Three Ingredients for a Gold Rally in 2018
Posted onThere’s no denying it, equities had a stellar year, Bitcoin even more so. However, as 2018 draws near major investment firms are making their predictions about the next twelve months and some see a climate forming that could be good for gold investors. Here, we take a look at three trends that may boot the commodity offering some a golden opportunity.
Weak Dollar, Strong Gold
The recent performance of the dollar is in stark contrast to the boom times of the equities market. The dollar has seen its largest annual loss in value since 2003. For 2017 the ICE U.S. Dollar Index which measure the value of the dollar against six other currencies fell 9.8%. Why does this matter to gold investors? Historically, there is an inverse relationship between the U.S. dollar and gold. This relationship stems from the fact that while the U.S. holds more gold than any other country, we do so by importing the metal. These imports, priced in USD, will become more expensive as the dollar falls. Moreover, those who own U.S., debt, namely foreign countries, become less confident in our financial standing when our currency falters. As a result, gold, a safe haven asset, rises.
Geopolitical Concerns Rise and Gold Follows
While other global economies are experiencing the euphoria seen in U.S. markets there are reasons, some argue, to exercise caution. One recent example comes from Germany where Chancellor Angela Merkel’s latest attempts to form a government failed. Meanwhile, threatening overtones from North Korea continue to escalate sendinging trepidations throughout the U.S. and countries that neighbor Kim Jong-un’s regime. In recent months we’ve seen examples of the correlation between rising fears of a nuclear engagement with North Korea and the price of gold. In early October gold prices climbed when President Trump increased his resolve to retaliate against Kim Jong-un. Meanwhile angst in Spain is on the rise as a possible Catalonia succession looms and Iran has refused to revise their nuclear deal with six world powers.
History Repeats Itself
It seems that even commodities like gold want to start a new year on the right foot. Case in point: In both December of 2015 and 2016 gold bottomed out in value. This drop was followed by a rally in January of 2015 and 2016 respectively. “Given the fact that gold’s previous lows were formed in the past two Decembers, the yellow metal could score a hat-trick if it maintains its rally in early 2018,” remarked one analyst at Forex.com. Other analysts at Casey Research compiled nearly 40 years of research dating from 1975 to 2013 showing that gold’s second strongest period based on monthly average gain is in fact January notching a little more than a return of 1.5% (September is the strongest).
With these three factors in mind gold investors might just be setting themselves up for success in a market that promises to serve more surprises throughout 2018. Over the long-term, gold offers balance to a diversified portfolio by giving investors an opportunity to profit from key market conditions like those ahead of us.
Five Things That Moved The Price of Gold In 2017
Posted onThe price of an ounce of gold surged over $125 an ounce since the start of 2017, for a roughly 9% gain. That’s an impressive move. If you bought an ounce of gold at the beginning of the year you’ve baked in a nice return.
What are a few factors that moved the price of gold this year? Let’s take a look.
- Threat of War with North Korea
Tensions have never been higher with the rogue nuclear-armed nation of North Korea.
The country fired 23 missile tests since February.
“Most Americans don’t realize how close we are to war,” said Illinois Senator Tammy Duckworth.
Gold is a traditional safe-haven and investors turned to the metal as various Twitter exchanges between President Trump and North Korean Supreme leader Kim Jong-un ratcheted higher throughout the year. The leaders of the two countries exchanged threats and taunts, including “dotard” and “Little Rocket Man.”
“The key problem for the United States is the likely possibility that North Korea has the missiles to deliver nuclear bombs to South Korea and Japan. If one of these weapons were to reach its target, an entire city would be annihilated,” noted a New York Times article December 6.
- Weakness in the U.S. Dollar
The U.S. dollar index fell 12% in 2017. A weak dollar is good for gold, but a signal of underlying weakness in the U.S. economic, political and perhaps even military might.
A weaker dollar makes gold cheaper for foreign buyers, who used the lower prices to snap up the precious metal at bargain prices.
However, the weaker U.S. dollar trend is a negative sign regarding international views of our country’s economic, political and fiscal policies. The level of a nation’s currency is a type of “grade” on how the country is viewed versus other countries around the globe to international money managers. Gold is a currency with a nation and without any of the fiscal obligations (or debt) that come with various governments around the globe.
- Stock Market Hit New All-Time Highs
The aging bull cycle in U.S. stocks hit its eighth anniversary in 2017. By traditional valuations, the stock market is overpriced and overvalued. Just how overvalued is the U.S. stock market right now?
