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  • Alternative Means of Holding Gold

    It may come as a surprise to you that not everyone wants to store their gold at home. Some people prefer a way to invest in the yellow metal without having the headaches or hassles of keeping track of it. Other investors who purchase gold for their retirement accounts are not allowed to keep it in their house. Below are several alternative ways that you can own gold without physically having it in your possession.

    ETFs

    ETFs are exchange traded funds. They may be the easiest means of investing in gold. While they sound like an account that holds a variety of different investments, the name can be misleading. The only function a Gold ETF fulfills is to track gold prices. With a number of years of successful track records, these ETFs have worked almost perfectly. While the Gold ETFs are supposedly backed up by physical gold holdings, some investors have argued about whether or not these gold holdings are actually physically owned and held by the ETFs. They are extremely easy ways to obtain exposure to gold. The two most popular and widely held Gold ETFs are the GLD, which is the SPDR Gold Shares and the IAU which is the fund run by iShares as the COMEX Gold Trust. The costs of holding these funds are marginal at .4% annually with similar or lower commission fees.

    The pros to this type of holding gold are fairly obvious:

    • It is an easy way for traders who want to buy into and sell out of gold on short notices to participate.

    • There is not any simpler or more convenient way to buy or to be exposed to gold.

    • These ETF shares can be held in retirement accounts like Gold IRAs.

    There are several cons to consider as well:

    • It is impossible to tell if the Gold ETFs really have the quantity of gold that backs up their outstanding shares.

    • There could be other costs and especially capital gains taxes with these Gold ETFs.

    Gold Accumulation Plans

    Many investors and savers for retirement are not aware of what Gold Accumulation Plans are. The idea is that you are saving money in increments to buy gold. They eliminate higher premiums for buying smaller amounts of the yellow metal, which is much of their appeal. Once each month, the money that you designate is deposited into the account and utilized to purchase gold. After this amount of saved gold builds up, you have the ability to exchange and withdraw it  in the form of cash, gold bars or coins, or even jewelry.

    The Pros to Gold Accumulation Plans include:

    • It gives your savings the diversification out of dollars and other currencies and into gold.

    • You gain the advantage of cost averaging into gold.

    • You can buy gold in small amounts without paying high premiums.

    A downside to Gold Accumulation Plans lies in the potential missing out on heavily buying gold on price pullbacks.

    Gold Certificates in Gold Pool Accounts

    If you believe in the banks and their integrity, there is an inexpensive way of investing in gold through gold pool accounts.  These accounts basically provide you with gold certificates of ownership in an unallocated storage account. There is risk in this form of purchasing gold, which you have to weigh against the convenience and cheap price. Banks are allowed to use your gold as it suits their needs in these forms of accounts. The bank is essentially providing you with an IOU on your gold if they loan it out or sell it to increase their capital reserves. If the bank gets into trouble, and your gold is reduced to this form of debt to you by the bank, you would likely have a problem. Gold pool accounts do not fall under government insurance plans like the FDIC. Despite this potential danger, more than 90% of gold held by customers in banks resides in this type of arrangement. You can generally have your gold be delivered to you by requesting this from the bank or financial institution and exchanging your gold certificates. These certificates are your proof of ownership in the gold pool account.

    The main advantages to this form of purchasing gold are:

    • It is simple for you to set up with a variety of banks or financial institutions.

    • You spend very little to buy and own the gold.

    • This form of gold ownership is often allowed in retirement accounts.

    The principal disadvantage to these accounts is that your gold is entirely in the hands of the bank holding it. There is no insurance against the bank failing.

    Segregated Gold Accounts

    For those of you who do not trust the good intentions of banks, there is another form of purchasing gold and holding it more securely with these institutions. Segregated accounts take away the hassle of having to keep the yellow metal safely at home. You are able to store your gold in the bank vaults. The bank is not allowed to touch your gold, as it is physically yours. The bank may or may not offer a private lockbox for your gold, and either way you will pay for this form of storage. Your gold will come with certificates of ownership that describe the fineness, weight, and type of holding as well. All the bank is doing is safeguarding your gold until you decide to sell it or have it delivered to you.

    The main benefits to these arrangements are:

    • Because the gold is being stored by a bank in a vault, it is often approved for gold retirement accounts.

    • You do not have to be concerned about where your gold will be kept safe and how it will be transported to the bank as they will handle this.

    The disadvantage centers on the fees that you will have to pay for this service. There will be annual storage and insurance charges as well as a handling fee for setting up the arrangement.

  • Gold IRA Companies Review

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  • BitGold Review, is the gold-based debit card service all it’s cracked up to be?

    BGdebitcards

    There have been a number of valiant attempts in the past to turn gold into a full-fledged tangible tradable currency. These have all failed so far, most spectacularly with e-gold that resulted in an enormous money laundering case, in fact the largest single digital money laundering case ever. Yet another attempt to establish gold as a fully legitimate, tradable, and exchangeable currency has been established in recent years. This is called BitGold.

