Penny Stocks

Should I buy gold now?

(This article was published on the 25/08/2011) Gold is at an astonishing high at the moment and you would be mad to miss the opportunities that come with that status. First of all the reality is that the USA dollar is bound to hit historic lows especially since the credit rating for the country was downgraded amidst much posturing. That means that you are not going to get much joy investing your money in that particular format. Greece and Spain are on the road to bankruptcy. Therefore, the Euro is cold comfort. With countries like Italy having national debt at about 120% of GDP, gold is the safe way to go.

Consumer confidence is at an all time low in most developed countries, partly because of the increased transparency requirements. Gadaffi’s Libya is falling into an uncertain future and the Arab Spring is sent to move towards Sub Saharan Africa. You also have to consider the fact that precious metals are hardly politically sensitive. The Swiss Franc is appreciating due to the perceived neutrality of the home nation but that is no guarantee of long-term stability in this volatile environment. There is speculation that oil and agricultural commodities are going to be regulated.

Is there a situation where gold might hit $3,000? We are now looking at the range of between $1,000 and $2,000. There is no reason why this precious metal cannot go higher. Hardly anyone is going to make a fuss about these price increases unlike something essential like wheat where riots might arise. It is also unlikely that the trade of gold will become universally illegal. The stock exchange is not reliable since the Bernard Madoff debacle which left many reeling from the shock of that audacious fraud. Gold is less likely to fall below a certain price value.

How to buy gold online?

Having made the decision to move ahead with this investment, you have to identify the forums where you can make a successful acquisition. There are few better places than the online market. First of all you have to look at the critical indicators of the holistic market. A case in point is where the USA interest rates were chopped by 0.5%. That immediately tells you that there is a risk of inflation and therefore you have to run away from the Dollar. Commodity prices went soaring to a 27 year high and gold was included in the mix. You also have to factor in the operations of major economies such as China and Russia which are trying to avoid the credit crunch by buying gold.

What is the ideal entry level? The internet is absolutely brilliant at giving you vast information sources within a limited timescale. That means that you can undertake some really technical analysis on where the market is going and the things which you need to be doing. Fiscal policies can be analyzed in terms of national interest rates and the volume of transactions. Try to visit the professional pages where the experts are comparing notes and coming up with a unitary position which might be of benefit to the new entrepreneur. One of the shocking figures relates to money devaluation by desperate countries which are printing money.

As a consequence of poor planning, some money supplies have increased in the range of between 12% and 20%. The other benefit of buying and selling gold online is the fact that you do not have to worry about hold paper currencies. Everything is done electronically in the shortest period of time. One of the recommended websites is the Bullion Vault which primarily deals with private investors. An auditing process ensures that you are always protected.

How to buy gold stocks?

Ideally there should be no complexity when it comes to buying gold stocks. Although other markets are undergoing turbulence, this one appears to be uncommonly stable. One of the advantages of gold as an investment is the fact that you are in a better position to hedge the risk factors. Spending in the USA continues to rise and their S&P rating is now AAA instead of the previous AA+ figure. Look at the Dow Jones index to see how other commodities are faring because you may be able to get an even better deal in the long run.

As of the 5th of August you could get an ounce of gold stock for $1,663. That has reached a high of $1,900 in recent days. You may be able to purchase gold from the stock market, authorized dealers, national mint organizations and other private outlets. It is good to assess the benefits that are associated with physical gold as opposed to Gold ETF. A brokerage account will enable you to access gold stock at the market rate but you may have to pay the operative some commission. It is a proxy arrangement and you may not be able to control all the transactions.

Some exploration companies are taking things to the next level by offering gold. They add their fixed and variable costs. Alternatively you may buy stock within those companies. Examples include the Agnico-Eagle Mines Limited which is based in the USA and operates on the NYSE:AEM index. The figures are showing a rise of 2.25% in recent days even after the rest of the market was facing some uncertainty. You may also choose Gold Corp GG, Barrick Gold ABX, Newmont Mining NEM, IAM Gold IAG, Harmony Gold HMY and Yamana Gold AUY. Others are Eldorado Gold EGO, Gold Fields GFI, Anglo-Gold Ashanti AU and Kinross KGC.

