Many people have under-performing 401k’s and individual retirement accounts. However, after the financial collapse of 2008, there became an increasing awareness of other options to protect against those devastating conditions. One solution that has endured the ups and downs for literally thousands of years has been gold.
After all, if individuals had even 10% of their retirement or 401k in gold, to hedge against a market failure, they would have protected themselves adequately. And folks who had even 30% in gold, would have actually profited after 2008.
Given this revelation, the demand for gold in an ira or 401k has increased dramatically over the past 5 years. Now, more than eve, gold is seen as a safeguard against financial ruin.
With the spot price of gold currently fluctuating around the $1300/ounce mark, many experts predict another rise to the $1900 price we saw in 2011. Now may be a great time to find out more about gold.
Investment options and tips change like the wind, so what’s selling this year may not necessarily be on anyone’s radar in a year’s time. However, like everyone else has noticed, some commodities have in fact managed to sail through the usual global volatility, and they have offered a stable and secure income source. Gold has, over the last decade, tripled in value to become the single most talked about commodity in the market. While some firms predict a 10% reduction in its value this year, most investors are holding their positions, which leads one to believe that gold is not going down anytime soon.
When it comes to precious metals, there has been a certain level of confusion in the market, and it all started when the Federal Reserve published their market forecasts. Every time the Federal Reserve holds a meeting about market forecasts, it’s usually followed by volatile market reactions that don’t always reflect what’s going on in the global economy. However, a number of failed procedural policies by the Federal Reserve have led to substantial errors by some investors who rely solely on these announcements in order to settle on a position in the market.
In order for one to position himself as a smart and informed investor, over-reliance on information from one particular organization should be avoided because it could lead to mistakes in trades. While there are a number of times when seemingly valuable assets have gone south, there are still good commodities available, and if properly observed, they could gain you a foothold in the world market.
Four types of commodities
World currencies have a tendency to implode due to a number of reasons, and as the dollar is one of them that isn’t doing that well right now, bullion is a safe bet for those looking to safeguard their money. A drop in the dollar could lose an investor significant amounts of money over a period of time, but major players are using gold as a safety measure against volatile commodities.
So how do we go about buying the different types of valuable metal?
There’s no single safe approach when dealing with these commodities or any commodity for that matter, but it would make sense to work through the so-called support levels and pick a position that allows you to sleep at night without worrying about the fluctuations.
Here are the main benefits to investing in silver, gold and platinum:
More investment options
Some of these options are bars, metal bullion, coins, futures, and mining stocks. These options can cater to a number of investment preferences and strategies. Also, there are many types of this sort of commodity, and although a lot of investors tend to be fixated on gold, silver has become quite valuable.
Diversification
Low risk assets are popular, and that is why a large number of investors use gold, silver and platinum to leverage out their trading stability; it insures that they don’t get wiped out in case one of their stocks goes south. Diversifying one’s investment portfolio is a smart business move.
Liquidity
Whatever type of investment you want to get into, you want to have a certain level of liquidity and marketability, and that’s exactly what the most valuable metals offer. Because of this, investors can sell their investments quickly and easily making the investment much more attractive.
Investing tips
Take time to learn all you can about bars, bullion, coins, mutual funds, mining firms and everything else that pertains to trading precious metals. Get all the finance news you can, and learn how market reports affect trades.
When starting out, it would be safer to stick with simple investments such as bars and coins and then move up as you continue to gain experience. Shares and futures might be a bit more complex for a beginner and could present more risk for your investment.
Pile of gold coins and gold bars.
Reading finance news and looking into the latest investing tips is a great way to learn about commodities and how they move about, so it is encouraged. In order to ensure a simple and transparent trading experience, try to do business with credible dealers who specialize in these metals. Online dealers come in the hundreds, but there are also quite a number of brick-and-mortar dealers who can be relied upon provided they are certified and have experience dealing with precious metals.
The troubling state of the economy has many investors turning to precious metals in order to protect their wealth from the ravages of inflation. Investors both large and small are seeking to convert paper money into gold and silver to better position themselves for the coming economic storm. Many of the wealthiest people in the world have recently converted large amounts of their funds into precious metals. These investors often have inside knowledge and many smaller investors are reading the signs and following suit.
The Rise of Competing Economic Powers
There are a variety of different reasons why the prices of both gold and silver have been rising steadily over the past few years and even decades. One of the main reasons is the large influx of smaller investors. In the past, it was mostly the Western nations that were involved in this market. The last two decades have introduced both China and India into the market. These countries have very large populations and the governments of both these nations have been encouraging their citizens to invest in bullion. This has caused a flood of smaller investors to enter the market and has had a significant impact on the price of metals.
Industrial Use Causes Price Increase
The metals that are sold and traded by citizens and bankers are also heavily used in the most popular industries of today. Cell phones and digital equipment all use large amounts of silver to help and conduct. While the industries use large amounts of the metals, the amounts used in each product is very small. This helps to keep the cost low to consumers, but it also means that much of the metal is not recycled. Since recycling is not cost effective, the metal is being removed from the market and ends up in the landfill. This causes the price to rise because is makes the item more scarce. Since there are no better substances for conducting, the industries will continue to use these substances. If scarcity becomes a problem, they will likely purchase large quantities and raise the cost of their products. This will also drive the price of the bullion much higher.
The Failure of Paper Money
The simple fact is that all currencies fail at some time. The historical record proves this to be true and the dollar will behave in the same way as all of the currencies. While this may be hard to imagine, the end of the dollar is inevitable. The preeminence of the dollar is already being called into question by many countries. This fact, along with the reckless behavior of the Federal Reserve, has many people seeking ways to protect their wealth. They are converting fiat currency into actual metal in order to have wealth when the crash occurs.
Simple Tips on Investing in Precious Metals
One of the most basic things to understand for newcomers to the market is the concept of spot price. The spot price is the price that the metal is currently being traded. This price is determined by averaging many different sources. Most dealers will sell their coins and bullion at a price that is a little higher than spot. They will also buy at a price that is slightly lower than spot. The mission for the investor is to try and purchase as close to the spot price as possible.
Another factor to keep in mind is that investing in metals is better in the long term. Those looking to make short-term gains would do better in the stock market. Those looking to protect wealth and position themselves for the crash are the ones who are investing in silver and gold.
