When gold eclipsed $1325 earlier this year it looked like it was staging a rally towards $1400 or higher. However, the rally didn't last and it appears gold has officially fallen into a bear market since the highs around $1900 in 2011/2012. It's anyone's guess how long it will last. You can view a historical chart of the metals prices here.
That being said, gold's recent price drop is not unique. All commodities, equities, and even bonds go through price changes. What is unique about gold is its historical price trend as a measure of value compared to government currencies. Our mandated currency just happens to be the dollar, so that is the currency we are most interested in comparing to gold. That is the reason you hear me preaching about the long term picture (over and over and over). Again, how and when you buy the precious metal depends entirely on your purpose for investing. Are you trading (buying and selling) for short term profit potential? Or are you buying gold to hedge the risks of dollar devaluation over the next 20-30 years? If you are somewhere in between or trying to do both, then you need to be more diligent with timing your purchases and investment allocation. That takes a lot of time and energy, and it is why you need a financial plan. I can help you with that.
Gold is at its lowest level compared to equities since 2008, Gold Sinks to Lowest Against Stocks Since Lehman Collapse. And if you are watching, silver is even lower compared to its recent highs. Is that a bad thing? Not necessarily. It may present the first buying opportunity for many of you. Separately, for anyone who purchased gold at $1900 it probably doesn't sit well seeing the prices hover around $1200. So putting things in perspective might make it easier to sleep at night.
In 2008, almost a decade after the bull run in gold started, after its large price drop that year, the price leveled off around $800. That is compared to $250 at the start of the 21st century. Don't get me wrong, nobody knows how far the gold price might go down this time, but the fact remains it doesn't stay down. How long will it stay there? I guess that depends on your definition of "long." For me and many others who own gold, 5 years is not long. It's been 2 years since the highs in gold and it feels like an eternity. However, looking at historical charts is a good way to stay on track. The purpose of owning 5-10% of your investments in gold is to protect from dollar devaluation over a long period of time. From 2008 to 2012 the price of gold doubled, and it wouldn't surprise me to see the same thing happen again during the next 5-10 years. Your guess is as good as mine when the next run up will occur, but history shows us the trend is clear. Go back 60 years and the change to today's prices is staggering.
The primary fact to remember is that despite gold's volatility, it retains its monetary value over long periods of time. That is why government's and central banks still hold a portion of their currency reserves in gold. In fact, most central banks are currently expanding their gold balance sheets to retain confidence from their respective citizenry.
The fact that gold is down from its all-time highs a couple years ago should not deter you from looking at the big picture. I'll remind our readers again, gold is always valued higher than the government mandated currency. The short term fluctuations in price may be confusing, but the long term trend is obvious and needs to be a part of every investment portfolio. Keep my 5-10% recommendation in mind the next time you are adding extra money to savings, or putting some extra away to pass on to the kids or grand kids.
And as always, Keep the Faith and God Bless.
Monday, September 22, 2014
Sunday, March 16, 2014
Gold Is...Back From The Dead???
The title should read "Gold Is...AND ALWAYS WILL BE MONEY!!!" LOL! I've had a fair number of people ask me why there's been such a delay since my last post, so I hope this one is informative and fun. I could bore you with the details why it's been so long, but that's probably not your idea of an enjoyable Sunday afternoon. The Wisconsin Badgers couldn't get past Michigan State, so I don't have as much of an incentive to get this finished before the start of the Big Ten Championship. However, if you are a fan of NCAA basketball or the Big Ten, it should be an exciting game. So grab some popcorn, and tune in to some great basketball and some fun gold and silver updates!
The news for gold and silver ending 2013 was pretty boring, but things have not stayed that way. First, there was the London gold fix manipulation headlines (London Gold-Fix Banks Accused Of Manipulation in U.S. Lawsuit). Second, the 1st quarter increase in gold prices are more than 10% and futures buying seems to indicate more short term increases (Big Gold Futures Buying Is Pushing Gold Higher). Last but not least, world events have put the currency/resource wars directly in the global spotlight (Exhibit A-Russia Warns Could 'Reduce To Zero' Economic Dependency On U.S. and Russia Wants IMF To Move Ahead On Reforms Without U.S., Exhibit B-Russian Troops Seize Gas Plant Beyond Crimean Border). By all intents and purposes, this is another major event in the ongoing shift of control over the global economy. The underlying change that is taking place is a shift out of the U.S. dollar as the world's reserve currency, and global events continually showcase that trend. Unlike any government currency, gold and silver are natural forms of money and can't take political sides. So it doesn't matter what currency is being used or the tyrannical government that is calling the shots, because gold and silver are always objectively valued as long term assets. Governments and banks can attempt to manipulate the prices, but much like land or energy resources, there is an intrinsic value that can't be hidden. I digress.
For a short term investment analysis you can read more about technical charts and trends here, Gold and Euro Soar On Escalating Ukraine Moves. To sum up the moves in the precious metals market recently, gold bottomed late last year near $1200 per ounce and has been moving upward ever since. As you'll read in some of my article references, some of that is due to futures buying and inflows back into gold ETFs (exchange-traded funds). ETFs are changing the way investors play the stock market. You can read the definition here, ETF | Exchange-traded fund. ETFs are a relatively new type of investment, in historical terms, with a relatively new type of gold and silver investor buying the 'digital metal.' In the past, a small percentage of investors made their home in the gold and silver markets by purchasing physical bullion. While gold and silver still only represent a small percentage of the commercial investment arena, the ease of digital investing is changing that. Money that was circulating elsewhere is moving back into gold and silver. There are also examples of large institutional investors changing their tune about gold to start 2014 (see George Soros article here). Average investors typically follow their lead, and usually they are too late to the party. The herd mentality driving the volatility is not unique to any particular investment (see housing bubble 2008). No matter what the reasons, it doesn't stop us from needing certain tangible assets. Unless you feel like settling for a paltry 1-3% guaranteed interest that doesn't keep up with price inflation, every investment involves some form of risk.
