Store Some Of Your Gold In A Safe Jurisdiction
Because of the issues discussed above, you should store some of your gold in a safe jurisdiction where the power of politics is limited.
Switzerland is one of the safest jurisdictions because they have seven presidents and a decentralized political system. This means that the states and the municipalities generally have a lot more power to make the rules on their own levels.
Switzerland was founded on the principles of subsidiarity, meaning that if a municipality cannot solve an issue on its own level and needs the support of the state, then it can call on the state. But it never works the other way around. It has to be from the bottom up.
A centralized system with one president for 320 million Americans, on the other hand, can make the rules from the top and ignore the people because they have the power. In Switzerland, no one knows the name of the president. The Swiss people have the last say and they would never allow for confiscation, theyre not that stupid. This is a unique system that you dont find in other countries.
Liechtenstein is similar, but they have a monarch figure Prince Hans-Adam II who has veto power. However, he is a strong supporter of gold. He was involved with the Center for Austrian Economics and wrote the book, The State in the Third Millennium, where he promotes secession rights down to the municipality level, as well as sound money principles such as gold and silver.
Build Up Liquid Stocks
Gold is monetary insurance as well as a means of building up savings over a longer period of time. For example, a person who invested $100,000 in physical gold in 1970 would be able to buy roughly 1800 ounces of gold. Today, that would be worth $2 million. Even if you purchased an ounce of gold in 2004 at a price of $500, it would now be worth over $1900.
As with anything related to gold, you need to know what youre doing. In this case, that means you need to have an investment horizon. Dont look at it as your trading vehicle. Instead, ensure that you are buying and then putting the gold to the side. Its your insurance. It acts as a store of value.
You cannot print wealth out of nothing. It is impossible.
You can do it for a certain period of time, but one day the debt has to be repaid. The world financial system had 140 trillion of credit in 2008 today, we are standing on almost 258 trillion of credit. Thats massive. Everything has an end and this debt orgy that we have been witnessing for the last 50 years is going to end as well.
We dont know exactly when, time is always slow, but it will end. That is why you should be putting liquid gold on the side. You want to have access to your gold in a crisis and you dont want to be running around with a kilo of gold. You will want it to be liquid.
How I Think Of Gold Bullion
Gold has long been called a store of value. That’s a fancy little phrase to mean that it never depreciates. Gold doesn’t old, it doesn’t break down, it doesn’t need repair it just is.
It provides no dividends or other payments. You can’t do anything with it. And it’s kind of heavy to lug around.
That said, even without any other financial benefits, the fact that it’s a store of value makes it a useful financial instrument.
It’s disaster insurance.
Think about the Syrian refugees who are trying to escape Syria and get into safer havens like the United States they have little more than the clothes on their back and few worldly possessions. Seven years ago, the Syrian pound conversion rate was 57 SYP to 1 USD. Today, you’d need over 514 SYP to get 1 USD. The value of their currency has been decimated.
If things hit the fan and we were in a similar situation, the value of the United States dollar would plummet. Perhaps to zero. In that case, you better make sure some of your worldly possessions have value in the country you’re escaping to.
That’s where physical gold plays a huge role.
As weird as it sounds, if there is a stable government somewhere, there’s a place you can go and turn your gold into the local currency. If the USG collapses and you’re left fleeing to a country like Canada or China or Russia, you can go there with gold and do more with it than worthless Federal Reserve Notes.
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Why Investors Like Gold
Gold has a proven track record for returns, liquidity, and low correlations, making it a highly effective diversifier, says Juan Carlos Artigas, director of investment research at the World Gold Council.
These qualities are especially important for investors:
- Returns: Gold has outperformed stocks and bonds over certain stretches, though it doesnt always beat them.
- Liquidity: If youre buying certain kinds of gold-based assets, you can readily convert them to cash.
- Low correlations: Gold often performs differently from stocks and bonds, meaning when they go up, gold may go down or vice versa.
In addition, gold offers other potential advantages:
- Diversification: Because gold is generally not highly correlated to other assets, it can help diversify portfolios, meaning the overall portfolio is less volatile.
- Defensive store of value: Investors often retreat to gold when they perceive threats to the economy, making it a defensive investment.
Those are a few of the major benefits of gold, but the investment like all investments is not without risks and drawbacks.
While gold performs well sometimes, its not always clear when to purchase it. Since gold by itself doesnt produce cash flow, its difficult to determine when its cheap. Thats not the case with stocks, where there are clearer signals based on the companys earnings.
