Silver and Gold Investing

8It is currently very important for investors to consider buying both gold and silver. In September 2010, gold climbed to a record $1,296 spot price per ounce. Silver also continued its steady gain, reaching $21 per ounce. A financial investment source, ArabianMoney, predicts gold to gradually increase in value to $5,000 within the next three years. Because of the historic 15:1 ratio of the average price of gold to the average price of silver, the gradual increase in gold value could also result in a rise in the price of silver from $21 per ounce to $315 per ounce in three years.

Gold and Silver Versus Paper Currency

Gold and silver have become good investments thanks to a continually weak financial market and government action. The US dollar’s decreased value compared to the Euro and concerns of excessive printing by governments has forced many investors to invest in commodities that have a proven ability to retain value. Since August 2001, gold has risen in value by $900 per ounce and silver by $14.50 per ounce. Gold is expected to pass $1,600 per ounce by the end of 2011 and silver will continue to shadow its rise in value during a period where slumping global currencies have made buying gold and silver a good investment. By investing in gold and silver instead of paper currency, you can expect to see a larger return on your investment in years to come.

Factors that Influence Your Investment in Gold and Silver

In order to maximize the return on your investment in gold and silver, you’ll need to understand all of the factors that might affect the value of your investment. These factors include the daily market spot price, the type of coin or bar you’re purchasing, and external economic data.

The daily market spot price changes each day in accordance with supply and demand. For example, if the supply of gold or silver were to increase in one day while the demand decreased, the daily market spot price would decrease. The daily market spot price might also fluctuate depending on the location of the commodity exchange you look at. For example, the spot price in the US might vary from the spot price in Japan.

The type of coin or bar that you invest in will also have an effect on the price you pay when you make your purchase. This is because government fees usually cause the value of bullion coins and bars to be above the spot price. Certified rare coins are also more valuable than the spot price would indicate, simply because of their rarity. For example, the value of a proof American Buffalo gold coin is currently $1,500, which is 4-5% above the spot price of gold.

External economic data can also have a significant influence on the prices of gold and silver. Generally, the spot price of precious metals such as silver and gold will increase during an economic downturn. This is because, as stock and bond investments become less appealing, investing in gold and silver becomes more appealing. As more people invest in precious metals, the demand (and their prices) increase. It is wise to carefully watch external economic data such as stock indexes and the Dollar Index in order to plan the best time to invest.

Simple Best Way To Invest in Gold and Silver

3If you are looking to increase the viability of your long term financial portfolio, then precious metals should definitely be a part of the discussion. There are many options available to those who want to invest in precious metals. The gold and silver investment strategy that some of the best investors in the world apply to their own portfolios is now available to the average investor.

No matter your previous experience in investing in gold and silver, the potential for profit is better than ever. No matter what anyone tells you about the viability of precious metals in a bear market or in a bull market, the fact remains that good investors can utilize the market for precious metals in many different ways, especially when the vehicle for investing becomes easy to use.

Here are some of the simple ways that you can invest in gold and silver.

– Find a stable precious metals ETF and use it in a diversified, long term strategy.

Whether you have ties with a mutual fund company or not, an exchange traded fund will always be available for you to trade. The ETF gives you the same options as a single stock while providing you with the diversification that is usually only available to people who are investing in mutual funds. Placed into a long term strategy of diversification, the precious metals ETF provides the average investor with a way to get into the market for gold and silver without giving away any financial information to an outside entity for no reason.

– Invest in gold and silver bullion.

Although governments across the world have attempted to make investment in bullion more difficult because they wanted to create a monopoly for themselves, it is still very possible to invest in bullion for yourself. The process is much more defined, and it goes through the government in most nations, but it remains one of the most profitable ways to place gold and silver in your portfolio.

No matter how much trouble it may be, any reputable financial advisor will encourage you to take the time to do the research for obtaining bullion in your portfolio. If done to scale, the effort will have a great chance of paying off for you in the long run.

– Invest in gold and silver products.

Even if you do not want to do the research to invest in gold or silver bullion, you can still invest in gold and silver products very easily. Much of the world’s most valuable jewelry is made from gold and silver and still contains a high percentage of the precious metals in the product. Buying one of these products is almost the same as making a purchase of gold and silver bullion, with the added feature that the product can be used in day to day life.

For instance, many of the top investors in the world have made it a point to purchase watches from esteemed companies that are known to put high grade gold and silver content in their products. In this way they are able to invest in the precious metals, maintain the value of their investments no matter how the market moves, and create the added value of social prestige with the product that they have invested in. This example of watches is far from the only way that this can be done. There are all kinds of investment artwork, cars and other precious metal featured products that can be invested in.

In What Should We Invest: Gold Coins, Gold Stocks Or Gold Bars?

2With the languishing financial situation worldwide, money, stocks and bonds have lost ground in favor of commodities.

Large use goods like oil and gas still remain powerful investments opportunities, but, likewise imply greater risks as they are largely conditioned by the socio-economical and Geo-political factors. Under these circumstances, people turn to the genuine value of precious metals and, especially to the world-old trustworthy gold.

Nowadays, gold is largely considered the most secure asset. The central banks of the world, governmental reserves, large and small investors alike trust in this yellow glittering metal whether as a safe haven or sheltered investment. Although its recognition was not always as widespread as these days, gold has preserved at all times its purchasing power and unique capacity of storing value throughout troubled or peaceful times.