    What is BitGold all about?

    Unfortunately, for the sake of the confusion and lack of clarity the name has caused, BitGold has no connection whatsoever to BitCoin. The only similarity between the two of them is the close name proximity. BitGold is actually an online platform that allows account holders to save, store, trade, pay with, and give to others gold in the form of a currency. The BitGold program operates similarly to a bank account. Individuals with accounts can make deposits from their own national currency, and then their money is changed into gold and denominated and valued as such.

    The technology involved is pushing the limits of the digital payments processing system as it assists individuals with securely buying, holding in secure storage, and also spending their gold with uncharacteristic ease. A BitGold account may be opened up in a matter of minutes, and it is totally free to both open and maintain.

    Account holders benefit from a number of conveniences, such as:

    • A secure and individually segregated vault and electronic account in which to buy and store gold.
    • The capability of receiving and making instantaneous payments in gold.
    • A prepaid credit card that allows holders to spend their gold at any place that accepts credit cards.
    • The ability to redeem in physical gold owner’s electronic gold currency for 10 gram GoldCubes or 1 kilogram gold bars.
    • The capability of funding the account through a network of proprietary ATM’s or via ACH payments from 9 of the 10 biggest US banks as well as by credit card payments.
    • A means for foreign users of BitGold to deposit funds to their accounts via international wire transfer, Interac for Canadians and China Union pay for Chinese customers.

    A simpler way to understand BitGold is to compare it with a similar means of payments and transfers known affectionately as PayPal, called the most beloved way to pay and be paid. Imagine if PayPal were denominated in gold grams instead of U.S. dollars or Euros. Much like with PayPal, BitGold account holders are allowed to receive or transfer with other users of the BitGold system, and to spend it at any merchant that accepts credit cards using the BitGold Prepaid Card, very similar in its operation to the PayPal Debit MasterCard.

    A new feature of BitGold is the ability of account holders to use their mobile app to trade, store, and purchase with the best performing currency of the 21st century in the palm of users’ hands. This mobile platform represents the only app available for purchasing gold online simply, for receiving and sending payments in it at no charge, and for rewarding users who bring their family and friends into the family to enjoy the BitGold experience.

    BitGold CEO, Founders and Management Team

    The management team of BitGold is no secret. Their website publishes names, profiles, and pictures on each one of them. Their board is made up of individuals who possess literally decades of hands on experience with investment management, financial services, legal, economics, software engineering, compliance, security, cryptography, design, and marketing.

    bitgoldceo

    Among their officers are CEO Darrell MacMullin (former head of PayPal Canada), Founder Roy Sebag, Co-Founder and Chief Strategy Officer Josh Crumb, and Chief Technology Officer Alessandro Premoli.

    How Does BitGold Work?

    BitGold works from start to finish with unusually easy to follow step by step instructions and no sneaky hidden charges. Setting up an account is always at no charge. The company provides the most advantageous gold prices in the business at the most competitive rates for selling and buying gold. BitGold claims to be the only existing platform that permits individuals to spend the gold they amass within their gold account, making it truly a working currency.

    bitgoldinterface

    Once users open their accounts up, they make deposits to the account via credit card deposit, ACH deposit, bank wire transfer, a deposit to one of the BitGold ATM’s, or one of several other specialized services. Gold is then purchased for the locally denominated currency amount of the account holder’s deposit. The gold is guaranteed to be within a 1 price range of the official gold price on world markets. The gold is then stored for the customer for free. Now that the customers have money denominated in gold and backed up by deliverable on-demand gold in a secure and audited vault, they can send money transfers, buy things with their BitGold pre-paid credit card, do automated payments, and make online payments all from the convenience of any secure Internet connection or via their mobile phone on their new app.

    BitGold now also offers their Recurring Savings Plan. This permits account holders to set up a pre-planned and -set amount that BitGold will draft from their accounts at whichever time interval they wish. The money then goes directly into the owners’ BitGold accounts, where it is transferred immediately into gold. These savings deposits can be arranged to be contributed by day, week, or month via the owners’ favorite deposit means.

    About BitGold Fees

    There are never any commissions or fees for any of these transfer or payment services. This table will show the fees for withdrawing physical gold:

    bitgoldfee

    How Does Gold Storage Work?

    bitgold storageThis is a major concern for anyone who has been burned by Bitcoin’s colossal failure Mt. Gox, the e-currency’s largest broker that spectacularly collapsed, costing its account holders over $500 million in losses. With BitGold, the major difference in storage is that the company actually holds segregated and physical gold holdings in secure third party vaults for every one of its customers. The gold is actually stored in Brink’s depositories found in major gold-holding centers around the world— London, Zurich, Hong Kong, Toronto, Singapore, New York City, and Dubai.