“Shiller’s cyclically-adjusted price/earnings (CAPE) ratio for the S&P 500 has climbed to around 32. The last time it rose to such a high level was in the late 1990s, shortly before equity prices in the US plunged,” wrote economists at Capital Economics on December 18.
The gold market climbed over 9% this year, alongside an exuberant stock market. Investors turned to gold this year, as a way to take some risk off the table, with equity prices at sky-high levels.
“We seem to be living in the riskiest moment of our lives, and yet the stock market seems to be napping: I admit to not understanding it.” — Richard Thaler, winner of the 2017 Nobel Prize in Economics
- Federal Reserve Rate Hikes
The Federal Reserve hiked interest rates three times in 2017, in March, June and December. Yet gold prices continued to climb despite the Fed’s move. Why? Because official interest rates remain at historically and abnormally low levels, with the Fed funds rate at 1.50% to end the year. Interest bearing accounts offer little return and risk levels in the stock market are at the highest level in over a decade. Investors continue to turn to gold as a hedge against a depreciating U.S. dollar and a hedge against stock market declines.
- Major Tax Package Overhaul
In late December President Trump signed into law a $1.5 trillion tax overhaul package. The stock market climbed as corporations receive a massive tax break, which could help the Price/Earnings ratio of publicly traded companies. Gold also climbed higher in in the second half of December. Many economists believe that this tax package will ultimately spike the U.S. deficit – already at $20 trillion even higher. That’s gold bullish.
The New Year is just around the corner. If you are making resolutions for 2018, purchasing gold right now could be one of the best ways to kick off the New Year right. Protect your assets. Hedge your risk against an aging, overvalued stock market. Make 2018 your best financial year ever.
How Much Cash Do You Have On Hand?
Posted onCash is king. Right? Yes, and no.
Holding at least six months of living expenses in an emergency fund is a smart financial move. Life happens. An unexpected trip to the emergency room. Car repairs. A job loss. These are all good reasons to hold about six months of expenses in cash.
Beyond that, however, you may be missing out.
- Economists call this “Opportunity Cost,” or the loss of a potential gain you might have had if you made a different choice.
Holding large amounts of cash, might give you some psychological comfort in the present. But, it doesn’t do “Future You” any favors. Why not? Over time, inflation erodes the purchasing power of your cash.
- Inflation occurs when the price of the same good or services costs more than it did a year ago, five years ago or twenty years ago.
See how prices rise:
- The average cost of a new house climbed from $19,300 in 1963 to more than $150,000 in 2016.
- The consumer price index is about 500 percent higher in 2016 that it was 40 years ago. That means that the average item in the grocery store costs 5 times more than it did in the early 1970s.
- From 1990 to 2013 the cost of an average car doubled from $16,950 to $31,352.
- In 1990 a loaf of bread cost 70 cents and in 2013 that same loaf cost $1.98.
How Much Cash Is Too Much?
Americans are holding about 58% of their investable assets in cash, according to a Blackrock investor survey. When you want to protect your future, that percentage is too high.
“Holding cash means you are actually losing money every year as inflation drains away the purchasing power of your cash.”
About six months of living expenses in cash is important. Beyond that, you are facing serious opportunity cost.
Chasing Stocks Is Not the Answer
Many Americans are understandably hesitant to put fresh funds into the stock market at its current overvalued, record-high levels. In fact, the current rally in stocks has left many Americans exposed to more risk than they may realize.
What’s Your Number?
If you intended to have a 40% allocation to stocks, 20% allocation to bonds, 25% allocation to cash and 15% allocation to tangible assets like physical gold and silver, you are likely far overstretched in the stock category right now.
Put Your Cash to Work
Review your statements. If the latest run up in stocks has pushed you beyond your intended stock allocation level, book some profits. Many Blanchard clients are using the new all-time highs as a smart time to take some money off the table in the stock market and plough those assets into tangible assets like gold.
Protect Your Assets Now
One of the most brilliant fund managers of our era – Bill Gross, portfolio manager at Janus – warned investors to “be careful in 2018.”
The current abnormally low level of Treasury rates leaves money managers and individual investors few options to “hedge their risk.”
“Should a crisis arise because of policy mistakes, geopolitical crises, or other currently unforeseen risks, the ability to protect principal will be impaired relative to history,” Gross said in his most recent letter to investors.