Nonetheless, there is a wide variety of gold investments on the present-day market. Investing in gold bullion bars and coins or in gold stocks are the best known and used means. To make things clear, there is an essential difference between investing in the metal in raw form (i.e. gold in bullion) and in gold mining shares. This variation translates into the basic disparity between the pair of concepts stability -solid value and, respectively greater risks – increased gains.

In other words, purchasing gold bullion coins and small bars represents the secure means for acquiring and preserving wealth. Their worth resides in the purity of the metal (99,9% being the best available) and its mass. On the other hand, the price of a gold ounce is directly connected with the inflation / deflation indexes and the balance between supply-demand. This means that whether the fiat value is losing power or gaining in popularity, you can rely on your gold possessions in any case.

The gold stocks are practically an investment in the business of the precious metal, which consists mainly in gold mining. Indeed surprisingly, the worth of gold stocks these days is up to a percentage of almost 500% in comparison with their outlay three years ago. Thereby, gold shares are rather a volatile domain that primarily addresses the expert financiers, who are in permanent liaison with the existing and prospect trends on the global gold market and, also capable to assume potential larger losses.

Gold, One of the Safest Ways to Invest

1The precious metals market has always been one of the best ways to invest for virtually every investor.

Gold stands at the head of the precious metals market as the most covered and easiest investment to get into. Here are just a few of the ways that gold can protect and build your wealth.

– There are more ways to invest in gold than many other kinds of securities.

The safe-haven investor is made even more safe because of the many ways that there are to invest in the metal. This ensures a high volume on the metal, and the high volume in turn secures a more stable price for the investments of everyone.

You can invest directly in gold bullion in most countries; however, you will need a professional partner in order to protect your investment from the government. If you do not feel like going through this hassle, then you can invest in many derivatives of gold such as exchange traded funds and mutual funds that include gold. These investments may be slightly off of the true value of gold; the derivative investments tend to be affected by the short term attitudes in the market more than gold bullion direct investments. All of these investments are still safer than other securities because they respond much less to short term movements in the market.

In order to decide between the ways to invest in gold, you should consult a professional financial advisor whom you trust. If you want to protect and build your wealth, then you must be sure that you deal with an investment that is within your budget as well as the one that is right for your portfolio.

– The safe-haven investor invests in gold for the long term.

If you are looking for investment that you can keep for a while without having to monitor it, then gold is definitely the investment for you. Most people do not have the time to look over their investments on a day-to-day basis. However, the only investments that truly make money outside of the precious metals market require a great deal of personal management in order to succeed. You get the best of both worlds when you invest in gold – the safety of a precious metal along with the ability to create wealth for yourself while saving time.

– Gold can maintain your portfolio even when the market is going down.

One of the main reasons that people invest in gold is the ability of the precious metal to maintain value and even go up in value during a bear market or recession. Gold is usually the investment that people look to when the dollar is falling. This means that you can actually reverse some of the negative effects of a recession including higher interest rates and a higher cost of living. Once the recession is over, precious metals tend to retain their value. This means that you do not have to sell your holdings once the recession is over – you can keep them as an addition to your net worth.

As one of the safest ways to invest, gold is quickly becoming a staple in the portfolios of many people. In order to get the most value out of the investment, you should start to invest in the product before people begin to truly understand what gold does. Once the general public is made aware of the true nature of the precious metals market, those people will likely flood the market and drive up the price. If you get in ahead of them, then you will reap the benefits of your good decision without having to pay a premium.

How to Invest in Gold for Inflation Protection

4The four asset classes in a Permanent Portfolio include stocks, bonds, cash and gold. Each asset class hedges against one of the four economic conditions: inflation, deflation, prosperity and recession. We initially invest 25% each into each asset class and then rebalance the whole portfolio when one of the asset classes reaches a 35% or 15% rebalancing trigger. Gold can be a volatile asset in isolation but when its combined with the other asset classes, it has actually helped reduce the volatility of the overall portfolio. We don’t buy gold because we think it will go up in price. We buy gold for the protection it can provide for the savings we can’t afford to lose. You actually need to be agnostic about all four different asset classes in the portfolio; each one serves a well defined purpose and will do better than the others at different unpredictable times.

Gold is our hedge against inflation and an uncertain world. Gold prices react strongly to inflationary pressures, currency devaluations or political upheavals. We only use gold bullion in the Permanent Portfolio not gold mining stocks, other derivatives or commodities. Gold doesn’t earn any income but it can produce capital gains when the other assets in the portfolio don’t. Holding physical gold offshore in a vault and insured is the best way to invest in and hold gold. I also suggest that you purchase and store some one ounce gold coins like the American Eagle or Canadian Gold Maple Leaf in a safe deposit box in a bank close to your home in case of a local emergency.

Gold is the only hard asset that you can include in the portfolio, the rest are just paper assets. You never know what the future will bring, so it’s always comforting to know that you have some assets you can get access to outside of the country you live in. If you don’t live in Australia, that country could be a good location to store gold since they are a stable country and have a great reputation for storing gold for investors. In many situations though it may not be feasible to hold physical gold, like in your retirement account for example or it’s just not convenient for you. In those cases a gold exchange traded fund (ETF) will be your best option. Here are some gold ETFs trading in the USA you may want to explore including their trading symbols:

  • iShares Gold Trust (IAU)
  • Central Gold Trust (GTU)
  • SPDR Gold Trust (GLD)

If you live outside of the USA you should explore similar ETF options.