Anytime there has been financial panic or concern about inflation/deflation, investors have been driven to the markets to purchase gold or silver. Many of these precious metal investors understand that these two assets are the true currency, especially during times of economic uncertainty both nationally and worldwide.
Their panic and fear is not unwarranted. Many financial advisors recommend that investors purchase gold and silver, and even palladium and platinum, to diversify a portfolio and strengthen the total value of all of the investor’s assets.
Keeping Assets Close at Hand
Purchasing gold and silver coins and bars has proven to be the best option for investors that choose to keep their assets close at hand. Bullion coins and bars are poured at 99.9% purity and hold their inherent value now and in the future. There has never been a time when gold or silver was valueless, as compared to other trading instruments including stocks.
Unlike investments in real estate, stocks and bonds, both silver and gold continues to act as proven wealth insurance. As a long-term investment, gold or silver does not require perfect timing to enter the market. The goal to diversifying a portfolio is to use gold and silver as a hedge against economic dangers and worldwide uncertainties, similar to those that were produced through the 2008 financial crisis.
Shortages in the Market
Gold and silver mining efforts remain stable with no increase in production. This puts a huge demand on both markets when attempting to find enough supply to fulfill all orders. In the last two years, both India and China have increased their purchases of gold and silver ornaments and jewelry, which is placed a significant demand on both the gold and silver markets. It has created a tremendous bottleneck of gold and silver coins and bars, producing huge shortages and increased prices.
Additionally, as many of the world economies begin to strengthen, the production lines at their manufacturing plants are gearing up to make goods once again. This produces an even greater demand on the markets, as manufacturing companies including the automotive manufacturers and electronics companies, seek to buy either gold or silver in huge quantities to meet the needs on their production lines.
Acting as a Hedge
There are significant reasons why investors choose to invest in silver or gold. These reasons include:
- The precious metal acts as a proven hedge against inflation
- Gold and silver can provide protection against the declining US dollar
- Silver or gold serves as the ideal safe haven during financial instability and geopolitical uncertainty
- As commodities, both the price of gold and silver is based on the fundamentals of the precious metals’ supply and demand
- Gold or silver acts as a unique store of value
- Either one of the precious metals works as the ideal portfolio diversifier
Gold or silver can be used by the investor as a long-term financial strategy. They work as the true monetary metals. They both seem unaffected by geopolitical conditions and financial uncertainty, except to rise significantly in price when investors abandon other trading instruments and purchase precious metals for their stability.
The price of both gold and silver continue to react to the ongoing supply and demand fluctuations. These fluctuations are often influenced by commercial enterprise necessity, and consumer spending.
When compared to other available commodities, both gold and silver will not corrode, perish or lose all of its value. The precious metals that were mined millenniums ago are worth just as much as those that are mined today. Because of that, all gold or silver that is currently above ground can easily be interchanged with gold or silver that is newly mined today.
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Article 2.
Why Precious Metals Investing Looks to Be a Good Bet for 2013
The gold, silver, palladium and platinum markets do not tend to fluctuate in worth like traditional paper traded instruments including stocks, bonds and mutual funds. However there are strategies involved in precious metals investing to make purchases worthwhile. Many investors choose to buy precious metal as an effective way to diversify their investment portfolio, and add stability to their investment strategy during harsh economic times. Overall, investing in precious metals will lessen the significant risks often associated with paper assets while maximizing potential for investment growth.
The word “precious” in precious metals makes reference to the rarity of silver, palladium, platinum and gold and the reason for their high value. The worth of the precious metal is typically measured not as a standard ounce, but a troy ounce. Often the prices are determined by the ongoing fluctuation of supply and demand. Often times, the more rare precious metal becomes, the more limited it is in supply. Scarcity will help increase its rising value and is often used as a surefire method for precious metals investing.
Developing precious metal investing strategies to diversify an investment portfolio includes taking silver, gold and other metals holdings of up to 10% to 15% of the total worth of the investor’s portfolio. At times of economic uncertainty, when paper stocks tend to diminish, the 10% to 15% of precious metals held in physical inventory will tend to increase in value, offsetting losses from stocks, bonds and mutual funds.
Ways to Invest
Effective precious metals investing strategies include taking physical ownership of gold, silver, platinum and palladium. While every precious metal market tends to become stagnant at times, both gold and silver have seen a huge increase in popularity due to its rapidly diminishing supply.
Purchasing bullion bars, ingots and coins is the quickest way to take ownership of the physical precious metals.