Gold Is an Excellent Portfolio Diversifier
If you are sitting on more cash that you need, put your cash to work. Buy gold and silver now to protect your future purchasing power and to hedge against a downtown in the stock market.
Gold has generated strong returns in 2017 – and that is despite a strong stock market and rising interest rate environment. Now is not the time to chase returns in an aging and overvalued stock market. The case for gold has never been stronger.
Put your cash to work. Tomorrow, it will be worth less than it is today. In five years, that cash will be worth even less.
The Three Ways Gold is Driving Clean Technologies
Posted onWhen we think of clean tech we often envision natural elements like water powering a generator, or sunlight charging solar cells. However, another natural element, gold, is also driving changes that allow industries to thrive with less of an impact on the environment. Here, we look at three examples where gold is playing a pivotal role in creating a greener future according to the World Gold Council.
Mercury-Free Manufacturing
Today, the third most widely produced synthetic polymer is poly vinyl chloride (PVC) which is used to make pipes and insulation for electrical cables. However, making PVC is a labor-intensive process which first requires the manufacturing of vinyl chloride monomer. Doing so requires a catalyst. The problem: the most commonly used process relies on a mercury-based catalyst. The prevalence of PVC in construction and plumbing today means mercury is needed in high quantities. This demand presents environmental problems given the problems mercury causes wildlife like fish. Moreover, mercury is toxic to the brain and spinal cord making its disposal particularly dangerous. However, recently, gold catalyst processes have emerged offering a solution to this problem. As the World Gold Council reports, “This breakthrough provides an opportunity for VCM producers to remove a highly toxic material from their process in a cost-effective manner. Depending on uptake, this application could generate total demand in the region of 1-5 tonnes of gold.”
Clean Fuel Cells
Gold is also helping bolster the adoption of electricity-producing fuel cells. This innovation limits toxins in the environment because the only byproduct is water. Like the manufacturing of PVC, a catalyst is needed. However, in this case a special catalyst is required, one that can function at low temperatures. Gold is the solution. We’re likely to see a significant ramping up in the manufacturing of these cells as more industries and countries take ownership of the future of the planet. The result could be a further increase in demand for gold.
More Efficient Solar Power
In short: gold offers improved efficiency in solar panels. For solar cells to effectively harness the sun’s power they require gold nanoparticles. Why? Traditional designs require a web of wiring which sits on top of the solar cell. These wires, however, can block up to 10% of the sun’s light. Researchers have discovered a way to redesign the panels without the wires. Instead, scientist can place a thin film of gold on a silicone sheet. This film allows more light to penetrate and some estimate near-term designs to offer up to a 20% boost in efficiency. Therefore, solar-powered technologies will likely expand their reliance on gold. Moreover, in newer designs gold is also needed for the electrodes.
These three emerging technologies illustrate the versatility of gold. While the element hasn’t changed we are constantly changing the way we can use it and finding new opportunities to expand its value in various industries.
Can bitcoin do any of that?
When the Bitcoin Bubble Bursts: What Will It Mean?
Posted onThe price of Bitcoin has tripled over the past month. A clear “feedback” loop is underway in bitcoin price action right now.
The Media reports on the new highs, which ignites interest from mom and pop investors who want in on the opportunity. Then, it hits another new high. The Media reports on it again, which ignites another round of buying.
Some Wall Street professionals have warned this could be bubble-like activity. Maybe, maybe not. Only time will tell. That does beg that question, could a Bitcoin price retreat have a spillover impact on other financial markets or the broader economy?
Let’s look to history as a guide.
When bubbles burst in the past two decades there has been meaningful impact on the broader economy and the financial markets.
- Remember the Dot.com bubble that burst in early 2000?
- It took the S&P 500 13 years before it surpassed the 2000 high again.
- Remember the U.S. Housing Bubble that peaked in 2006?
- Housing prices in some states still have not returned to those price levels.
Bitcoin has few Links to the Actual Economy
Bitcoin is not intertwined in the real economy, or even the financial markets in any meaningful way. One major investment firmed called it “a curiosity.” If the price of bitcoin were to correct sharply lower, it won’t hurt the economy, the labor market, or the stock market. That’s the good news.
Gold Report
The price of gold fell last week, skidding to a fresh four-month low? The culprit?
Blame it on the speculators.
