Should You <b>Invest in Gold</b>? - Smarty Cents | How to invest in gold |
- Should You <b>Invest in Gold</b>? - Smarty Cents
- More Precious Than <b>Gold</b>: <b>How to Invest</b> in Water - <b>Gold</b> Stock Bull
- BRICS Targeting the Dollar: <b>Invest in Gold</b> - Wealth Daily
| Should You <b>Invest in Gold</b>? - Smarty Cents Posted: 16 Mar 2014 11:00 PM PDT  Photos.com Plan your portfolio. "When you focus on the fundamental, the single most beneficial aspect to investing in precious metals is as an asset diversifier," says Saulnier. The benefit, he explains, is that gold and silver do not follow the same market trends as stocks and bonds, creating a much-needed buffer for portfolios heavy in those areas. He encourages individuals to evaluate their overall risk profile, personal beliefs and investment goals before determining how much to allocate to gold or silver. "If they do not want the volatility of equities, or they can't handle volatility emotionally, I will allocate a greater percentage to multi-asset classes, with gold or silver being one of them," says Saulnier. "Some clients have strong political beliefs and desire a large allocation to metals. Others find the entire idea of investing in what they consider to be nothing more than shiny rocks abhorrent. [Regarding investment goals], if the client needs the assets in less than five years, I will often avoid precious metals entirely due to their volatility. If the client needs the money in five or more years, I will begin to allocate to metals. If the client needs their money in more than 10 years, they have no objections to metals and they have the appropriate level of risk tolerance, I will allocate my largest percentage to metals here." Consider your options. Once you've made the decision to invest in precious metals, there are several options to consider, each carrying its own advantages and disadvantages.  Certainly, the most obvious way to invest in gold and silver is through the purchase of actual physical assets. There's an inherent store of value, which means that, regardless of economic fluctuations, holding the tangible metal will always ensure some value. The problem, says Saulnier, are the costs. First, there are costs for storage, and there's also the reality that any capital gain from owning the metals will be taxed at 28 percent. Namely, though, Saulnier is concerned with what he calls "collectable charlatans." "They sell you a collectable coin, and you often pay a premium over the spot price of the metal based on the alleged collectable value of the coin," Saulnier explains. "This is an arbitrary measure of worth and is often presented to the buyer as a non-negotiable value. The problem is—very few people buying collectable coins are really knowledgeable in the true value of the coin, and they pay far too much for this perceived collectable value." When you invest in an Exchange Traded Fund (ETF), you do not own the actual gold or silver bouillon. The ETF retains ownership, while the investor owns a claim to the ETF's total holdings. "Your investment into the fund represents a proportional ownership of the bullion the fund holds," says Saulnier. "The fund tracks the actual performance of the metal and will therefore provide returns that mimic the actual returns of the metal." Obvious benefits here include not having to worry about storage and safe-keeping of the metals and, adds Saulnier, the transaction processes for buying and selling ETFs are often much easier than with the actual metal. Investing in a mutual fund that owns stocks of gold and silver producers, miners and refiners allows investors to see greater returns—and also greater losses—than they would from owning the actual bouillon. "These funds carry the greatest amount of volatility because of their stock exposure," Saulnier explains. "They also have higher correlations to stocks than owning the actual metal. If you truly want exposure to the metal, including its stock diversification benefit, do not invest in stock mutual funds. The SPDR Gold Trust EFT is a better option, because it represents a proportional ownership of the actual metal bullion and does not carry the correlation and volatility of stocks." Now is the time! Currently, Saulsier is actually going against his own standard advice and recommending that clients invest in mutual funds. "Mining stocks were punished far more last year, with some mining companies losing over 70 percent—that is far more than the near 30 percent drop in gold bullion," he says. "I find mutual funds holding gold stocks a better risk reward right now than owning a collectable gold/silver coin or gold bullion ETF." Saulnier's advice is indicative of the fact that, like any asset class, the performance of gold and silver may ebb and flow, and it's up to individuals (or their advisors) to be savvy enough to stay on top of the trends. But if you're still on the fence about whether to invest in precious metals, consider Saulnier's perspective on their enduring value: "Never in history have gold or silver been worthless. Name one currency that is still in existence today that was in existence 1,000 years ago; I can rattle off dozens that are worthless today that were staples of their respective economies over the past hundred years. That alone should be reason enough to hold 2 or 3% of your investments in gold or silver." For more on this year's investing trends, check out Top Investing Trends to Watch in 2014.  | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| More Precious Than <b>Gold</b>: <b>How to Invest</b> in Water - <b>Gold</b> Stock Bull Posted: 07 Jul 2014 08:36 AM PDT The world is running out of its most precious resource… not oil, but water. I am feeling this acutely in my home state of California. Technology is helping, but desalination remains very expensive and energy intensive. More than a billion people across the globe don't have access to safe water. The situation can only get worse as water gets evermore scarce. Are we approaching Peak Water or have we already passed it? If the idea of Peak Oil is scary to you, Peak Water would be many times worse. While oil plays an indispensable role in modern life, humans can only survive for 3-5 days without water. Simply put, life depends upon water and there is no substitute. As fresh water supplies decline and demand increases via a growing population, water prices are going to rocket significantly higher. The water sector has beat the S&P 500 by 11 percent annually since 2001 as the global water industry is expected to hit $1 trillion by 2020. Forecasts show global demand outstripping supply by a widening gap and this trend will only accelerate as drought conditions worsen. Agriculture is the source of most of the water demand and food prices are rising. As China, India, and other developing nations continue to industrialize, they will require more food and thus higher demand for water. In addition, the fracking revolution demands huge amounts of water in order to blast the oil out of rocks deep in the earth. Each fracked horizontal well uses millions of gallons of water to extract the oil from the ground. Fracking is exploding all over the United States and moving overseas as well. As this trend accelerates, demand for water will rise as well. So, we have a clear picture of the investment case for water stocks. Demand is climbing higher and supplies are dropping sharply. Anyone that has taken Economics 101 knows the impact this will have on the price of water going forward. Water is an undervalued commodity. I've been bullish on water investments for some time now, but there are only a limited number of pure-play water stocks. Some investors get exposure via ETF's such as: Guggenheim S&P Global Water (CGW) The largest of those funds is up an average of 16% per year over the past 5 years, but it is up only 1.8% YTD. I think investors can achieve better gains by selecting a few of the best managed water stocks. There are a number of ways to play increasing water prices, include drip irrigation, water efficiency technology for farms, companies that own desalination plants, water utilities and more. The following is a list of some of the water stocks traded publicly on the exchanges. If you would like to know my #1 water stock pick for the next 12 to 18 months, please sign up for the Gold Stock Bull Premium Membership.
You can invest in rising water prices via one of the water ETFs or by performing your own due diligence on the dozens of companies mentioned above. However, if you would like to view our top water sector stock pick, along with our top gold, silver, energy and agriculture stock picks, click here to join the Gold Stock Bull Premium Membership. The film below delves into the importance of water and the battles that have erupted around the globe over water resources. It highlights the most water-rich regions of the world and who is buying up acreage around key aquifers. It also offers some solutions for conserving water and ensuring access to everyone well into the future. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BRICS Targeting the Dollar: <b>Invest in Gold</b> - Wealth Daily Posted: 25 Jul 2014 08:47 AM PDT I continue to maintain that the U.S. dollar is slowly losing its status as the world's reserve currency. More steps toward this developed recently. A meeting between the leaders of the BRICS countries resulted in an agreement on a new financial system and currency pool. American dominance — including the dominance of the U.S. dollar — came about around the end of World War II. The Bretton Woods agreement set something of an international gold standard, under which other countries could redeem gold in exchange for dollars. But the Federal Reserve inflated the money supply to the point where there was not nearly enough gold reserves to make the dollar redeemable, and in August 1971, Richard Nixon abandoned the last remnants of a gold standard. While Nixon was part of the problem, he can't be fully blamed for this. It was inevitable based on the system that had been set up and the money creation that had taken place. Part of Bretton Woods was also the creation of the International Monetary Fund (IMF) and the World Bank. To this day, the U.S. government mostly controls these institutions. There are various reasons for U.S. dominance over the last 70 years. Some say it is because the U.S. has the most powerful military. Others say that it is because the U.S. has the largest economy, which it does. I think it is a combination of these reasons. The U.S. and Soviet Union were really the only two superpowers left after World War II, but the Soviet Union was under communism. The U.S. has also had the biggest economy of any country in history. There may be some tiny countries today that surpass the U.S. on a per-capita basis, but the U.S. economy remains number one among the world's large countries. In addition, while the U.S. dollar has had its problems over the years — particularly in the 1970s — it has generally been the most stable currency of the large countries. BRICS I used to refer to the top emerging economies as the BRICs: Brazil, Russia, India, and China. For this article, I refer to the BRICS countries, adding South Africa, whose president was part of this latest meeting. While I am down on the U.S. dollar for several reasons, it doesn't mean I'm impressed with these other countries. Brazil is a large country and not insignificant, but it is a relatively poor nation. South America seems to be the face of currency crises. It seems there isn't a moment when some country is not having some kind of near hyperinflation event. Brazil does not escape this criticism — its currency is terrible. It had something resembling hyperinflation in the 1980s and 1990s. The country would be better served if it used U.S. dollars, and that is coming from someone who frequently criticizes the dollar. Russia, meanwhile, is