How to Invest in Gold Like a Pro

gold-like-a-pro_gold-bullionGold investing comes with rewards, but not without the relative risk. If this is the asset you have chosen to actively invest in, knowing the market from the ground up is critical to making sound financial decisions.

Have a Plan

Knowing when and where to enter and exit positions is a powerful skill that can only be honed through consistent planning and preparation. For starters, know what market environment you wish to participate in. Gold prices can move either in a ranging or trending direction. Trend trading is by far the simplest strategy that can produce decent returns, making it a good fit for beginners who wish to test out the waters.

Know What Kind of Gold to Buy

This is probably one of the most common questions aspiring gold investors throw at their financial advisers. However, there is no one-size-fits-all answer when it comes to gold investing. The answer will depend primarily on the goals of the investor. If you are interested in using gold to hedge against financial uncertainty or to take advantage of the rising gold market, gold bullion is probably the best form of gold to invest in.

Determine Capital Exposure

How much of your total capital should you invest in gold? Similar to knowing what kind of gold to buy, the answer to this question is not a constant. The general rule of thumb, however, is to invest anywhere between 10 to 30 percent, depending on how the global economic situation is currently acting.

Seek Long-Term Growth

Patience will play a huge part in an investor’s endgame. Avoid actively trading gold as this will create more short-term losses due to relative short-term price volatility and chip off additional capital from brokerage commissions. Instead, try to visualize the market conditions months or years from now. Does it look healthy, promising, and invest-able or dim and bound to free fall anytime?

Invest in Gold with a Reputable Source

The right source is paramount to successful investing. Your source should be able to provide real-time price feeds of gold and other investment vehicles you are trading, transparency in operations. Dealers add a commission to the price they charge, and that amount can vary. Purchasing directly from a Mint is a great way to procure freshly produced gold bullion and is one of the more legitimate and safe avenues for gold investors.

Learn to Extract Profit

After all, the entire point of investing is to make money. You should schedule dates where you can extract some of the profits from your gold investment. This way, you can protect a portion of your capital investment from volatile price movement.

Investing in gold is a great way to grow your current savings and build a retirement nest. From an investment perspective, gold offers decent returns but still with minimal risk. An investor must be able to manage this omnipresent risk above all else if he/she wishes to profit in the long term.

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Silver Market Volatility and When to Buy

silver--and-eolic-turbineSilver has been considered a precious metal throughout human history. It has been mined with zeal since ancient times. No doubt, many people say the silver market is sometimes volatile. They ask when is the right time to buy.

More than 877 million ounces of silver are mined each year. Importantly, new industrial processes continue to consume more of it. Silver analysts, such as those at JP Morgan Chase in New York, believe that demand from solar energy producers and others will drive silver prices much higher over the next decade.

Why Buy Silver Now

JP Morgan Chase’s precious metals “strategy” is based on Modern Portfolio Theory (MPT) asset diversification. Silver is historically inexpensive, supply is low, and silver demand is predicted to increase from today’s levels.

This simple story is compelling for investors in search of value. Long-term gains from financial assets like seek reinvestment, and silver is a prime opportunity for a portion of investors’ funds.

Silver and the Solar Industry

According to BRE’s IHS publisher in the UK, the demand for solar power is predicted to increase 30 percent year-to-year. China, despite fluctuating stock markets and reports of economic slowdown, continues to install solar energy components faster than others but people around the world see the long-term value of solar energy and they prefer it to carbon-based energy generation.

Most PV cells are made with silver paste. The solar industry predicts use of about 70 million ounces of silver, a bit less than 10 percent of the world’s annual production, in 2015 to 2016. PV production used more silver from 2014 to 2015 as appetite for solar increased about 7 percent.

World Silver Survey

The most recent World Silver Survey (Silver Institute and Thomson Reuters) reported that strengthening of the U.S. dollar and a move away from commodities by investors in favor of equity assets would temporarily depress both silver and gold prices. This has already happened.

However, longer-term prospects for both silver and gold should improve when the climate change summit of major countries are expected to reach an agreement at year-end 2015.

Silver Supply

Analysts on Wall Street continue to ask where new sources of silver production will be found. Unlike gold, silver is used by a number of manufacturing processes. Silver mining production grew about five percent in 2014-2015. Both silver and copper production increased as new mining projects in the Latin American countries came online.

New production accounted for slightly more than 30 percent of the total global supply. In 2014, Mexico was the largest silver producer in the world. Peru, Chile, China and Australia are also major producers.