The “excuses” for gold selling included:
- U.S. dollar strength
- Senate approval of the U.S. tax cut package
- Stronger-than-expected U.S. labor report for November
But, at the end of the day, it was speculators pressing on the market as day traders took advantage of “shorting” opportunities.
Fed Watch
As expected, the Federal Reserve hiked interest rates at this week’s meeting on Wednesday afternoon. While the rate hike was widely expected, it could open the door to modest weakness in the gold market. The short-term gold chart outlook has weakened in the wake of the recent selling. That means there could more to go on the downside, before a “bottom” is found and long-term investors swoop in for great bargains.
What level should you be watching for? The $1,225-$1,215 per ounce area offers potential support for gold. If the price drops that far in the days ahead, long-term investors would be lucky to have the opportunity to buy at that price.
Stay tuned. Buying opportunity ahead for gold.
Investing In Bitcoin: A Special Report – Part 2
Posted on — 2 CommentsLook Before You Leap into Bitcoin
Remember the dot.com boom? Internet companies with no revenues and profits, but massively overvalued stock prices?
The current mania round Bitcoin has a similar look and feel. Are people talking about Bitcoin? You bet. Were taxi drivers and hair dressers talking about dot.com stocks? You bet. And, that did not end well.
Throughout history, markets of all kinds tend to “peak out” or post “blow-off” tops not long after the man on the street starts rushing to join the party. It is a cycle that repeats over and over again and Mom and Pop are always the one who get hurt. At tops the general public rushes in because they are attracted to rising prices. Just like Bitcoin right now. The general principles that underlie the markets don’t change and continue to drive price cycles over and over again.
We’ve already outlined 3 key reasons investors should be wary of Bitcoin 1) It has no intrinsic value. 2) It appears to be a bubble. 3) Bitcoin could simply disappear one day.
Here are 8 more points investors need to read:
4. Is Bitcoin a currency?
Let’s talk about what defines a “currency.” Since 1913 in the United States, our currency has been issued by the federal government.
The U.S. dollar and major currencies around the world are:
- Backed by the full faith and credit of that government.
- It is physical. There is paper money and there are coins that you can touch.
Bitcoin is not backed by any government. There is nothing tangible that you can ever see, touch or hold.
In fact, bitcoin is the antithesis of gold. Let’s look at some key characteristics of gold and why investors continue to turn to precious metals as a true viable method of wealth preservation and accumulation.
- Gold is a tangible asset.
- Gold is physical.
- Gold is not issued by a government, which means it is nobody’s liability (not associated with any government debt or deficit).
- It has true physical supply – you can only pull so much gold out of the earth. (Unlike a computer software program where they can change the “rules” and create more than 21 million bitcoins at any point in time).
5. Cryptocurrencies are Unknown and Unproven
Get this. There are over 1000 cryptocurrencies right now. Have you heard of:
- Litcoin
- Namecoin
- Ethereum
- Zcash
- Dash
- Ripple
- Monero
These are all part of the “altcoin” fad. Any of these cryptocurrencies could go bust at any time, leaving investors with zero. In fairness, these cryptocurrencies can explode in value as well.
6. Regulators May Pounce At Any Time
Sudden regulatory changes could emerge at any time in response to the concerns that this cryptocurrency is being used in black market transactions, money laundering and other illegal activities.
- Governments could ban the use of bitcoin at any time.
The SEC has already warned that Bitcoin is subject to regulatory risks and federal securities laws. It would not be surprising for a regulatory body to issue regulations that could completely disrupt the availability and accessibility and liquidity of bitcoin.
A Federal Reserve regulator said last week that bitcoin could pose a threat to financial stability. Regulators are just getting started. Once regulations come down, investors could be left holding a worthless piece of cyberspace.
7. Exchange Heists
There are no bank robbers with guns. But, they steal money just the same. More than 980,000 bitcoins have been stolen from exchanges, either by hackers or insiders, according to news reports. That totals more than $10 billion at current exchange rates. Few of the stolen bitcoin have ever been found.
8. The IRS are getting involved
Anyone who thinks they can avoid taxes using Bitcoin is wrong.
A federal court has demanded that Coinbase, the largest cryptocurrency exchange to hand over its customer list to the IRS. More than 14,000 customers are suspected of tax evasion.
Because Bitcoin is viewed like any other asset by the IRS, every transaction, no matter what size must be reported. Coinbase is fighting this, but they are expected to lose. The IRS is a powerful entity and will demand what its due in back taxes, penalties and fees once they obtain the customer list.
