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Advice On When To Buy Gold

Gold has a reputation as being one of the most solid investments in comparison to other options. People have come to rely on gold’s stability, especially during times when the economy is at a downturn. Even banks and financial institutions use gold as their standard (the ‘Gold Standard‘). Many people try to figure out when is the best time to buy gold. The fact is, even if gold prices are at an all-time high, it is still a good investment as part of your diversified portfolio. Gold is something that you can buy and hold physically. It does not lose value based on what the Federal Reserve does or the fluctuation of your country’s currency. Gold is recognised as a standard around the world, and this is what makes it so attractive.

 

There is no lack of demand for gold around the world. Mining companies are racing to keep up with the demand, but mining technology has really not improved for quiet a while now. So, it will be inevitable that demand will surpass gold production eventually, driving up the price even higher.

 

As mentioned, gold can be a solid part of your diversified portfolio. Financial experts suggest that between 3 to 10 percent of your portfolio should be invested in gold. It is a way to preserve part of your capital during times of uncertainty. Gold prices may move a little, but not nearly as much as the equity market.

 

Instead of trying to find a time when to buy gold, you should consider the recommended method, which is ‘dollar cost averaging’. In this approach, you decide how much money you want to allocate every month towards gold purchase. The price of gold is not part of the equation because over the long run, dollar cost averaging will even out any upswings or downswings in gold prices along the way. This spreads out the risk over the long term.

 

Once you have decided that you want to buy gold, you have to decide in what form you want to buy it? There are several investment options:

 

– You can buy physical gold in various forms. Gold bars can be purchased in different sizes from grams to ounces to kilos. Gold coins include the Krugerrand, American Eagle, American Buffalo, and Canadian Maple and more. You pay for the weight of the gold plus a ‘minting charge’ with coins, and the denomination that is stamped on the coin is just symbolic. You can also buy gold jewellery. Do remember that when you buy physical gold, there is usually a premium attached to the price. The rule of thumb is to buy physical gold at a price as close to the spot price as possible. The spot price is the market price of gold at a specific time. It is based on the latest average bid price on the trading market. For the physical gold to be a good investment, the premium should not be higher than 10 percent of the spot price. If you pay a premium higher than that, your gold has to appreciate that much more in order to give you a good return.

 

– You can buy shares in gold exchange-traded funds, or ETFs. When you invest in gold ETFs, you are buying shares of the fund that is backed by physical gold, but you do not have possession of the gold itself. You can buy and sell your shares on a stock exchange, as you would buy and sell other types of stocks. Some investors like the convenience of this approach, but others feel it does not offer the same ‘solid’ investment as physical gold.

 

– You can buy shares in a gold mutual fund. In this method, you do not invest directly in the metal, but you are purchasing stocks of the mining companies who are producing the gold. This method actually carries higher risk because your returns are based on the performance of the companies rather than gold. You are counting on these mining companies to have gold strikes and produce a healthy amount of gold. If the mining company has a small gold strike, their profits will be lower, and your return will be smaller. Look for larger, more established companies that have a good track record of gold production.

 

Gold has been a solid choice for investors looking for a way to preserve their capital. You should not try to time the market in an attempt to find the perfect time for when to buy gold. This precious metal is a smart investment for any investor, at any time.

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The History of Gold Investment

When The New Gold Rush Started To Happen

Gold has always been a prized precious metal, however, the history of gold investment is not long. It can be traced back to the late part of the 19th century, when many countries in Europe adopted the gold standard.

Gold standard simply refers to a system whereby the value of a country’s currency is based on the quantity of gold held in its reserves. Within this system, the dollar was directly linked to gold. But the system started to be abandoned in 1971, with the US suspending the direct conversion of the dollar to gold.

The Swiss Franc was the last currency to divorce itself from gold, with the gold standard suspended there as recently as 2000.

Since 1919, the price of gold was led by the London gold fixing scale, which was really just a telephone meeting of bullion trading companies in the London bullion market.   Fixing its price and divorcing it from currencies combined to make gold a commodity, not a form of money, and it was only a matter of time before investors cashed in on the highs and lows of gold’s changing price.

You can buy gold in bullion form, or buy it indirectly as a futures contract investment (‘Paper gold’).   But gold is not an investment per se, it is a cushion, or hedge, investment that will protect your portfolio from the volatility of other investments, like the stock market. Because it has intrinsic value and because of its industrial use along with the demand for gold jewelry, the prices of gold are relatively stable – and it’s impossible to see how this precious metal would ever have zero value, unlike stocks that go worthless when a company files for bankruptcy.   Historically, whenever the stock market crashes, gold prices experience an upward rush.

As crashes tend to be cyclical it seems obvious that the value of gold will always be relevant.

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Gold V Shares… Which Is The Wiser Option For Investors?