    Should owners determine that they want to take physical possession of the gold they own in the account, BitGold will happily oblige them. This works by BitGold simply shipping the owners their gold in the form of 10 gram GoldCubes or 1 kilogram gold bullion bars. The physical vault redemption involves a cost of $25 handling plus the cost of shipping and providing insurance to the mailing address of the customer.

    Does BitGold Offer Both Debit and Credit Cards?

    The BitGold prepaid cards work anywhere credit cards are accepted. They also have a feature that allows users to withdraw their funds from ATM machines in local currencies. This makes their cards as practical and functional as debit cards and credit cards.

    Is BitGold Potentially a Scam or Fraud?

    As for the question of whether BitGold is a scam or not, prospective users of the platform can consider the leading investors and companies that are backing it. Among these well-known names in the investing and security industries are such firms as Soros Brothers Investments LLC, Sprott Inc., Clarus Securities Inc., Sandstorm Gold, GMP Securities, Dundee Capital Markets, and GMP Security.

    The company also touts a number of legitimizing factors and characteristics on its website. They are a Canadian Company that is supervised by FINTRAC. They are audited by Big Four accounting firm PriceWaterhouseCoopers, store all their gold at Brinks’ Secure Gold Depositories, and maintain 100% insurance coverage on all of their gold holdings which are independently audited on a regular basis. BitGold also maintains a legal segregation of its customer’s accounts and assets, has a daily audit of all transactions and electronic holdings, and performs separate real time auditing of its gold.

    BitGold and GoldMoney Inc Merger

    On July 20th, BitGold announced that it had successfully completed its $60 million GoldMoney acquisition and created the world’s first global platform with a gold-based financial service operations and gold reserves. This new combined company is building out the world’s first global, gold backed-reserve financial services network and increasing its global share of markets in international remittances, transfers, payments, wealth management, and cross-border and cross-income savings.

    BitGold 2015 Promotion

    To encourage new account holders, BitGold offers its new users a first deposit 5% bonus. This is worth as much as 2.5 grams of gold or US dollar equivalent of approximately $100. To be eligible, visitors have to make their initial deposit in ten minutes or less of opening their account.

  • 5 Alternative Investments Every Investor Should Know About

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    The popularity of alternative investments has been soaring in recent years. A growing distrust of traditional investment products combined with historically low interest rates have created a growing subculture of investors seeking out new ways to protect and grow their money. In today’s markets, alternatives offer investors a dizzying variety of choice – fine wine, rare collectables, antique toys, vintage cars, there is a market for just about everything! In our following review we will focus on some of the more traditional alternatives which investors are likely to encounter, but first, we highly recommend you watch this short 2 minutes video to get familiarized with the alternative investment landscape:

     

    Now let’s dive into the investments…

    Art and antiques

    Fine art and antiques have been a popular investment choice for centuries, but their emergence as a prime alternative asset class only really began to take off with the yuppie culture of the 1980s. Today, there is an unprecedented art boom worldwide, with work from prominent artists fetching draw dropping sums of money. In a recent auction at Christie’s, Pablo Picasso’s painting, Women of Algiers fetched a record $160m! Art is becoming the ultimate status symbols, and the growing class of oligarchs all over the world are unlikely to reel their horns in any time soon when it comes to bidding for the works from master artists. If your budget doesn’t quite stretch as far as your local oligarch’s, don’t worry. Affordable art can be found from a variety of different places. Undergraduate and graduate degree shows from students at your local Art School are often an interesting starting point for your collection. If you plan on starting to invest in art, you better be aware of the risks involved. This type of investing can be very speculative and require some careful studying.

    Real Estate and Farmland

    The real estate sector hit a major speed bump during the 2008 financial crisis, but house prices and rents have come back strongly in the past few years. Investment properties are being snapped up at record pace by overseas buyers looking to secure yield and high end property in hot areas like New York and California continue to smash through record highs. Another popular form of real estate investment has been the purchasing of prime agricultural land. With a growing population, quality agricultural produce looks set to perform well as an asset class going forward. Land with an onsite water supply are particularly attractive as an additional investment play on water prices going forward. With the ongoing drought in California it’s easy to see why investors are interested.

    Timber, Rubber, and Fruit Plantations

    Finding literal examples of money growing on trees not an everyday occurrence, but in the case of timber and other forms of plantation investments, investors can enjoy the fruits of real life money trees! Although in their relative infancy, plantation investments have been growing in popularity over the past several years. With the right structure and management in place, plantation investments can produce some outstanding returns. Investors must keep in mind that plantation investments are often suited to long time horizon, trees take time to grow, and so will your investment, but with enough patience returns can be highly lucrative. Due diligence is absolutely essential in this sector – investments of this type are unregulated and there are always unscrupulous schemes out there. Do yourself a favor and conduct your own thorough due diligence.