9. The Smart Money Doesn’t Invest in Bitcoin
Institutional investors are not investing in bitcoin. There may be some speculative trading in bitcoin. But, smart money investors are not buying bitcoin to buy and hold. It is a speculative market. The Wild West.
10. Bitcoin is not viable for Traditional Commerce
The intense volatility of Bitcoin prevents it from being used in commerce in any meaningful way. The wild swings in price, both higher and lower, create uncertainty when it comes to buying and selling in bitcoin.
- It fluctuates – often dramatically – on a daily basis.
In fact, in early 2017, McKinsey consulting firm said that it appears unlikely that the Federal Reserve for the U.S. Treasury will start accepting bitcoin as a form of payment anytime soon due to regulatory risks.
It is, however, being used by criminals due to its decentralized structure and ability to move money from local currencies into bitcoin, and then out of the country and finally into a different currency.
11. Bitcoin Is Not A Safe Haven
Bitcoin is no safe haven asset. It is a wildly risky and speculative investment. That compares to gold, which has proven itself over the millennia. It is real currency and a real store of value.
Consider these facts about gold:
- Gold is a physical hard asset that you can hold and touch, or put in your safe deposit box. It’s real.
- Gold is considered to be the world’s first international currency when King Croesus first minted coins back in 564 BC.
- Governments around the globe continue to buy and hold gold because of its true intrinsic value.
- Gold is rare. At the end of 2012, there were only 174,100 metric tons of stocks in existence above ground. If every single ounce of this gold were placed next to each other, the resulting cube of pure gold would only measure 20 yards in any direction, according to the World Gold Council.”
Investors who want to preserve and grow their wealth should consider a currency that has been around for over 2,000 years – has been tried and tested – a proven portfolio diversifier. From 1968 to 2016, optimal portfolio had 27-30% of its assets in gold and the rest in stocks and bonds, according to Jeffrey Christian, managing director at CPM Group.
Can you make money in bitcoin? Some will, most won’t.
Investing In Bitcoin: A Special Report – Part 1
Posted on — 4 CommentsHave you wondered if you should buy some bitcoin? If you answered yes to that question you are not alone. After all a massive media blitz has highlighted the cryptocurrency’s recent surge to a new all-time high above the $16,000 level.
Sounds like an investment you should be in on, right?
If you were lucky enough to purchase bitcoin at $1,000, congratulations!
While the tug of the “Fear of Missing Out” could be strong, remember the old Latin phrase: Caveat Emptor, which simply means “let the buyer beware” applies here. Let’s start with the basics.
What Is Bitcoin?
Bitcoin is a digital “virtual” currency developed in 2009 by the shadowy figure Satoshi Nakamoto. It is a global payment system that allows for anonymous peer-to-peer payments with no centralized authority. Bitcoin transactions take place via “blockchain technology” which is a so-called digital ledger where these transactions are publicly and chronologically recorded.
- Bitcoin is not a physical currency. It is not issued by any government and it is not legal tender.
People who use bitcoin confirm the validity of bitcoin using the publicly availably blockchain transactions on the open source digital ledger.
Where Does Bitcoin Come From?
So-called “miners” earn bitcoins who use their computers to confirm Bitcoin transactions. Every transaction is linked to other transactions to create blocks. These are linked to create the blockchain. This blockchain technology holds a record of every Bitcoin transaction that has ever taken place. As these computer operators verify transactions, they earn new Bitcoin, which is how new currency is “created.” The original computer program allows for 21 million Bitcoin to be generated.
What about Regular People?
People can buy bitcoin on exchanges, such as Coinbase and pay a fee to store Bitcoin in an online wallet.
11 Things to Consider Before You Buy Bitcoin
- What is the value of Bitcoin
People are focusing on the massive price increase, the record-setting “value.” But, what is actual the value of Bitcoin? There is none. People are buying Bitcoin on the “hope” that it will become widely accepted and widely used.
Recently, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon called bitcoin a “fraud” and he said he would fire any employee who was caught trading bitcoin for being “stupid.” However, he did admit that bitcoin was a good option for murderers and drug dealers.
2. Could Bitcoin be in a bubble phase?
People are buying it as part of a speculative buying binge. Remember the economic bubble in Dutch Tulip Bulb Mania?
In 1637, at the height of tulip mania some single tulip bulbs sold for more than 10 times the annual income of a skilled worker. Like all economic bubbles, it eventually popped. As tulip bulb prices dramatically collapsed over the course of a single week, many tulip bulb investors instantly went bankrupt.
