that it is a finite natural resource) mining companies are able to fetch a higher price for their gold, and therefore earn increasingly higher profits. If you own stock in the company and it continues to succeed on the back of the current gold boom you can sell those stocks in the future for a profit.

christhomas

Buying gold online can be an easy and safe process if you take the necessary precautions and do your research. However, if you rush into it you could wind up paying extra for no reason, or even worse, if you’re truly unlucky and incautious you could be scammed out of your investment completely. The following three tips should help you avoid unscrupulous sellers and make a safe gold investment over the internet.

Start By Comparing Official Dealers

If you’re planning on buying coins that are produced by the U.S. Mint you can check their official list of dealers to find a reputable source that deals online. If you’re planning on investing in gold bars you’ll want to stick with some of the more established online dealers like BullionVault, BullionDirect, Monex, APMEX, USAGold, and the USGoldBuraeu. If you’re shopping for Canadian Maple Leafs, check with the Royal Canadian Mint website to find their official dealers list. Although North American coins and bars are the most popular, the same rule applies for any type of bullion — always check with the most authoritative resource before buying.

Protecting Online Financial Transactions

Perhaps the riskiest aspect of buying gold online is not that you’ll be ripped off by the broker, but that someone could intercept sensitive financial information by compromising your internet connection. To avoid this it is best to keep an updated antivirus program running on your computer at all times. Using a combination of Avast and Malwarebytes PRO is a good way to keep your PC secured. Also, only enter your financial details into web pages that start with the letters “https” (the ‘S’ on the end stands for “secured”). These pages are encrypted and it is therefore highly unlikely that the transaction could be intercepted or spied on.

Checking Accreditation and Certifications

There are a lot of online gold dealers out there. Maybe you are considering buying from a dealer that is less-known in order to save money, and you’re not sure whether to trust them? The safest way to find out if a company is reliable and safe to deal with is to check the Better Business Bureau online database. There you should be able to find their corporate history as well as consumer experiences and information on any accreditations they have. If you’re purchasing gold as an investment it is extremely important to only deal with the most reputable providers, as you don’t want to take the risk of buying counterfeit gold or losing your investment altogether. Finally, only buy from dealers that provide an official certificate of purchase with each investment.

christhomas

Gold exchange-traded funds (ETFs) are open-ended funds that are traded on a stock exchange much in the same way the shares of a company are traded. It allows you to trade and actively track the price of gold without actually storing or possessing any physical gold bullion. You’re basically buying gold holdings that are stored in a remote location on your behalf, and can be traded on the stock exchange during market hours; units of an ETF can be sold margined or short, similar to conventional stocks.

How Does a Gold ETF Work?

When you invest in an ETF you are actually investing in a set amount of gold. However, you cannot trade the ETF for gold, you can only exchange it for its cash value (which you could then turn around and buy gold bullion with if you wanted to). You can sell your ETF on the stock exchange whenever you think the conditions are right to provide an optimal return.

Choosing a Gold ETF

Finding the right ETF for your needs is not difficult at all, you just need to determine what matters the most to you. If you’re concerned about liquidity it would be best to go with the largest fund at the time. If you’re worried about where the physical gold that backs your ETF is stored, go with a Swiss ETF like ETFS Physical Swiss Gold. Alternatively you could check out the list of the top ten gold and precious metal ETFs for 2012.

Notable Benefits of a Gold ETF

Gold ETFs offer the following three benefits:

• No Delivery Charges or Premiums – When you buy physical gold bullion you have to pay a premium over the current spot price, and you have to pay a delivery/making charge. With a gold ETF you don’t have any of these additional expenses, and you don’t have to cover sales tax, VAT, or wealth tax.
• No Possibility of Theft – When you buy physical gold bullion and keep it in your possession there is always the possibility that it could be stolen. Although gold ETFs don’t give you access to physical gold at all, and many believe that a lot of funds don’t have enough gold to back their customers’ holdings, you can always exchange your ETF for cash, and it cannot be stolen.
• Ease of Liquidation – As long as there is a stock exchange it will be easy to convert a gold ETF into cash. On the other hand, finding a dealer to buy your gold coins or bars is not always easy, as many banks won’t buy them back and many jewellers will only trade something of equal value instead of paying cash.

christhomas

With the economy in constant turmoil and advisers everywhere recommending precious metal investments as a way to protect assets, it isn’t surprising that many people are considering the advantages of using gold to secure their retirement. Not only are more people struggling in retirement than ever before, but many analysts believe that America could be in for the worse retirement crisis ever.

Invest in Gold with Your 401k or IRA Funds

One way to begin securing your retirement with gold is to invest some of the funds in your 401k or IRA account. Since the funds in these accounts are held in dollars, the decline of the dollar directly affects the value of your retirement savings. By converting a portion of the account to gold you protect those assets from depreciation and ensure that a minimum amount is safeguarded from inflation and economic collapse. You can deposit American Gold Eagle coins directly into your IRA or use the funds in the account to buy them online. These coins will not decline in value like the dollar and are therefore a safe option for securing your retirement with gold.