    Hedge Funds

    Although firmly part of the conventional financial establishment, Hedge Funds command a great deal of prestige and intrigue within the wider investment environment. Hedge Funds are renowned for specializing in highly focused investment strategies – Designed for high net worth or qualified investors, they are not subject to the same amount of regulatory environments which can stifle performance in traditional funds and provide investors with some unique opportunities in today’s volatile markets. Hedge Funds have long attracted the best minds Wall Street has to offer, highly traders and analysts in quest of a lucrative investment niche. Hedge Fund managers operate an incredibly diverse set of of investment strategies and their ability to utilize leverage boosts both potential returns, and potential losses. Not for the feint of heart, or the financially illiterate, Hedge Funds are amongst the most popular form of alternative investments. Check out Hedge Fund Guide for tips and strategies on how to invest in hedge funds for both beginners and seasoned investors.

    Precious Metals

    Gold and Silver are another more conventional form of investment and have been used for thousands of years as a store of wealth and value. Gold is the ultimate form of money, and indeed the only form of money which has managed to survive this long. Gold has been used a store of value for thousands of years. With the unprecedented degree of monetary easing being conducted by central banks all over the world, investors have been flocking to precious metals as a form of insurance against inflationary pressures, and systemic counterparty risk within the banking sector. Often painted as the domain of conspiracy theorists and doomsday preppers, a typical gold investor is actually much more likely to be your average Jane or Joe. Investing in gold can get very complex as there are several ways to invest in gold. From gold ETFs to mining stocks to pure physical bullion, you should invest based on your own convictions and confidence in the current political/economical landscape. Those who want to invest in gold solely for profit should stick to “paper gold” like stocks, ETFs and mutual funds, while those who think the dollar is heading south should consider gold bullion as it offers the best protection in case of a systemic collapse or a 2008-like scenario.

    That wraps up our review of traditional alternatives – it’s important to keep in mind that there are literally hundreds of different sub asset classes out there. Given the unregulated nature of many of these markets investors should always conduct due diligence. Overall, alternatives are becoming one of the fastest growing segments of the financial landscape and are likely to keep up a steady pace of innovation for the foreseeable future.

  • Tips for protecting your retirement portfolio from Inflation

    Did you know that investing in precious metals was one of your best bets when it comes to protecting your portfolio against the effects of inflation?

    Inflation is one of the worst enemies, if not THE worst enemy, of your purchasing power and the value of your dollar. The U.S. Federal Reserve aims at keeping inflation below 2%, but history has shown that inflation rates in the United States have often been way above this target. One thing is for sure, despite some rogue analysts have said, we will not see inflation go to 0 in our living. The Federal Reserve is interested at keeping inflation rates hovering around 2% to stimulate spending habits and create jobs.

    As an example, did you know that from 1980 to 2014, the cumulative inflation rate in the U.S. was 187.3%? That gives us an average rate of 5.51% per year. This basically means that $100 in 1980 would be worth $287.3 USD today, or in other terms, $100 USD in 2014 would be worth $34.81 USD in 1980. (N.B.: we are strictly talking about the purchasing power)

    Check out the table below to see the price increase since 1970 for some of the most popular products and services purchased by American consumers:

    inflationtable

    Why is the Gold Price Not Affected by Inflation?

    Gold is not affected by inflation rates like the dollar for many reasons. One of the obvious ones is that one cannot simply “produce” gold at will. Supplies of gold on this planet are limited and until we develop the technology to go mine other planets in the solar system (and beyond!) we will eventually be confronted to a gold scarcity. Some argue that the scarcity is already happening since less gold exploration sites are being discovered every year. (see chart below)

    golddiscovered

    Gold value is not determined by the government

    Think about this simple yet often forgotten concept: a $20 dollar paper bill is just a piece of paper that only costs a few cents to produce. The only reason it is worth $20 is because the government said so. In times of crisis or global warfare, we have seen what can happen to paper currency during the Weimar republic hyperinflation. 0000

    Gold, on the other hand, has intrinsic value that can NEVER go to zero. Gold is in demand in various industries, such as electronics, architecture, aerospace, healthcare, dentistry and obviously jewellery. Gold has no borders and can be traded worldwide. In times of war, you’d much rather have an ounce of gold than $1,200 in cash.

    Treasury Bonds, another Inflation-proof asset

    Aside from Gold, the other type of investment that is a popular hedge against inflation is treasury bonds. The main advantage in buying Treasury bonds is that the they lock in certain returns on investment regardless of external factors. Visionary investors who bought $10,000 in 30-year Treasury Bonds in 1982, would have have enjoyed a $40,000 profit today, when the notes reached maturity with a fixed 10.45% rate. Now, you might say that the days of double-digit percent coupons may be long behind us. In January 2014, for example, the U.S. Treasury auctioned another round of 30-year bonds with just a 3% coupon. Nonetheless, such bonds, along with gold and other precious metals, cans still comprise a key element to any well-diversified and recession-proof portfolio.

