With the most recent breakout in the gold and silver price, we seem to have a confirmation that the correction of more than a year is over. The gold price corrected from over 1,900 US dollar (beginning of September 2011) to 1,515 dollar earlier in 2012. Silver declined from almost 50 US dollar (beginning of May 2011) to around 26 dollar. After a long correction, it seems to be time for a move higher. Who knows, maybe we'll soon see all-time highs. It seems to be the time to step into gold and silver. This article provides tips for individuals and investors who want to profit from the next ride up, but also protect against the economic turmoil in the world.
Tip 1. People globally are accumulating gold & silver to protect against the debt crisis.
An increasing number of individuals and investors globally are buying gold & silver in the first place to protect their wealth and savings. Even Central banks are accumulating gold on a large scale. What can we learn from this trend? People are protecting their purchasing power against the negative effects of the ongoing global debt crisis. Gold and silver are a safe store of value. With one ounce of gold you will be able to buy the same goods in let's say 3 years. The paper money you are owning will lose its value over the same period of time.
We are witnessing a severe crisis, caused by excessive amounts of government debts and massive money printing mainly in the Western countries and Japan. The most logic outcome of those practices is inflation, which results in a declining value of paper money.
Tip 2. You too should own gold & silver, it's very simple.
It became very simple over the past years to own precious metals. There are actually more ways than ever to buy gold & silver. Here are some tips:
Ideally you buy gold and silver in the form of 100g bars, 250g bars or 500g bars. Don't buy large bars, as you will potentially encounter difficulties selling them. Make sure you own the metal; so an unallocated solution from your bank is not an advised solution. A simple but safe solution is to store the metals in a personal safe, but not at home. Consider buying some gold and silver coins like the South African Kruegerrand, the Australian Kangaroo, the Swiss Vreneli, the Canadian Maple Leaf or the American Eagle. Don't buy exotic coins as you will have difficulties to find buyers when you want to sell. There are Exchange Traded Funds (ETF's) you can buy on the stock exchanges. Make sure you only buy the ETF's that are backed with physical gold and silver, like Sprott Physical Trust or Central Fund of Canada. You can easily buy and store precious metals via online programs. The huge advantage is that the metal is stored in a safe vault, which is usually included in the service. We like BullionVault.com and GoldMoney.com. For US and Canadian citizens, there is an accessible silver savings program SilverSaver.com. If you prefer Swiss authenticity 100% outside the banking system, then you should consider GlobalGold.ch.Tip 3. Be sure to own physical gold & silver, avoid paper holdings.
Avoid as much as possible buying paper gold or silver, like the ETF's GLD and SLV. They became very popular because of their ease of use, but there are some risks associated with the ETF's. As a general rule of thumb, remember to own your gold and silver outside the banking system. We're afraid that ETF's could be knocked down when a systemic financial crisis should occur. If you want an example of what can go wrong with paper gold, then have a look at the recent drama that occurred with MF Global: investors simply lost all their money.
Tip 4. We are in stage 2 of the 3 in the gold bull market, still far away from the top.
Every market goes from undervalued to fairly valued and finally overvalued. These are long term trends which are called "wealth cycles". The key to be successful in your personal or professional investment life, is to get rid of overvalued assets in order to accumulate undervalued assets.
If you look at the current gold and silver prices, you might think that the metals are overvalued. You could be wrong. Expressed in nominal terms, the prices look high indeed. But if you monitor following indicators, you'll get another picture:
When taking inflation into account, the gold and silver price are much lower than their peak of 1980. When looking at the personal ownership of gold and silver, you'll see a ratio of roughly 1:10.000 people in the Western world who own the metal. When comparing the current gold and silver investments with the ones at the top of the previous bull market in 1980, you'll see a ridiculous low amount of invested assets in precious metals today. We did not see any parabolic move of the gold or silver price. If you look back to 1980,you'll see what parabolic means.We are currently in the second stage of the bull market. When we enter the third and final stage, a hype will occur and everybody will rush to own gold and silver. Clearly "smart money" is already profiting from the current undervaluation of gold and silver; as usual, they are ahead of the herd. Are you too?
Tip 5. Be prepared to see serious price moves, mainly in silver... it's normal.
In general, all commodity markets tend to move sharply. Gold and especially silver follow the same principle. It's quite common to see the silver price move 3% or more on a particular day. As the long term bull market in gold & silver continues, the volatility intensifies as well. So we can expect an even more intense price action. Be prepared and do not panic, it's a characteristic of the bull market.
The "heart fainted" investor will preferably need to focus on gold. If you are not afraid of volatility and you have an iron stomach, then you could go for silver. You'll have potentially higher profits. But be sure to time your purchase.
Tip 6. Timing your purchase is crucial, never chase prices higher.
One of the key decisions is to determine when to do your purchase. It's a decisions you should base on the long term charts. The "golden" rule is to buy the dips (they always come) and avoid buying at the peaks.
When you have a look at the gold chart of the past 10 years, you'll see that the price is moving perfectly in a range of higher highs and higher lows. Don't chase prices higher; just wait to buy the dips. Don't be afraid of waiting a bit if prices are near an intermediate peak. You should welcome decreasing prices for the buying opportunity you get.
Tip 7. The previous century was for gold, this one is for silver.
During the past decade both gold and silver performed very well in nominal terms. When looking at the gold/silver ratio, most precious metals experts agree that the silver price will increase sharper than gold. One of the reasons is that the historical gold/silver ratio is approximately 16/1. The ratio tends to move to that average on a longer term basis. Currently it's almost 60. Do you see the opportunity?
Another way to estimate the potential of a silver investment, is to look at the supply side. Silver is expected to encounter severe shortages because of the combination of its increasing industrial usage and increasing investment demand. You would be surprised to learn how much industries are using silver as a raw material in manufacturing products. Silver is all around you: your laptop, mobile phone, jewels, light switch, your car, mirrors, solar panels, batteries, electrical products like TV or washing machine, etc.
Want more info about each of the 7 tips mentioned in this article? You'll find a dedicated article per tip with much more details, starting on this page http://goldsilverworlds.com/tip-1-gold-and-silver-is-for-everyone-individuals-and-investors-globally-are-accumulating/
Guidelines For Investments In Silver Buying World Coins With Confidence - (Do You Desire More Information on the Coins You Love?) Do You Own Mint Packaged or Graded Coins? China Is Producing Knock-Offs of These Too
With BullionVault you can buy physical bullion bars at current spot prices.
ReplyDeleteYour bullion may be stored in one of 5 secure worldwide vaults. And you may exchange it online or withdraw physical bars.