a former piece of the Soviet Union. It is better there today than it was 25 years ago, to be sure, but the country still struggles from its past. While it is rich in oil and natural gas, there is not a lot else to point to. Its economy is still quite small in comparison to the United States. India has a population of well over 1 billion, and you would think a country with such a huge population would have more economic significance. But it is an extremely poor country, plagued with bureaucratic regulations and a terrible currency. A good portion of the smartest people get out and move to the U.S. or somewhere else where property rights are more respected. I think India has a lot of potential in the future, especially as technology and communications continue to increase on a global scale. But as of right now, it is hard to take the country and its government seriously. It is a terrible place to do business. We speak of the top 1% in the U.S., but this is more exaggerated in India, where there is not much of a middle class at all. Most people are really poor, while a tiny percentage controls most of the wealth — which isn't a whole lot for a country of well over 1 billion people. The only real significance India has for me as an investor is the demand for gold coming out of the country. China is a country to take seriously. For the last 35 years, we have seen China somewhat liberalize its economy, resulting in one of the greatest gains in wealth in history over such a short time span. Hundreds of millions of people have been lifted out of extreme poverty. We do have to remember that China is still a communist country, even if in name only. The politicians there may not follow the communist model, but they do follow a model of central planning. While it is better than it used to be, it's still not great. China's currency is not freely floating. This is a major problem, and it means the currency is not likely to replace the dollar as the world's reserve currency, as some have predicted. China also has a massive real estate bubble that is about to pop. Its biggest leverage against the U.S. is the more than $1 trillion in U.S. Treasuries that it owns and continues to buy. As for South Africa, there is not a lot to say. The nation has major problems of racial division, and the crime rate is extremely high. It is certainly economically better than most other countries in Africa, but that is not really saying a lot. Property rights have been weakened there, and the country is quite insignificant in economic matters. Stay on top of the hottest investment ideas before they hit Wall Street. Sign up for the Wealth Daily newsletter below. You'll also get our free report, Gold & Silver Mining Stocks. A Currency Pool The meeting between the leaders of the BRICS countries resulted in the signing of an agreement to create a BRICS Development Bank, which includes a currency pool worth over $100 billion. The move is being seen as an attempt to move away from the IMF and World Bank. In other words, it is a move away from using the dollar in international trade. The countries may also consider allowing entrance to other countries in the future. While these five countries contain about 42% of the world's population, they represent a much smaller portion of the overall world economy. Still, the trade between the countries is estimated at 17% of the world's total. Ironically, if these countries would just stop destroying their own currencies, they probably wouldn't need to take such steps. But because they all continually destroy the purchasing power of their money, the currencies are not trusted and don't make for good trading. If China is buying goods from Russia — regardless of whether this is between individuals, businesses, or governments — why can't the Chinese just use yuan to pay for the goods? The Russians could instantly convert the money back in to rubles if they wanted. The problem here is that the yuan is neither a free currency nor a trustworthy one. These five countries have a horrendous record of monetary policy, so it should be no surprise that they can't do this and that they still rely on the dollar. There are no major countries that have far more stable currencies than the dollar (Singapore and Switzerland are not major). The yen and euro aren't terrible, but they aren't any better than the dollar. Your Money Despite my criticisms of the BRICS countries, their move is still significant. The world is slowly shifting away from dollars. In some ways, I see this as positive for Americans — after all, the government will not be able to run huge deficits as easily if other countries stop buying a good portion of the debt. The long-term key for Americans is what the Fed does, assuming it still exists in 20 years. If there is high monetary inflation like the past six years, then it will mean lost purchasing power and a weaker economy due to resources being misallocated. If the Fed keeps its money creation under control, then Americans will be fine, even if other countries stop using dollars in international trade. The ultimate answer probably lies in a return to the use of gold as money. Either way, gold should be part of your answer in hedging against a declining dollar. The U.S. dollar will decline in international trade, even if the other currencies are not much of an alternative at this time. Over the long run, a weaker dollar means gold will shine. Until next time, Geoffrey Pike for Wealth Daily Media / Interview Requests? Click Here. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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1 Comment for "Should You Invest in Gold? - Smarty Cents | How to invest in gold"
Me and my wife have been planning our retirement and looking for good investments. I didn't know there were so many options for investing outside the country. Are there records of gold values in those other countries? http://www.goldjewellerybuyer.ca/products_and_services.html