Investing in Gold

Gold A Good Investment Haven?

Investing in gold is beneficial since it provides support in times of political or economic uncertainty, it helps in the long and short term, it is a tool that protects against inflation and devaluation, it is not corrosive, and it is accepted anywhere in the world.

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But, although it is safe, it is not recommended to deposit all the money in this metal since one of the main rules of investments is diversification. To be profitable, it is recommended to buy it when its value is down and sell it when it is up.

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This metal can be acquired in six different ways: physically (ingots, coins, and/or jewelry), through certificates of deposit, gold futures, shares of mining companies, investment funds, and exchange-traded funds.

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If it is done with coins, it is suggested to acquire the following:

  • Fifty centennial pesos gives a low premium and allows positioning on the value of gold day by day. In times of crisis, the premium for this goes up, especially in Hispanic countries.
  • South African Krugerrand: It was the first gold coin to contain exactly one ounce of fine gold and was created as a bond for private gold ownership.
  • 20 Swiss Francs Vreneli: It is one of the most classic and popular coins in the world for both collectors and investors. It is fully backed by the Swiss government.
  • Twenty-five pesetas of Alfonso XII: representative national currency of Spain. In times of crisis, your premium can increase considerably by purchasing high securities positioned by supply and demand.
  • La Vera Valor, the bullion gold coin: due to the fact that it is not linked to any country, religion, culture, and/or fiduciary currency, it is considered a unique and atypical currency.

Gold is distributed as follows: 60% of the annual demand for gold worldwide comes from the jewelry industry, 10% from technology, 20% goes to bullion and investment coins, and 10% to banks centers of the world.

Gold is distributed as follows: 60% of the annual demand for gold worldwide comes from the jewelry industry, 10% from technology, 20% goes to bullion and investment coins, and 10% to banks centers of the world.

Gold is distributed as follows: 60% of the annual demand for gold worldwide comes from the jewelry industry, 10% from technology, 20% goes to bullion and investment coins, and 10% to banks centers of the world.

Gold is distributed as follows: 60% of the annual demand for gold worldwide comes from the jewelry industry, 10% from technology, 20% goes to bullion and investment coins, and 10% to banks centers of the world.

VAT on Gold and Silver

At the time the image was taken, the gold bullion price was 1,514.64 euros. That is, the price of gold is trading at that price, and then we will see how they would sell it to us, but before seeing this, it is important to point out the VAT issue.

The ingot is taxed at 21% VAT; however, coins that are legal tender are exempt from VAT and, specifically, the Krugerrand is considered legal tender; therefore, the page does not record the purchase operation with 21% VAT. Now, if you buy another silver coin that is not legal tender, you will be taxed with VAT.

Buy Gold And Silver Safely

First of all, it is important to know the different ways to invest in gold. As you can see in the image below, the first and most typical form is ‘physical gold and silver. This option has both advantages and disadvantages.

 

Physical Gold and Silver

 

Within this option, we can buy coins and ingots in physical stores and online. These stores usually buy gold from refineries. This business works thanks to the fact that this company sells the gold to the stores at the listed price at that time, and the stores sell it to us but charge at least a 3% premium.

 

We have talked about physical and online stores, but I wanted to mention that if you have a trusted jeweler, you can also buy it there; just look at the premium they charge you, probably around 3% or something less.

 

Gold and Silver Paper

 

Now let’s go-to paper gold, which I think is more convenient to buy; it’s an ETF, it doesn’t require so much effort, they don’t charge us the 3% premium… and, therefore, we can buy and sell more easily. In the specific case of silver, the advantage they provide is even greater because it is not subject to the 21% VAT.

 

From my point of view, the problem with paper gold is that if the financial system collapses, it would be very difficult for the ETFs to give them the gold that corresponds to the participation they have in the ETF.

 

Therefore, what we are trying to do here is to buy physical gold because we believe that sooner or later, we do not know when the financial system may go bankrupt and, in that specific case, we would find that our gold, the one we had in that ETF it would not reach us.

 

Mining companies

 

Another way to approach investing in gold is through mining companies. The difference is clear, the mining companies are companies, and what they are buying is a share in the profits; logically, the more the price of gold rises, the more the price of the mining companies will rise.

 

Having said that, now what is appropriate is to start with the purchase procedure. In this case, we have chosen an online store, but if they have a trusted jeweler, I will go there before entering the online store.