    Using an IRA as a tax-free way to invest in precious metals

    If you go to your local gold dealer and purchase thousands of dollars worth of gold, you will be taxed by the IRS on the profits you make. This is the main reason why we recommend investing in precious metals through a retirement vehicle such as an IRA or 401k. The IRS allows tax-free rollovers from an existing retirement vehicle to a self-directed precious metals IRA. This type of IRA will allow you to invest in physical bullion coins and bars that you can store at an accredited depository. Click here to see some of the IRA and Gold dealers we recommend working with.

     

     

  • Pros and Cons of UK’s Gold Self-Invested Pension Plans (also known as Precious Metals SIPPs)

    goldsipppensionA Self-Invested Personal Pension (SIPP) is a type of personal pension scheme that lets anyone with a taxable income in the UK invest in a complete range of investments that are approved by HM Revenue and Customs.

    Although all kinds of assets are permitted in an SIPP, only some types are subject to taxes. One investment type that is not subject to a tax charge is gold bullion, which has been permitted by the UK Treasury as an allowed investment instrument in SIPPs since 2006.

    Below we review the main pros and cons of investing in physical gold bullion with an SIPP:

    Pros

    • Investors are able to decide which assets are bought, leased, and sold, and they can also decide when those assets are acquired/disposed of, depending on the terms of the agreement set forth by the trustee (plan provider). This means you’ll have full control over how your pension savings are being invested.
    • Serves as a hedge against inflation and safeguards your investment savings from devaluation. For this reason, advisers recommend devoting at least 5%-20% of your total investment portfolio to precious metals.
    • The UK Government will provide an income tax rebate equal to up to 45% of the cost of contributions made to an SIPP. In other words, if you purchase £10,000 in gold bullion for your SIPP this year, you would receive an income tax rebate of up to £4,500.
    • There are no capital gain taxes charged on any gains achieved through gold investments made in an SIPP, so you won’t be taxed on any potential profits earned.
    • The management costs for holding gold in an SIPP are very low – investors pay less than 10% of the charges seen in other unit trusts.
    • In addition to gold investing, an SIPP can be used to facilitate a broad range of investment types. In fact, investors can choose from thousands of funds and financial instruments, many of which are offered to pension holders at a reduced charge.
    • Your SIPP trustee will typically handle the legal responsibilities and government tax requirements on your behalf.
    • Gold investments held in your SIPP could perform better than any other asset type during times of economic uncertainty or when stocks/bonds are underperforming.

    Cons

    • Investors can only invest in ‘Good Delivery’ bars from the London Bullion Market Association (LBMA) – all other types of gold bars and coins cannot be included in an SIPP. All types of silver are also excluded.
    • There are rules and restrictions that apply to withdrawing from the SIPP.
    • Given that the operative term in the phrase SIPP is “Self-Invested,” you’ll be in charge of selecting and monitoring your own investments independently. As such, investors with an SIPP need to be willing to conduct the research needed to make well-informed investment decisions on their own behalf.
    • The terms of SIPPs vary greatly between trustees. In fact, some types of SIPPs can actually be more expensive than conventional pension saving methods, which is why it is always necessary to thoroughly review and compare your options before choosing a trustee/plan provider.
    • It should be noted that many SIPPs are not set up to give the investor direct title of ownership over the gold stored in their SIPP. Instead, the trustee retains physical ownership of the gold. So this is an important factor to consider when comparing SIPP plan providers.

    Conclusion

    SIPPs are an ideal plan type for people who would like to diversify the their retirement pension is being stored and invested, which is why this type of plan is typically recommended to investors who already have an Individual Savings Account (ISA). However, it is important to reiterate that you’ll be responsible for making, and assuming responsibility for your own investment decisions within an SIPP.

    For individuals who are fairly confident in their investment and research capabilities, SIPPs offer the advantage of gaining greater control over the way your pension is invested, which could potentially lead to greater profits and ultimately more money for retirement. With that said, you can still utilise financial guidance and assistance services if you’re interested in SIPPs but aren’t an experienced investor yourself.