As a volatile alternative currency, gold and silver carry risk, and that is why you need someone to help you with it. While there are no guarantees, if you are timing the market right now, any price below $1300 seems like a bargain. If you own ETFs or are considering purchasing them, remember that the biggest difference compared to owning the physical metal is that someone else owns 'your' gold. You are investing in a company's capacity to store their gold, and paying them a fee to do it. That's a lot different than buying and selling with a dealer (preferably me) and storing the gold wherever you want. There is value in purchasing a gold or silver ETF if that is your only option. However, physical metals can be sold back to me at any time (assuming you accept my buy price), and you also get more flexibility of choosing how to sell your metals if you don't want to sell to me. You can sell your gold or silver at local pawn/jewelry stores, on eBay, at local farmers markets and craft shows, or even choose to barter with it. Unlike an ETF, you actually own the physical metals, so you can create a competitive selling market for your assets.
The recent correction in gold and silver during 2013 is much different than 2008. In 2013 the price bottomed at $1200 compared to near $800 in 2008. If you purchased gold and silver any time before 2010 you are probably very pleased with your investment, even after the crazy drop in prices last year. If you bought when prices were near $1800 you'll just have to wait a while longer for your retribution for last year's price manipulation. And if you are smart, buying when prices are low like they are right now, is a lot better idea than waiting until the price of gold eclipses $2000 during the next phase up in this historic bull run.
Keep the Faith and as always, God Bless.
www.argentumusa.com
The news for gold and silver ending 2013 was pretty boring, but things have not stayed that way. First, there was the London gold fix manipulation headlines (London Gold-Fix Banks Accused Of Manipulation in U.S. Lawsuit). Second, the 1st quarter increase in gold prices are more than 10% and futures buying seems to indicate more short term increases (Big Gold Futures Buying Is Pushing Gold Higher). Last but not least, world events have put the currency/resource wars directly in the global spotlight (Exhibit A-Russia Warns Could 'Reduce To Zero' Economic Dependency On U.S. and Russia Wants IMF To Move Ahead On Reforms Without U.S., Exhibit B-Russian Troops Seize Gas Plant Beyond Crimean Border). By all intents and purposes, this is another major event in the ongoing shift of control over the global economy. The underlying change that is taking place is a shift out of the U.S. dollar as the world's reserve currency, and global events continually showcase that trend. Unlike any government currency, gold and silver are natural forms of money and can't take political sides. So it doesn't matter what currency is being used or the tyrannical government that is calling the shots, because gold and silver are always objectively valued as long term assets. Governments and banks can attempt to manipulate the prices, but much like land or energy resources, there is an intrinsic value that can't be hidden. I digress.
For a short term investment analysis you can read more about technical charts and trends here, Gold and Euro Soar On Escalating Ukraine Moves. To sum up the moves in the precious metals market recently, gold bottomed late last year near $1200 per ounce and has been moving upward ever since. As you'll read in some of my article references, some of that is due to futures buying and inflows back into gold ETFs (exchange-traded funds). ETFs are changing the way investors play the stock market. You can read the definition here, ETF | Exchange-traded fund. ETFs are a relatively new type of investment, in historical terms, with a relatively new type of gold and silver investor buying the 'digital metal.' In the past, a small percentage of investors made their home in the gold and silver markets by purchasing physical bullion. While gold and silver still only represent a small percentage of the commercial investment arena, the ease of digital investing is changing that. Money that was circulating elsewhere is moving back into gold and silver. There are also examples of large institutional investors changing their tune about gold to start 2014 (see George Soros article here). Average investors typically follow their lead, and usually they are too late to the party. The herd mentality driving the volatility is not unique to any particular investment (see housing bubble 2008). No matter what the reasons, it doesn't stop us from needing certain tangible assets. Unless you feel like settling for a paltry 1-3% guaranteed interest that doesn't keep up with price inflation, every investment involves some form of risk.
As a volatile alternative currency, gold and silver carry risk, and that is why you need someone to help you with it. While there are no guarantees, if you are timing the market right now, any price below $1300 seems like a bargain. If you own ETFs or are considering purchasing them, remember that the biggest difference compared to owning the physical metal is that someone else owns 'your' gold. You are investing in a company's capacity to store their gold, and paying them a fee to do it. That's a lot different than buying and selling with a dealer (preferably me) and storing the gold wherever you want. There is value in purchasing a gold or silver ETF if that is your only option. However, physical metals can be sold back to me at any time (assuming you accept my buy price), and you also get more flexibility of choosing how to sell your metals if you don't want to sell to me. You can sell your gold or silver at local pawn/jewelry stores, on eBay, at local farmers markets and craft shows, or even choose to barter with it. Unlike an ETF, you actually own the physical metals, so you can create a competitive selling market for your assets.
The recent correction in gold and silver during 2013 is much different than 2008. In 2013 the price bottomed at $1200 compared to near $800 in 2008. If you purchased gold and silver any time before 2010 you are probably very pleased with your investment, even after the crazy drop in prices last year. If you bought when prices were near $1800 you'll just have to wait a while longer for your retribution for last year's price manipulation. And if you are smart, buying when prices are low like they are right now, is a lot better idea than waiting until the price of gold eclipses $2000 during the next phase up in this historic bull run.
Keep the Faith and as always, God Bless.
www.argentumusa.com
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