Tips For Buying Gold In 2021
Dateline: Bogota, Colombia
The other day, I shared how I delayed receiving my second passport by making three basic mistakes.
One of those mistakes was simply not letting the experts be the experts. These days, I make great efforts to not only go to the experts and pay them for the true value of their knowledge and services but, when possible, I also curate the information I gain from my network to share it with you.
Not too long ago, my friend Claudio Grass an expert in the gold business shared the short version of his top ten tips for buying gold. Knowing the wealth of knowledge he possesses, I asked him to sit down for an interview so we could create the long version of that same list.
His insights into the world of gold did not disappoint.
Claudio built up a precious metal company called Global Gold several years ago that focused on trading and storing physical gold under Swiss law. After six years in the business, he resigned from the company in order to promote Switzerland as the best place to store physical money.
From his years of experience, he has created powerful connections with the best gold companies in Switzerland and Liechtenstein many of which were previously his greatest competitors. As a gold consultant, he is now able to refer clients to the right companies, helping them create tailor-made solutions for buying physical gold and storing it in the right jurisdictions to protect their gold investments outside the banking system.
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Pros And Cons Of Physical And Paper Gold
So why choose physical gold instead of paper gold? The reasons are many:
- Physical gold holds intrinsic value while paper gold does not.
- Physical gold is scarce and cannot be replicated. Its said that the ratio of traded paper gold to physical gold is anywhere from 200 to 250 to 1.
- Physical gold has been accepted as a form of currency for centuries. However, paper gold cannot be used as currency.
- While some governments mint gold coins and bars, physical gold is not directly tied to a countrys financial system. This detachment means physical gold can provide a safe haven against geopolitical turmoil that might otherwise impact a countrys currency. Paper gold might be subject to volatility amid geopolitical unrest.
- Do you hope to pass along wealth to future generations? If so, physical gold could be easier to hand down to your heirs than paper gold is. When you hold physical gold, you have immediate access to it and can pass it on to a family member at a moments notice.
- Physical gold diversifies your portfolio by decreasing your allocation to paper-based assets. While paper gold provides you with some exposure to the gold market, it cannot replace the physical attributes of real gold you can hold in your hand. You could even argue that in a way, paper gold increases your allocation of paper-based assets.
How To Store Precious Metals
If youre buying precious metals to hold as an insurance policy, or store of wealth, you will want a secure method of storing them.
Some you will want close by, for an emergency, just in case you have to actually use the precious metals as money.
And having them close by also means there is no counterparty risk.
So some of your precious metals should be stored
In a home safe
Its important to remember, it takes a lot more space to store $5,000 of silver than it does $5,000 of gold.
If you plan to store some gold and silver at home and again, holding at least some precious metals at home is a wise move then you obviously need to protect your metals from fire and thieves.
There are all sorts of home safes on the market. From big-box stores or local companies.
From cheaper options to top-of-the-line models. Offered in all sizes. Theres something for every budget and your needs.
How to determine if a safe is robust enough is something we also cover in our free Ultimate Gold and Silver Guide.
Of course there are risks to keeping precious metals at home as well.
Throughout 2020 weve seen riots and looting in cities across the United States. And it seems likely that things get much worse before they get better
We see Bolshevik politicians rising. They have sticky fingers, like Franklin D. Roosevelt, who actually banned the private ownership of gold in the 1930s.
In these cases, it makes sense for some of your precious metals to be stored
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How To Buy Physical Gold
If you decide that investing in physical gold is the right move for you, here are some things to keep in mind.
1. Find a reputable dealer. From working with pushy salespeople to falling victim to scams, navigating the world of buying and selling gold can be sketchy. Sellers can inflate their products value, or use persuasion tactics to create a sense of urgency to buy immediately. Doing some homework ahead of time can help you avoid a bad investment.
You can use the National Futures Associations Background Affiliation Status Information Center to check on a firm or individuals background.
2. Watch out for fees. Gold dealers typically charge more than golds spot price, or the price at which gold trades on a commodities exchange. This premium typically consists of a dealers fee and manufacturing and distribution charges.
3. Find secure storage. People joke about burying gold for a reason: Its valuable, and because it’s a physical commodity, people may try to steal it. Its important to anticipate storing your gold somewhere safe, whether that is a literal safe or a safety deposit box at a bank. Storing gold safely can get expensive. Depending on their size, safety deposit boxes at a bank can run from $30 to a couple hundred dollars a year.