    Top Providers of Gold SIPPs

    If you would like to learn more about Gold SIPPs or if you would like to get started right away, we recommend checking out the following providers:

    Regal Assets UK: This is our #1 recommended Gold SIPP firm due to their flawless track record in the United States. Recently established in the United Kingdom, Regal Assets has gained a solid reputation in the U.S. and has been praised by various industry experts and financial magazines. This company specializes in gold investing through retirement accounts and waives first year storage and admin fees if you meet their minimums. They also have a flat yearly fee for administration and storage of your metals, as opposed to many other companies who offer a scaling yearly fee that increases gradually. Request their free gold SIPP investment kit to learn more at www.regalassets.co.uk

    Bullion Vault: Another great choice for a Gold Pension Plan is Bullion Vault. This is a good option for tech-savvy people as they provide an online interface to trade your precious metals online. Bullion Vault is a popular firm in the UK and has been around for decaded. Learn more at www.bullionvault.com

    The Real Asset Co: Not to be confused with Regal Assets, The Real Asset Co is a relatively new player in the Gold SIPP market. Founded in 2010 by a group of young entrepreneurs, this company gives you access to a wide variety of bullion products through an online interace. You can buy/sell your metals online anytime.  Learn more at www.therealasset.co.uk

  • Three Reasons the American Gold Eagle Bullion Coin Belongs in Your Investment Portfolio

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    Any financial planner will tell you that diversity is integral to health of any portfolio, yet many people find that their retirement account at work and, possibly, their home are their only assets. As the housing bubble demonstrated, keeping all of your eggs in one basket is a disastrous plan. Diversifying by purchasing American gold eagle bullion coins is an easy way to hedge your bets against stock market fluctuations and the fickleness of property valuation. If you’re considering American Eagle gold coins, here are three aspects to weigh before making a decision.

    It’s ‘Cash’ That Doesn’t Suffer Inflation

    It’s a good idea to keep a portion of your assets in liquid forms so that you can handle an emergency. However, interest rates are abysmally low on savings accounts, fees can be high and you will lose purchasing power over time due to the devaluation of the dollar. Bullion coins, on the other hand, go up in value as gold does. While there have been fluctuations in the past, you can rest assured that you will have no problem getting fair market value for your coins if you need cash in a hurry. Whether you choose to wait for an auction to close on Bay or just go to the local pawn shop, the value of the American Eagle coin is easily verified and goes up along with the value of the gold it contains.

    Easy to ‘Set and Forget’

    Paperwork and taxes are part of life, but investing in bullion coins is as easy as tossing them in your fire safe and forgetting them until you need them. While of course you will want to talk to an accountant, most people do not need to pay appreciation on assets until the asset is liquidated. As long as your gold is simply sitting, it is just another asset you may or may not decide to sell. Compared to the hassle associated with owning property, such as taxes, insurances, utilities, and inspections, American eagle coins are easy to obtain, easy to store and easy to cash in when you’d like without a lot of paperwork.

    Very Few Surprises

    Virtually all investments carry risk. Your retirement fund could be handled improperly, your pension could be dissolved, or that cute condo on the beach you bought could soon be surrounded by a seedy, unsafe neighborhood. Gold bullion coins, on the other hand, don’t come with such worries. By investing in gold that you take physical possession of, you are ensuring that part of your portfolio is heavily protected from outside factors. Unless gold becomes inexpensive for some strange and previously-unknown reason, you can hedge your bets that the historic performance with remain steady and leave you with no surprises. This can be psychologically reassuring, especially if you like to go high-stakes with other percentages of your portfolio.

    Whether you’re concerned your portfolio is too heavily invested in real estate or you would like to have less paperwork in your life, American gold eagle bullion coins are an excellent way to protect the purchasing power of your money while still keeping it liquid in case you need it. If you’re not a big fan of surprises, gold coins are likely an excellent choice.

    Learn more about the American gold eagle here: http://goldiraguide.org/allowed-in-ira/american-gold-eagle/

  • Ways to Invest in Gold in 2013

    A solid investment portfolio should include a wide variety of assets with both short-term and long-term value. Since the economic collapse in 2008, wealthy individuals worldwide have been diversifying their investment portfolios by including assets with long-term value and less systemic risk such as gold and silver. Fads come and go with financial instruments gaining and losing their value in the short-term. When the wise carefully consider the asset that has always retained its value over the centuries, they think of gold. Gold’s purchasing power has doubled since 1920. The saying back then was that one ounce of gold could buy a man a nice suit. Well today that same ounce of gold can buy 2 men’s suits. Can you say the same about the dollar or any other type of investment?

    Precious metals are held by governments and banks in high-security vaults because they are the foundation of the entire global monetary system. Nations, like Venezuela and Germany, have requested the return of their gold from the United States. Swiss citizens have signed a petition supporting gold-backing for their paper currency. Even Texas has demanded that its gold be returned from the Federal Reserve. Why?

    Gold is a real asset with value. Originally, all United States dollars could be redeemed in physical gold and silver. A dollar bill is really a receipt. It grants you the right to the real asset. Do you want the paper IOU or the real thing?

    Gold Stands the Test of Time

    gold in 50 years

    From 2000 to 2011, gold was in an impressive bull market outperforming all other asset classes. Despite recent downturns, the precious metals are still valuable and in high demand. In India, gold and silver are exchanged during wedding ceremonies and festivals.