New capital investment in silver mining could cause silver production to flatten or decline as silver use continues to increase at a steady rate. For instance, silver demand reached more than one billion ounces in 2014. This level is the fourth highest demand level since 1989-1990. Silver production actually declined by 4 percent in 2013 as industrial demand steadily increased.

Investor Acquisition

Investor appetite for physical silver coins and bars declined last year after a record 2013. In 2014-2015, the world’s stock markets continued to rise as bond and savings rates remained historically low. Money flowed into what investors considered was a “sure thing.” Fewer people purchased precious metals during the period. Precious metals prices, like all assets, rise and fall with supply and demand.

Silver may never reach gold’s popularity with investors. However, like copper, industrial applications and production statistics are solid predictions of higher prices.

Professional Investors

Elliott Associates, an eight billion dollar hedge fund, invested almost $200 million in private solar assets earlier this year. The investment manager believes that solar power will continue to gain popularity and is recognized as a firm that invests in “paradigm shifts” like solar vs. traditional electricity generation resources. Like other professional investment managers, the firm also recommends asset diversification for client portfolios, including precious
metals positions.

Many investment managers around the world now encourage stock market investors to re-balance portfolios and diversify. Stock market appreciation has caused portfolios to become imbalanced because, at current prices, equities may outweigh the original portfolio’s design. Imbalance can increase investor risk.

The best way to manage risk is to spread capital across asset classes, including gold, silver, and other metals. Investors typically keep some reserve cash position. If prices of any asset class decline from current levels, the investor may choose to purchase more to decrease cost basis.

Reasons to Own Silver

A properly diversified portfolio should include silver. Consider precious metals positions when rebalancing stock and retirement plan portfolios.

Central banks around the world have announced that interest rates will rise in the near future. Rising rates, China’s slowdown, or any number of political and economic woes are not the reasons to own precious metals like silver.

Silver prices are historically inexpensive. When silver starts to rise, it may do so quickly. Accumulating silver makes good sense now.




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Consider Adding Metals to your Investment Mix

physical-metal-silver-golden-state-mintHolding something of quality in your hands–there’s something about it that inspires confidence. A flawless leather shoe, an impeccable piece of Waterford crystal, a perfectly weighted knife, or a solid precious metal round can remind you that some things are meant to endure. Reading a list of numbers on an account statement can tell you things, but we don’t invest simply for the things we know. We seek that feeling of confidence that building wealth and providing protection against loss can bring. Any non-currency coin-like product is called a round.

You’ve heard the word: Diversify. That’s as much of a safety net as you can get when you try to invest and build wealth. Diversification often gets left off at the spread of funds available. Adding gold, silver, and copper into your mix of investments provides an additional layer of diversification you may not have considered.

Gold is well-known as a hedge against inflation. To a somewhat lesser extent, that also applies to silver and copper. Most financial advisors encourage holding metals in your portfolio, and there are several ways to do it. Metals can be traded on a stock exchange in different notes and funds. However, these vehicles carry the same caution as other exchange-traded entities: Don’t invest in something you don’t understand. The trading of metals as commodities involves understanding all the factors that cause the price volatilities, and that can take years. If you need to get started sooner, consider holding physical metal.

Physical metal is a broad category and includes bars and rounds of precious and semiprecious metals, most commonly gold, silver, and copper. Holding physical metals in your investments can reduce the anxiety produced by watching the market price fluctuate and wondering what the right next move would be. Somehow, looking at a bar or round in your hand makes it possible to say, “I have this” in a way that a line item on a brokerage statement just doesn’t. If you aren’t comfortable having the bars or rounds in your home but still want to own them, they can be stored at a depository for you.

Don’t overlook physical metal when working out your retirement plan. Physical precious metals can be held in an IRA and provide the same tax advantages as any other IRA. There are special rules in place that must be followed for your physical metals to qualify for inclusion in an IRA, but they are not difficult to understand, and they are not particularly burdensome. For a clear explanation of the process, take a look at Golden State Mint’s explanation of the steps.

If you decide to hold your metals yourself, you can choose bars or round rounds. (The US Government mint sells rounds only.) Both bars and rounds are offered in multiples of ounces and in fractions of ounces. Bars are bars–they are stamped with the name of the mint and the weight of the bar. If you are going to buy metals and hold them yourself, why not enjoy owning something beautiful? Both the US Mint and private mints offer rounds commemorating many events and celebrating a variety of interests. Here are just a few examples offered by Golden State Mint:

Your group can also design your own custom round. This could be an innovative way to reward excellence, or promote unity in your group, while encouraging investment and fostering an interest in collecting.

You can probably start adding metals to your investment mix sooner than you thought, and have items you can enjoy as well.

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