4. Consider purchasing insurance. Insurance is an additional cost of owning physical gold. If you purchase insurance, be sure your policy covers the exact type of asset you have.
Bullion Bars And Coins
These are the best option for owning physical gold. However, there are markups to consider. The money it takes to turn raw gold into a coin is often passed on to the end customer. Also, most coin dealers will add a markup to their prices to compensate them for acting as middlemen. Perhaps the best option for most investors looking to own physical gold is to buy gold bullion directly from the U.S. Mint, so you know you are dealing with a reputable dealer.
Then you have to store the gold you’ve purchased. That could mean renting a safe deposit box from the local bank, where you could end up paying an ongoing cost for storage. Selling, meanwhile, can be difficult since you have to bring your gold to a dealer, who may offer you a price that’s below the current spot price.
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Streaming And Royalty Companies
For most investors, buying stock in a streaming and royalty company is probably the best all-around option for investing in gold. These companies provide miners with cash up front for the right to buy gold and other metals from specific mines at reduced rates in the future. They are like specialty finance companies that get paid in gold, allowing them to avoid many of the headaches and risks associated with running a mine.
Benefits of such companies includes widely diversified portfolios, contractually built-in low prices that lead to wide in good years and bad, and exposure to gold price changes . That said, none of the major streaming companies has a pure gold portfolio, with silver the most common added exposure. So you’ll need to do a little homework to fully understand what commodity exposures you’ll get from your investment. And while streaming companies avoid many of the risks of running a mine, they don’t completely sidestep them: If a mine isn’t producing any gold, there’s nothing for a streaming company to buy.
How To Buy Physical Gold Bullion
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It’s amazing the power it holds on our society. The California gold rush in the late 1840s and early 1850s has been the stuff of lore . Even today, you can turn on Discovery Channel and watch a show about guys in Alaska mining for gold .
If you’ve been tempted by the yellow stuff, and you’re thinking about picking up some gold bullion as an investment, I’m here to suggest a different way of thinking.
Physical gold bullion isn’t an investment. It’s an insurance policy.
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Why Buy Gold And Silver
Gold and silver arent bought to provide a return on investment.
Gold and silver could absolutely end up being a lucrative investment. But that should not be the primary reason for buying these precious metals.
We shouldnt be interested in exchanging dollars for physical gold or silver, only to exchange the metals for more dollars at some point in the future.
Gold and silver should be considered a form of savings that exists outside of the conventional system.
Just like you protect your house with home insurance and your family with life insurance, precious metals are an insurance policy to preserve your wealth in chaotic times.
Gold is an anti-currency. Its the kind of asset that you own because you dont have confidence in the paper currency issued by central bankers and spent liberally by governments.
I own gold because of all the I dont knows in todays world.
And theres certainly no shortage of I dont knows today:
Will economies ever recover from the events of 2020?
Will the US and China start a shooting war?
Will the US default on the remainder of its enormous $27+ trillion of debt?
Will the US dollar remain the worlds reserve currency for 20 more years? Ten more years?
Will unprecedented money printing and lower economic output cause inflation? Stagflation? Hyperinflation..?
I dont know.
Thats a pretty lofty bet.
Sure, the world is not coming to an end. Humanity has been through much worse.
And the Federal Reserve is leading the charge.
From Etfs And Allocated Accounts To Sovereigns And Britannias Dominic Frisby Looks At Some Of The Best Ways To Buy And Sell Gold
Gold Britannias are free of capital gains tax
Today we’re talking gold. I’m not going to make projections about the price whether it’s going to go up or down. Instead we’re going to look at the cost of buying and selling gold. What’s the easiest, cheapest way to buy gold?
Most would say via one of the gold exchange-traded funds such as the ETFS Physical Gold , for moresee a list of gold ETFs here.You buy the ETF through your broker, the same way you would buy a share. You pay a small premium to the spot price of gold, and a small annual percentage to cover storage and other related costs.
ETFs really are brilliantly simple. It is because they’re so convenient that ETFs have become the means by which most investors and perhaps more importantly in the financial scale of things most institutions buy gold.
Almost as convenient is to open an account with one of the online bullion dealers the likes of GoldMoney, GoldCore or Bullion Vault. You pay a small premium to the spot price of gold and storage costs are low.
The overall costs are usually marginally higher than ETFs , but many investors prefer the online bullion dealer route because they feel the gold that they buy is “theirs”. The gold bars are specifically allocated to them and they can take delivery, if they so choose. I should stress it is also possible to take delivery via some ETFs, but the process is more cumbersome.
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