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Posts Tagged ‘gold investment’

Why Investing in Gold Bullion Could Cost You Everything

Wednesday, November 20th, 2013

I’ve been buying and selling gold bullion since the mid-1980s, and even though gold was in a bear market at the time I was able to realize profits by watching the technical charts, spending hours each day poring over the tiniest tidbits of news that could possibly affect gold prices, and in general doing everything I could to buy as close to the bottom of each mini-market and subsequently sell at the top. It didn’t always work out for me but more often than not I was able to trade gold bullion without pulling out my hair, which was already disappearing on its own.

In 2001 gold bottomed out at $252 per ounce. It was at this time that I decided to reevaluate my portfolio. Over the next two years I sold 90% of my gold bullion. Before you pull out the calculator to see how much money I lost by selling, let me elaborate. I exchanged the majority of my gold bullion for pre-1933 gold coins, mostly $20 Double Eagles. I bought PCGS-certified versions of the coins and I developed a new strategy: buy, store and forget.

Rather than using my days to study the intricacies of the gold bullion market I simply stored the coins in my safety deposit box and used my time to study the U.S. economy, and what I discovered only strengthened my faith in my strategy. In 10 years home prices grew by 60% on average, but income had only risen 2% in that same time. The vast majority of financial services companies were doing well, but I was hard-pressed to find any manufacturing or production data that could justify such growth.

We all know what happened next: stocks and real estate values plummeted and gold rose to over $1900 per ounce. The U.S. government is on the verge of collapse, and our dollar is practically insolvent. In my research I found out that the last time we were in a similar situation, the U.S. government outlawed gold bullion and paid gold bullion owners a fixed rate of $20 per ounce for their metal before revaluating gold at $35 per ounce, where the price stayed for the next 40 years. I didn’t know any of this when I switched from gold bullion to certified gold coins and silver, but now that I do I try as hard as I can to educate investors about gold’s past.

If you plan on holding your gold for any length of time and “flipping” gold bullion isn’t in your plans, do yourself a favor and take a serious look at investment-grade rare gold coins. Nothing exotic, just MS62-MS65 Double Eagle coins and/or Indian Head gold coins. They have a numismatic value that tends to increase over time, and they could be exempt from any future government gold bullion confiscation. Do the research, because those who forget the past are doomed to repeat it.

Gold Bullion Smuggling on the Rise in India

Friday, September 20th, 2013

In an attempt to curb the country’s insatiable thirst for gold, the Indian government has been dramatically raising gold import costs, yet little has been done to satiate the national appetite and some have resorted to breaking Indian law to get their hands on gold bullion.

Despite assumptions that China was to overtake India as the world’s biggest consumer in 2012 India’s unquenchable thirst for gold held strong in 2012. According to the World Gold Council, the country imported 864.2 tons of gold last year, trumping China’s 776.1 tons. In an effort to bridle this rampant demand the Indian government has raised duties on the yellow metal repeatedly over the last 12 months. Just as many experts warned, however, the gold regulations have resulted in smuggling operations that brought as much as 250 tons of gold into the country illegally last year.

“The hike in customs duty has not stopped the import of gold into the country. It has only changed the route as smugglers earn a profit of around $3,719 on every kilogram of gold smuggled into the country,” said Bachhraj Bamalwa, chairman of the All India Gems and Jewelry Trade Federation.

It’s no surprise that India is still so hungry for gold, and gold investors can expect to see such demand for the foreseeable future. India’s appetite for gold has been a factor in the yellow metal’s current bull market, in which it has increased over 400 percent in the last 12 years. As demand for physical gold bullion and rare gold coins shows no signs of abating this year look for the gold price to rise despite the wishes of governments and central banks.

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