How to buy gold bars?

Perhaps one of the best investment decisions that you can make is to go for the much vaunted gold bars. Even the respected Bank of England is falling into the quantitative easing trap. They are essentially printing money like it’s going out of business. Down in Africa, the Ugandan economy is typically of a “Banana Republic” with all sorts of charlatans speculating on the poor shilling. As a consequence the national currency has been declared the worst performing against the US dollar. Gold bars therefore represent some stability which cannot be touched by the greedy politicians.

If you elect to buy gold bars in smaller quantities then it is highly unlikely that you will be faced with any significant problems. One of the main outlets in London is Baird’s but there are plenty of others in New York. The single ounce is popular and is currently priced at about $1,800. There are some smaller bars with the smallest being the 2.5 gram unit which is about $130. The smaller bars ensure that you are not dealing with bulky and heavy materials. As an illustrative model you will find that a 1kg bar is worth $40,000 but measures about 5” by 3.5” by 0.25”.

At the top of the scale is a 12.5kg unit which costs $400,000. It is better to phone first in order to ensure that there is a sufficient level of supply. If you had 50kg of gold then they would be worth $2 million. The formalities required include a passport and 2 utility bills especially if you are spending more than $10,000. Most of the retail business is done over the internet or the post. Couriers will then ship the item once the funds are cleared. There are storage facilities for a fee if you are spending more than $10,000.

How to buy gold coins?

Perhaps the most traditional method of buying old is the coins. Some of the UK bullion houses have been operating since 1981. A specialist will decide to service a particular investment niche with the appropriate risk assessments. Some of the houses will allow you to work online while others require more formal arrangements. Associations may occasionally set the rules of engagement. For example the London Bullion Market Association is very influential. The minimum is 995 parts out of 1000 being pure while 999.9 is the highest quality.

Make sure that you are dealing with an approved dealer. One of the ways in which you can identify them is by the stamp which they carry. They may also have a seal which comes from the trade ministry within the jurisdiction. Many countries have the equivalent of a Royal Mint which is given the task of producing legal tender. On the other hand the coins that you will be buying have to be of certain purity in order to retain value. There is very little gold in the GBP coin even if it might look shiny. Valuable coins need to be stored with a bank or other reputable financial institution.

Some of the people who purchase gold coins are actually looking for the historical significance. For example you may want to get a piece of pure gold that was struck in the reign of Queen Victoria. If you are interested in assessing the value of your largesse then it is better to get an expert that has been properly vetted. Most countries will have a list of approved smelters and assayers. This is known as the Good Delivery List in the UK. All those coins should be of good appear and free from surface cavities or irregularities. Watch out for excessive shrinkage or even layering.

Price of gold?

There is no doubt that the price of gold is very high at the moment. Recent announcements point to an average of $1,900 for every ounce. The Dow Jones has been sending even higher figures on occasion. The demand is very strong and that might reduce the price slightly. Nonetheless you have to consider the fact that any reduction is unlikely to alter the overall value of the asset when compared to currencies such as the USD. Six consecutive days have been sending the price of gold to record highs. The COMEX floor reports made the outlook for the precious metal even better than it currently is.

Ralph Preston is an analyst with the Heritage West Financial group and he describes this as a “raging bull market”. Some of the earlier contracts have gained close to $39.70 which represents a rise of 2.1%. These might appear to be small movements until you consider the fact that some people have more than $1 million vested within the sector. The New York Mercantile Exchange predicts that the rises will continue as the fall of Tripoli is being reported. Oil is going to be tricky until that country goes back to the Gadaffi era production levels.

There is speculation that another stimulus is on the way. This has affected the price of Gold. President Obama is dreaded the 2012 election where the Republicans are gunning for a fight. That means that he might be willing to do absolutely anything to ensure that the unemployment rate falls below the magic 8% figure. It is all very well telling people not to speculate but the truth of the matter is that they are looking for answers and solutions from gold as an investment for the future and present.