Devote a Portion of Your Annual Salary to Gold Investments

Another way to secure your retirement with gold is to devote a percentage of your annual salary towards gold investments on a quarterly basis. Experts recommend committing 5% – 25% of your yearly investment budget to gold investments, depending on your individual needs. If your goal is to earn as much profit as possible for your retirement, it would be best to keep your gold holdings below 10% of your investment capabilities, as this will give you the liquidity needed to trade with more flexibility. Keep in mind that there are a number of ways to invest in gold. Diversification is the key to building a strong risk-mitigated portfolio that will stand the test of economic trials.

Use Gold ETFs to Gain Insight and Increase Flexibility

You can compliment both of the above strategies by investing a gold exchange-traded fund (ETF) in order to track the price of gold and increase your trading flexibility. With an ETF you don’t actually have physical possession of your gold holdings, as they are stored by the fund. Instead, your holdings are represented by stock units that can be traded on the stock exchange during market hours. Although you can’t exchange an ETF for physical bullion, you can trade it for cash whenever you’d like.

christhomas

With economic uncertainty being a global theme since the financial crisis of 2008, many countries have been stockpiling gold to protect themselves from the possible devaluation of the dollar and other fiat currencies. Last year Venezuelan gold mines were order by their government to begin contributing half of all mined gold to the nation’s gold reserves. A similar occurrence happened in Kazakhstan, where mines have been order to devote ALL of their gold production to the government. Likewise, India, China, and Russia have all been stockpiling gold. So why are all these countries stockpiling gold, and what can we learn from it?

Paper VS Gold – A Trust Issue

The fact is, nations around the world are having a problem trusting paper currency given its horrible track record of consistently decreasing in value. You wouldn’t invest in any other commodity or resource that has been declining in value for the past century, so why would you invest in the dollar? Simply put, countries don’t trust that the dollar will hold value in the future, so they’re moving towards more historically reliable forms of money, like gold and silver. Although the doom and gloom media hype often makes the situation seem direr than it really is, there is truth in the fact that gold can provide protection in the event of an economic catastrophe.

Protecting National Sovereignty

The only reason the dollar has not collapsed is because the economies of China, India, and other producer countries depend on the American consumer market to sell the products they manufacture, and Americans pay in dollars. If it weren’t for that fact, China would exchange all of their dollars for gold – but if they were to do that then the dollar would become worthless and they would no longer be able to sell their products to Americans. Even so, nations are still trading a large percentage of their dollars for gold because they want to minimize devaluation.

Avoiding Complete Devaluation

If the global fiat-based economy collapses and currencies lose their value, every single dollar stored by governments around the world will be rendered useless. Thus, if a country stockpiles nothing but dollars, it is at risk of losing all of its monetary value. By stockpiling gold a country can ensure that it maintains a minimum value level, thereby protecting itself from complete implosion. Wise independent investors are following the actions of governments and institutions and are modelling their portfolios after them.

christhomas

Buying gold bullion (bars, ingots, and coins) is the safest and easiest way to invest in gold. However, not all gold coins are the same, and there are some facts that should be considered before entering into this field of investing. In the following paragraphs we’ll discuss some of the most influential factors that will determine what type of return you’ll be able achieve through your gold coin investments:

What Coins Should You Buy?

For most people the best gold coins to buy are those minted by official government mints within North America, such as the American Eagle, the American Buffalo, and the Canadian Maple Leaf.  These government-backed coins are very easy to liquidate when you need cash because they are practically ubiquitous and are trusted by dealers everywhere. American Eagle coins can even be deposited into Individual Retirement Accounts (IRAs). Although the 2006-released American Buffalo is the purest coin ever offered by the U.S. Mint, it is not as common as the American Eagle, and of course its purity gives it a higher price tag. If you live in South Africa a good choice would be the Krugerrand, and if you live in Austria a good choice would be the Vienna Philharmonic.

Comparing Dealer Prices

Since the U.S. Mint does not sell their coins directly to the public, you’ll need to find a reputable dealer to buy from. Fortunately, you can use the U.S. Mint’s official bullion retailer list to drastically simplify the prospecting and comparison process. Dealers sell their gold coins at a set premium above the current spot price, which can be found on gold price tracking sites like Kitco.com. As a rule of thumb, you never want to buy coins that are sold at a premium higher than 5% of the spot price. Obviously, the goal is to be persistent in order to find the dealer with lowest premiums on the coin you’re shopping for. It should also be noted that one ounce coins carry lower premiums than one-tenth ounce, quarter ounce, and half ounce coins, and are therefore the cheapest by volume.

Avoid Rare Collector’s Coins

Collector’s coins typically have more of a mark-up than officially minted gold coins. In addition, rare coins are not as easily appraised, and many brokers and dealers are hesitant to buy them, so you would have a hard time turning them into cash. While some rare coins will appreciate in value and may wind up being worth a lot more in the future (especially those that are government-backed and are considered legal tender) there is no guarantee that this value appreciation will occur, and if it doesn’t you’ll earn less of a profit than if you invested in of the aforementioned U.S. Mint or Royal Canadian Mint coins.

christhomas