    China has increased the development of its Hong Kong metals exchange. Many see a low gold price as an opportunity to buy for the long-term.

    In the precious metals industry, the wise sell at the peak and accumulate in the trough. Billionaire Jim Sinclair has stated his intention to buy more gold at lower prices. Many see low gold prices as an opportunity – coinage, industrial production and jewelry always need gold. Moreover, even with the recent price decline, the United States Mint is recording record gold Eagle coins sales.

    Some are noting a separation between the paper spot price and the real physical price. Gold and silver remain in high demand. High demand leads to high prices.

    Eventually, all paper assets become worth “Zero.” Just look at the proud city of Detroit. In the 1950s, it was the symbol of prestige, power and money. In 2013, it is insolvent. All those holding Detroit municipal bonds might lose their entire investment.

    Many of these bankrupt municipalities are telling bond-holders what percentage of their investment they “might” get back. Do you want your investment to be that uncertain? Wealth is not built on uncertainty.

    Internationally, nations are printing paper currencies as fast as they can. This increases the supply of money and decreases its value. This can lead to inflation and hyperinflation.

    Gold is not just a short-term investment. Gold is a long-term hedge against economic uncertainty and unstable currencies. There are many ways to invest in gold including the following: stocks, ETFs, mutual funds, coins and bullion. Each can be a good way to benefit from gold price increases. Let us consider the pros and cons of each of these gold investment strategies.

    Gold Mining Stocks

    Gold mining stocks are the most direct paper investment in precious metals. Each mine is planning on attracting capital investment based on the price of a unit of gold.

    Pros

    Those who believe that “gold is money” would compare a mine to a bank. When gold prices increase, there is a multiplier that increases the value of these stocks tremendously.

    Cons

    Government regulations, scientific exploration, environmental protection and capital investment can delay the opening of a mine for a decade. Mines collapse and can be involved in labor disputes. Prices might change dramatically during the planning stages of opening a new gold mine. It is very difficult to increase mining supplies rapidly.

    Exchange-Traded-Funds (ETFs)

    The growth of the Exchange-Traded Fund (ETF) has been explosive for silver and gold. This is an attractive way to measure the price of the precious metals by comparing the inflows and outflows of capital.

    Pros

    With an ETF, an investor can make purchases based on margin to control a larger slice of the pie.

    Cons

    On the downside, ETF holdings must mirror the going market rate for the metal. When the price declines, an ETF must sell physical metals that leads to a domino effect as lower demand is met with higher supply.

    Mutual Funds

    Mutual funds can help an investor gain from the full spectrum of companies involved in the precious metals industry.

    Pros

    This diversified approach allows an investor to create a flexible portfolio with lower risk.

    Cons

    Commissions and fees can lower the return on gold mutual funds. Furthermore, you usually do not own any physical metals.

    Gold Coins

    Most gold coins were in circulation years ago, but have since been hoarded because of their intrinsic value. You must differentiate between numismatic, semi-numismatic and bullion coins. Numismatics are legal tender, most semi-numismatics are collector’s items and bullion have a high gold content.

    Pros

    Numismatic/Artistic value, scarcity and historical significance increase the value of gold coins. Gold coins are easy to identify and authenticate. This gives them a premium over other gold investments. Holding gold coins gives you physical possession of the asset.

    Cons

    Not every one is a coin collector and it can be difficult to get fair value when you want to sell.

    Gold Bars

    Gold bars are the currency of central banks. These have their own serial numbers, which can be tracked by the financial institutions.

    Pros

    Gold bullion bars are easy to identify, stack and authenticate. They represent the penultimate peak of financial success with physical possession.

    Cons

    You will need to spend significant amounts of money on security and storage. Those who work in the gold storage facilities must wear special iron-plated shields on the tops of their shoes because a dropped gold bar could break bones. There have been some tungsten-filled gold bars found.

    Precious Metals IRA

    It is also possible for Americans who own an IRA to invest in gold through it. Depending on your type of IRA, you may or may not be able to buy gold. If your current custodian does not allow precious metals, consider opening a separate Gold IRA. The IRS allows you to open a separate IRA for precious metals. There are some important requirements to fulfill though, such as precious metal purity (needs to be 99.9%+) and the custodian needs to be fully accredited and allowed to securely hold your metals.

    There are probably many other ways to own gold, but the above are certainly the most popular ones in the U.S. Do you know of any other way to invest in gold that we should have covered? Let us know by commenting below.

  • Why China and India Are Investing in Gold

    While gyrations in the price of gold have been in the news lately, another news item has concerned continued gold purchases by consumers in China and India.  In both cases, the citizens of these countries have an appetite for gold that seems to have been stoked by the recent decline in the price of gold.  While there are varying reasons for such purchases, as discussed below, the strong demand for the yellow metal from China and India shows that gold is truly a global currency.  If the price drops on markets in one or more countries, the demand for the precious metal in other countries where gold is highly regarded is likely to pick up, as has been seen recently.