“These bubbles tend to end in tears. And I worry about how this bubble might end,”
Billionaire hedge fund manager Ken Griffin said about bitcoin to CNBC on Nov. 27, 2017.
3. Security Risks: Any Bitcoin you might buy could simply disappear one day.
Bitcoin may be hacked. Operational glitches or malware could disrupt the peer-to-peer network. Cyberattacks can open the door to stolen private encryption keys.
This has already happened:
-
Hong-Kong based Bitfinex was hacked in August 2016. That resulted in the outright theft of $65 million in Bitcoin.
- In 2014, the Mt. Gox bitcoin exchange filed for bankruptcy and announced that 850,000 bitcoins had vanished into thin air. Simply gone.
The hackers: The bitcoin world is their world. They understand the shadowy worlds of the dark net better than anyone. If you think any bitcoin you might buy is “safe,” just remember how protected your Social Security number was by Equifax earlier this year where 145 million Americans had their most sensitive personal data stolen. Simply stolen. Bitcoin is a computerized technical system with who knows what vulnerabilities yet to be discovered.
Investors who are considering buying bitcoin need to understand the realities of what bitcoin is and isn’t. Take the time to learn the facts.
More reasons that you should be wary of Bitcoin in Part 2 of this Special Report.
Gold’s Future in a Technological World
Posted onWe often consider gold demand to be a measure of how many people want to store their wealth in a resource that’s more durable than the dollar. In reality, however, far more factors drive the price. In recent decades technology has become one increasingly influential driver. As gold prices increase, the technology sector becomes more aggressive in their pursuit of substitute materials, which, in turn, puts downward pressure on gold.
Recently, The World Gold Council took an in-depth look at the relationship between technological development and demand for gold. In their report, they cited a dramatic rise in gold prices which quadrupled between 2005 and 2011. In response, the tech industry started to reevaluate hardware designs in an effort to stabilize their production costs. For example, electroplated coatings and gold bonding wire became thinner. At the same time, designers revisited ways to replace gold completely with alloys and substitution materials. As a result, gold, which had a 77% market share in the global bonding wire market, dropped to 40% where it stands today. The good news: this steep drop in demand from the tech sector may be leveling off, and, better still, there is reason to believe demand will increase.
By the end of Q3, this year gold posted year-to-date demand growth for the first time since 2010. The drop in demand has stopped because these substitutions, namely copper, are still inferior to gold and lack the anticorrosive and malleable properties of gold. Therefore, uncompromising industries like aeronautics will likely remain loyal to gold thereby setting a “floor” to diminishing demand.
The World Gold Council also cites a worldwide shortage of digital memory which should also buoy demand for gold. Just as gold demand diminishes among some technologies, it will likely grow in others. For example, new smartphone designs include new technologies like facial recognition, wireless charging, and infrared sensors. All of these features require new semiconductor designs which operate from gold bonding wire and other gold components.
Battery technology is likely to become more influential to gold demand in the coming decades. As electric vehicles hit the roads, gold will become a mainstay in the manufacturing process. Moreover, other car features will require more advanced technologies and in greater numbers. In-car entertainment systems, LEDs, printed circuit boards and braking systems are all examples electronics requiring gold.
Recent reports from the World Semiconductor Trade Statistics support this optimistic outlook. In a revised forecast they predicted a 21% increase in the global semiconductor market for 2017. Next year also looks strong as the WSTS reports, “For 2018, all major product categories and regions are forecasted to grow with the overall market up 7.0 percent, with Memory contributing the highest growth followed by Optoelectronics and Sensors.”
The key takeaway is that a gold purchase is more than just a store of wealth. It is an investment in the industry of technology. As zero-emission cars, virtual reality and telecommunications become an increasing part of our world gold will continue to play a vital role.
Three Rare Gold Coins That Write History
Posted onRare coins always have a story to tell.
Pacific Octagonal Coin
In 1915 Congress decided to commemorate the Panama-Pacific International Exposition held in San Francisco. The legislation allowed for five unique coins to be minted, two of them were $50 pieces. One, particularly unusual in design, was octagonal. Quite a bit of effort went into minting the coins; professionals hauled a 14-ton press all the way from the Philadelphia mint to San Francisco. Interestingly, all the pieces sold poorly. As a result, many were returned for melting making them particularly rare today. Based on the quality, such a coin in today’s market could fetch anywhere from $33,000 to as much as $375,000. In fact, in one episode of Pawn Stars, the store owner, Rick, traveled to a major coin auction in Atlanta to find one of these rare pieces of history for a customer. Eventually, he tracked one down paying $67,500 for the coin. Shortly after, the customer bought it, as promised, for $70,000.
