Why Physical Bullion?
As the market of any product is open, many will have the chance to buy the wrong product or commodity. Many have argued that having an account in gold and other precious metals in paper/certificate will be blown up with the physical bullion market. Hence, buy the real thing and get out of any investments that give your paper instead. To have a sound investment in physical gold, listed below are few of the things you need to know.
Gold Accountability
Banks and brokerage houses are the major holders of the precious metals and thus contribute in the precious metal exchange traded funds (ETF).
What are the risks?
Risks in gold investment lie on those that deal with paper substitute. However, if you invest in physical bullion the counterparty risk is decreased.
Management Skills
The holdings of the physical bullion is determined by the skills of the manager, it doesn’t reflect on the gold itself after market timing, averaging and hedging are introduced
Liquidity of Gold
Bullion can be traded any hour of the day; it has a high level of trading activity. It can be easily bought and sold. Thus, bullion held in papers or certificates must be avoided.
Gold Ownership
To be sure that you will own what you bought, ensure that title is transferred under your name before securing its storage vault. Any bullion must be stored in allocated basis for it not to be used in any way possible. Ownership of gold certificates alone is not redeemable in physical gold, so, invest in the real thing.
WHY GOLD
Physical gold is real money. No other currencies withstand the purchasing power of gold over thousands of years. Investing in gold is not spending or using up one’s financial assets, but preserving it. Most of the major currencies now such as pound, yen, us & Canadian dollar slowly lose their purchasing power. Thus, listed below are few reasons why everyone is encouraged to devote themselves in yellow bars and the like.
Gold maintained its worth
Gold maintained its worth in the market for hundreds of years. Its price may be unstable for quite some time; however it sustained its value for a long period of time. No any paper currencies withstand its purchasing power. Gold price and USD currency in particular are correlated with each other negatively. However, sometimes the other one move ahead from the other, thus, the other one can be a leading indicator to the rise and fall of the value of the other one. In the long run, gold remains stable while others fall.
No one’s Accountable
The production of physical bullion is not within the control of bankers or politicians. They have to be dug from the ground and be formed in a very complex and pricey approach. Nature itself hinders the massive production of gold and cannot be manipulated compared to the production of paper money.
Risk Possibility
Gold price can be volatile in a short period of time, but its value and profit in a long term basis is remarkable. In case that the price of gold is down, it will soon go up in a short period of time. That is the reason why the gold price has raised in the past years and investing in gold rarely make some losses.
Supply and Demand
Regardless of changes in the price of gold, its supply increases moderately every year. Since it cannot be created easily due to environment restrictions, costly production, and nationalization threat, it cannot be produced as easily as paper currencies. Increase of supply in the printed paper money with less demand means less value. Thus, future economic downfall is inevitable, and gold is the first-rate substitute to any paper currency.
As a major hedge for future economic breakdown, central banks became the largest buyers of gold. Likely, Chinese government encourages its people to invest in gold bullion, putting 5% of their savings to the said commodity.
However, the large funds that can substantially move the financial market are just beginning to engage in gold. And if they can just put 5% of their assets in management into gold, the value of gold will surely increase sharply.
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“I SEE A GREAT FUTURE FOR GOLD AND SILVER COINS AS THE CURRENCY PEOPLE MAY INCREASINGLY TURN TO WHEN
PAPER CURRENCIES BEGIN TO DISINTEGRATE.”
MURRAY ROTHBARD