The prolonged debate in the world of investing over gold v shares will never end. Varying opinions are offered on a regular basis with people aimlessly switching sides and losing money along the way. To ensure such a mistake is not made, it is important to understand the intricacies of such assets.

Let’s take a dip into this heated debate. Gold v shares which is the wiser option for investors?

Gold Protects ‘Purchasing Power’. Purchasing power is key and gold protects it on the investor’s behalf.

But what does this mean? The value of the asset is not going to depreciate in a way where one will not be able to get a return of some sort on what is in their portfolio.

Shares Are Volatile. The economy has a greater role to play with shares and they can often be extremely volatile. There is a lot of ‘guesswork’ involved with investing into shares. This risk might not be worth it for most people and that is why gold is often found to be more reasonable as an investment choice.

The likes of Warren Buffet have often said Gold is a ‘sterile’ place to invest in because it is not going to pose a massive risk to your portfolio. Most people would think that is the whole point in investing!

It might not grow as fast as you would like it to, but it will grow.   The smart and/or educated answer would be to consider diversification. Gold and shares should both be an integral part of anyone’s portfolio. Those who choose one or the other will have to sift through this piece again to decide which pros or cons fit their needs.

In essence, gold is the wiser option as it is usually going to trend upwards on most occasions, if one was to choose a singular option.   To put it simply, Gold v shares which wiser option is for investors? For security the answer is gold, for greater/quicker possible gains it would be shares.

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Understanding the Gold Market

 The gold market is one of the most popular safe-haven commodity markets in the world. Investors who are reluctant to put money into the volatile currency market, or the fragile equities market, often turn to gold because it is a commodity that will always be in demand. Since it is a physical item, it will be valuable even if there is a global economic collapse.

When you invest in gold, typically you are investing in either gold coins or gold bars. Krugerrands are one of the more popular types of gold coin – they are the second most popular coin in the US, and in Europe they enjoy greater popularity than the US Gold Eagle. In fact, a higher number of Krugerrands have been made throughout recent history than any of the other modern gold coins.

A Krugerrand is made of 91.67% gold, with the remainder being copper. In theory, there are four sizes of Krugerrand: 1oz, Half-ounce, Quarter-ounce and tenth-ounce, however the fractional-ounce ones are rarely available and not as sought after as the full 1 ounce coin.

dedededThere have been around 42 million Krugerrands minted since the coins were released to the market in 1967, with the majority of them having been minted in the 70s and 80s, when inflation fears were driving more and more investors towards gold.

When the US Congress lifted the import ban on the coins in 1994, there was a massive influx of Krugerrands to the USA, however the coins did not manage to take over the market, since US Gold Eagles were already established as being the default and most popular coin for US investors. This means that US Gold Eagle prices remain higher, and the coins remain slightly more sought-after in the US.

In Europe and the rest of the world however the Krugerrand is more popular.

Krugerrands are the second most popular way of trading gold in the USA, and they have the most active secondary market – there are usually thousands of the coins changing hands every day, making them even more popular than gold bars.

 Gold bullion bars come in many weights from 1gram all the way up to 1,000gram bars.  These bullion bars are more ideally suited to pure investors into the commodity who have no interest in the various coins for collectability, but are in the market more so for hedge and speculation purposes.

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Gold Coins

Gold coins are the most dynamic type of gold in that they serve as both a kind of bullion speculation and as a collectible. Despite the fact that a few coins are more lavish than others, essentially every one of them will be sold at a solid premium over the current cost of gold contained inside the coin. The motivation behind why gold coins cost more every ounce than gold bars is a direct result of the coins’ collectability, scarcity, and high demand.

Every single real coin command another variety consistently, and once a certain year’s creation is finished, that variety of the coin will never be delivered to market again. This pushes an irregularity and interest that goes past the estimation of the gold contained inside every coin. This is restricted to gold bars and rounds, which can be created by any gold mint on the planet, and subsequently are less significant and collectible.

Reverse of the American Buffalo gold coins, st...

There are actually hundreds of different types of gold coins that have been stamped all through the world and throughout the past hundreds of years. Adversly, between these coins, there are just a modest bunch that are routinely purchased and sold on an extensive scale: the Australian Kangaroo, the American Eagle, the Chinese Panda, the Canadian Maple Leaf, the Gold Buffalo, the South African Krugerrand, and the Mexican Libertad. A greater part of the normal gold coins are additionally delivered as silver coins.

Albeit numerous gold coins, for example, the Australian Kangaroo and the Chinese Panda, contain 99.9 percent or 99.99 percent gold, a few coins, for example, the American Eagle, don’t. The American Eagle is a composed of 22-karat gold, which has about 91.67 percent gold, joined with about 5.33 percent copper and around 3 percent silver. This combination makes a more sturdy coin, as 100 percent pure gold can be somewhat delicate for a flowing coin.

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