Queen Anne ‘Vigo’ Coin
One man in England re-discovered a gold coin he received as a child. Now 35, the man found the piece his father gave him, in a toy treasure chest. Apparently, no one in the family believed it carried much value. They were wrong. The coin is one of the rarest in all of Britain. It was a Queen Anne ‘Vigo’ gold piece valued at £250,000. It is one of only 20 minted. Of those twenty, five still remain unaccounted for. The coins were minted in the early 1700s. The gold used was part of the treasure the British took from a fleet that attempted, and failed, to take Cadiz, a Spanish city. As recently as 2013 another one of these coins claimed £300,000. The man believes the origin of the coin within his family dates back to his grandfather who traveled the world during his working years and made it a hobby to collect rare pieces.
The Wayfarthing Woman
Sometime a gold coin find is a historic event for more than one reason. This is the case with one man’s find in Norfolk, UK. A gold pendant and other coins, now belongs to a 23-year-old amateur metal detectorist. Moreover, some have claimed that the find is rewriting Anglo Saxon history as we know it. Experts suggest the find is worth £145,000. The pendant rested around a female skeleton’s neck buried in the soil. Originally, the piece was imported from Sri Lanka. The site also contained coins “bearing the marks of a continental king [which] is prompting a fundamental reassessment of the seats of power in Anglo Saxon England.” The value of the treasure suggests that the woman was of a particularly high status, perhaps even a member of the royal elite. One piece among the horde includes a golden cross which is now one of the earliest symbols of Christianity ever discovered. In an interview, the detectorist explained that he would likely use the proceeds for a payment on a home.
Millennials, Gold and a 335% Gain
Posted on — 1 CommentMillennials have a lot of people confused.
Countless articles offer advice for those presented with the scenario of engaging Millennials in the workplace. Moreover, major corporations like Mastercard are tripping over themselves to understand the mind of a Millennial. However, there’s one simple, overarching truth that everyone is missing; Millennials are people, and people like to feel secure. Before long we might begin to see Millennials seek security in their finances by embracing gold for its enduring characteristic as a safe haven asset.
Part of the value for Millennials who seek gold as an investment comes from their lengthy time horizon. With an extended period of growth, compounding can build returns over decades. Additionally, interest rates may also offer benefits to gold investors. The chief market strategist and head of research at the World Gold Council explained this phenomenon in an interview. He remarked that if global economies, “are unable to tolerate higher interest rates, then I suspect that interest rates won’t be going up for very long and that, I suspect, will be good for gold.” Of course, if interest rates rise those holding gold might see a deterioration in the value of their holdings. Even in this scenario of rising rates, however, there are reasons for Millennials to make gold part of their portfolio.
In the same interview, experts discussed the importance of considering the long-term. With so many decades of working years ahead, Millennials need to look beyond the hot equities market of today. That is, while stocks are rising fast now, there’s no reason to believe they will sustain this acceleration given outsized valuations. Gold, in contrast, is finite in its supply offering considerable upside potential for those disciplined enough to adopt a long-term strategy. Gold has returned an astounding 335% over the previous 30 years. Moreover, during a long enough period gold outpaces many other investments. For example, over a 45-year duration, history has shown that gold has outpaced both stocks and bonds.
Millennials, by definition, are young. They’re also plentiful; Millennials are the largest generation this country has ever seen, and they’re starting to save. Therefore, this generation should be considering how choices today will pan out over lengthy spans like 45 years. While many were young during the financial collapse of 2008/2009, they remember the tumultuous years and have resolved to evade the anguish of such financial burdens. Additionally, they remember the fraud and dishonesty of those who helped cause the mess. Gold does not require that the investor trust a CEO or a financial officer.
Gold helps ease fears arising from turbulent equity markets because the metal has a historically low correlation with stocks. Gold offers similar protections against inflation and currency devaluation. In the coming years, the financial world is bound to experience more change as new global conditions arise and new investment products emerge. Gold creates a stabilizing force over the long-term amid these inevitable shifts.
Millennials, like all other investors want stability and a strong rate of return. Gold provides both.