Hedging against Inflation
With a proper precious metal investing tactic, any investor can hedge against devaluation, deflation or inflation. A traditional tactic for investors is to buy bullion of precious metal bars. They are offered for sale in varying weights so that even one single gram purchase is both available and affordable for the beginning investor. A small purchase of precious metal investing offers an attractive alternative for investors that have a limited income.
Assessing the Metal’s Purity
The purity of the precious metal will be used to determine the actual value of the gold, palladium, silver or platinum when it is struck in coins or bars. Having the ability to quickly identify the purity of the metal will diminish any risks or losses on the investment. Full purity of any precious metal is at 99.00% purity for silver. However, other precious metals can be assessed lower or higher in purity.
Like any investment, precious metals tend to fluctuate in price. However, the spot price of gold, silver, palladium and platinum have been on a significant upward trend for years. As a long-term investment, most precious metals will hold their value, especially in times of low supply, like now.
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Article 3.
How the Future Looks for Precious Metals
Investing in gold and silver, and other precious metals has been on the forefront of many investors’ minds. Mining company stocks, jewelry and housewares, bullion bars, and coins are all possibilities for your precious metals investment. One of the reasons this type of investment is so popular right now, is because economic struggles throughout the world don’t negatively impact precious metals. During economic crisis, disasters and recessions, the value goes up or remains the same, but never depreciates.
As gold is the most popular precious metal to invest in, that is a good place to start. Gold was originally used as currency, making it the oldest form of investments for precious metals. It is no longer used as currency, but still remains a popular investment option. Gold is durable, has stable values, and doesn’t corrode or tarnish over time. This makes it ideal not jus for jewelry and coins, but also bullion bars, and industrial applications like for the manufacturing and technology industries. There are minor fluctuations in gold, but overall, the prices continue rising at a steady rate. Investing in gold and silver is excellent as far as their outlook.
The future is also bright for investors of silver, even more so than the past. New investors often choose silver because it is affordable, about $30 or less an ounce. While its value is lower, it will begin improving as it is used more for industrial applications. Silver is the best electricity conductor, making it invaluable for the technology industries. The prices for silver are still going up and will continue to do so.
Platinum is the rarest of precious metals, which in turn makes it the most valuable. Platinum is often used for high-end jewelry items as well as industrial applications. Because it is so rare, platinum goes for more than $1,600 an ounce to over $1,700 an ounce. Platinum is still very high in demand due to its value and rarity, making the future look bright for investors of this precious metal.
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Article 4.
In Gold We Trust 2013
The In GOLD We TRUST 2013 report is out. In this edition author Ronald Stoeferle analyzes the latest gold price correction from a holistic point of view. In GOLD We TRUST 2013 has an important focus on the monetary aspects of gold, a topic that remains underexposed in other gold market reports. Below is the summary of the 54-page report.
Even though the consensus is convinced that the gold bull market has ended, we remain firmly of the opinion that the fundamental argument in favor of gold remains intact.
There exists no back-test for the current financial era. Never before have such enormous monetary policy experiments taken place on a global basis. If there ever was a need for monetary insurance, it is today.
In the course of the recent gold crash, the market has once again demonstrated its tendency to maximize pain. Massive technical damage has been inflicted. We are convinced that repairing the technical picture will take some time. Accordingly $1,480 is our 12-month target.
We think that the correction that began in September 2011 exhibits strong similarities to the mid cycle correction of 1974 to 1976. That phase was similar to the current one, especially with respect to the marked disinflation backdrop, the presence of rising real interest rates and extreme pessimism regarding gold-related investments.
Since 2008 there have been more than 500 interest rate cuts around the world. Non-standard monetary policy measures seem to have become standard procedure. Tapering and exiting from QE might be more difficult than market participants currently envision.
Due to the high levels of debt, nominal interest rates must remain near zero and real interest rates negative, providing a solid foundation for future gold price increases.
The gold mining industry is currently going through a major period of change. It appears as though the industry is in the process of altering its priorities. We believe that the new commitment to transparent cost reporting, greater financial discipline and shareholder value is a crucial – if quite late in coming – insight by the sector. From a sentiment perspective, gold mining stocks are probably “the ultimate contrarian play”.
This gold report is the first in which we offer a quantitative model of the gold price. The model justifies a considerable risk premium to the current price, although only small probabilities of occurrence of extreme scenarios have been factored in. Based on our conservative assumptions, we arrive at a long-term price target of $2,230.
Due to the clearly positive CoT data as well as extremely oversold conditions, we assume that a bottoming process will soon begin. Regarding the sentiment situation, we see anything but euphoria in gold. Skepticism, fear and panic never signal the end of a long term bull market. We therefore judge that our long-term price target of $2,300, first stated several years ago already, continues to be realistic.