     What’s Behind the Demand for Gold in China and India?

    In both countries there are cultural factors which undergird the demand for gold.  In India, gold has long been a prized possession and a prime feature in gift giving during auspicious times of year, and for major events such as weddings.  This provides the impetus for a fairly constant demand for the metal throughout the year, as even during non-auspicious periods Indian families may buy gold if the price drops for future use.

    In China, the historical lack of a government pension scheme has led to Chinese families using precious metals such as gold as a way to preserve wealth and prepare for retirement.  After being prohibited from owning gold for many years once China fell under communist rule, the authorities have in recent years allowed Chinese citizens to purchase gold and this has led to an upsurge in buying in the country, both by its citizens and by the Chinese central bank.  While the central bank does not update its purchases on a regular basis, the last update it gave showed a large increase in the purchase of gold by the bank to add to its reserves.

    Image courtesy Tao Zhyn/flickr
    Image courtesy Tao Zhyn/flickr

     Globalization and Rising Income Levels in China and India

    Another factor that should be remarked upon when it comes to Chinese and Indian gold demand, is the impact the process of globalization is having on the incomes of consumers in these two countries.  With manufacturing, customer service, and other business processes being outsourced to these countries, the average income of consumers in

    China and India has risen.  With more spending money comes the ability to make more purchases of desired items.  As explained above, with cultural factors in favor of holding gold, either for retirement or wealth preservation purposes or for the giving of gifts on auspicious occasions, consumers in both China and India have voted with their wallets by purchasing large quantities of gold recently.

    While this was likely driven to some degree by the recent decline in the price of gold, giving buyers the chance to buy at what they might consider “bargain” prices, the cultural factors that favor the purchase and holding of gold in these countries seem likely to persist.  With hundreds of years, or more, of tradition behind the tendency of Indian and Chinese consumers to buy and hold the yellow metal, gold dealers in these countries seem likely to be in business for some time to come.

  • Don’t Fear the Taper: Is the Case for Gold Still Strong?

    Federal Reserve taper talk has been in the news recently, with the central bank evincing an interest in cutting back on its monthly purchases of bonds due to a stabilizing economy.  While it’s too soon to say how serious the Fed is about pursuing this path, it’s not clear that recent economic numbers are in fact strong enough to warrant pulling back on the accelerator.  Even if the Fed does reduce its purchases somewhat, if the economy continues to weaken, the central bank may find itself increasing its quantitative easing (QE) measures in short order.  In either case, the fundamental value gold offers remains unchanged, and its centuries-long role as a store of value seems unlikely to dissipate anytime soon.

     How Strong is the Economy?

    While the economy has certainly recovered from the depths of the financial crisis of 2008/2009, some of the latest reports have shown weakness.  If this trend continues, the economy could slip into a dreaded double-dip recession.  One of the headwinds to business activity is the federal government sequester, which will result in lost wages to employees forced to take furlough days, and could dampen economic activity as a result.  In addition, the price of oil remains at elevated levels compared to past years, and this acts as another headwind to economic activity.  While it is impossible to predict exactly how things will play out, it certainly doesn’t seem like the robust growth that would cause the Fed to aggressively cut back on its policy of stimulating the economy via QE is likely to erupt anytime soon.

     Prospects for continued monetary stimulus

    If it is true that the various headwinds facing the economy keep it from achieving liftoff and returning to robust growth, how will the Fed react?  While this is hard to predict, given their past support of the economy via QE and other policies in the years since the recent financial crisis, it seems unlikely that they would take a “cold turkey” approach and remove all stimulus rapidly.  A more likely approach might be to slowly taper down purchases of bonds over time, depending on the course of economic activity.

     Gold’s historic role as a Store of Value

    While the price of gold, as has been seen recently, can be highly volatile in the short run, in the long run it has served admirably as a store of value and a hedge against inflation.  The yellow metal’s ability to preserve its purchasing power over time, and especially during periods of high inflation, gives it a strong story to tell to those who are looking to protect themselves from the ravages of inflation.

     The Case for Gold

    While there is currently a great deal of uncertainty about the strength of the economy as well as the future course of Federal Reserve policy, in the long run the massive expansion of the Fed’s balance sheet that has occurred as the central bank has bought bonds through its stimulus program has the potential to be inflationary.  If this money floods into the economy and off bank balance sheets, the result could be rising prices for goods and services.

    This makes the case for gold, in my opinion, a strong one.  With its ability to survive financial crises over the years and to offer a defense against inflation, gold offers its owners a hedge against troubled financial times that few other assets can match.  The recent strong buying of physical gold by investors who have rushed to gold dealers to make purchases in the wake of the precious metal’s price slump shows that others agree with this assessment as well.

     

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