 

How to calculate the premium

 

To calculate the amount of pure gold in the coin: If the coin weighs 37.5 grams and the gold purity is 900 over 1,000, the number of grams of gold in the coin is 33.75. On the other hand, if the price of the coin is 1,889.44, the cost of one gram is 55.98 dollars.

 

To calculate the cost of an ounce that has 31.10 grams, we multiply it by 55.98, and we get 1,741. We subtract 1,514.64 from this result, and they are charging us 226.4 euros above the price of an ounce of gold. That is a premium of 14.95% to what the shipping costs should add.

 

Therefore, the first conclusion we draw is that there is no need to buy coins. If you are people who buy gold for investment, do not buy coins, you have to buy gold bars with a premium of around 3%. Thus, they already have the basis on which to negotiate; we know what the reference of the premium that they should charge us is.

 

Many times, when the demand for gold is very strong in physical and online stores, the premium increases. The important thing is that premium and, therefore, here the jewelers can play a very important role.

Gold Bars: How To Buy One

For quite some time, investing in gold has become the best option in times of great turbulence in the equity markets since its value shows less volatility than other types of assets. Of course, it is not about pieces of the precious metal but about the acquisition of ingots verified by the London Bullion Market Association, whose price will depend both on market conditions based on its price and size, or better Said the weight, of the piece that you want to acquire.

The question that more than one can ask is how you can buy those ingots. The routes are so diverse that, at present, there are vending machines for precious metal similar to those in which you can get a chocolate bar, a soft drink, or a bottle of water.

Of course, these vending machines are not found anywhere, and the commissions that apply are much higher than through other channels. However, the purchase must be made with a credit card and not with coins, as if it were a ‘snack’ vending machine.

The most common means for acquiring a gold ingot go through those certified entities that guarantee, from the outset, the weight and quality of the gold ingot they offer. As the saying goes, all that glitters is not gold, so you should be careful when purchasing it.

If, in the end, one goes to a bank or one of these certified entities, one must determine the piece of gold that one intends to acquire, both based on the price and the profitability that can be obtained with it. Due to these variables, the trustworthy advice of our bank manager is necessary to avoid incurring an investment that, despite the expected initial security, is disappointing in the end.

The procedures for acquiring the ingot can be very different between the investor’s own bank or one of the entities certified for the sale of these pieces, especially if the physical delivery takes place. As before with vending machines, the main difference lies in the commissions that apply.

Some trading companies also have an offer for the ‘online’ purchase of gold bars. As in any other transaction, this formula is much more comfortable, safe, and fast for an investor interested in getting hold of a gold ingot.

The three main advantages of this investment are these:

  1. Security of investment in gold:  First of all, buying gold facilitates investment security since it is a value that has not ceased to be weighted throughout history, whether we invest in gold coins, such as the South African Krugerrand, or if we do it by buying bullion from private companies or public banks.
  2. Prestige recognized throughout the world: It is an asset that can be sold in absolutely all markets globally, where it is always valued appropriately. There are even markets, such as China and Asia in general, in which investment in gold is more valued than in Western markets. This means that wherever we are, we can always sell them.
  3. Stability of value:  Although obviously, the price of gold in coins or ingots fluctuates over time, its value maintains greater stability than the stock market values ​​of most of the world’s markets, since its variations up or down tend to be softer than those of other assets. This is verified especially if we analyze the value in long periods of time, where its weighting shines for its stability.

The investment in a gold ingot, as indicated at the beginning, is a refuge value in turbulent economic and stock market times. Of course, it must be taken into account that its acquisition supposes a much higher outlay than the acquisition of some other assets. For this reason, it is convenient to choose the most appropriate and secure channel before getting hold of one of them.

Gold Shares Are One Option

There is something called gold ETFs (Exchange Traded Funds), and they are basically investment funds that operate on the stock market and are managed just like a stock.

They can be bought at different market prices on the Mexican Stock Exchange, and the great thing is that they publish their stock portfolio daily (this means that you can buy ETFs at any time you want).

Obviously, any asset has its risks. Fortunately, there are some certified options that you can consider.

Over the years, gold prices have remained relatively stable.

  • Gold is a valuable asset that reacts strongly to high inflation.
  • Investing in gold is profitable because it is very likely to appreciate in certain markets (this will bring you more profit in the long run).
  • It is not a very good option to buy collectible or antique gold coins as part of your investment (they are rarely bought on the market).
  • Its value does not change over time, nor can the government print or replicate it like bills.
  • Gold has value by itself because it does not accumulate massive debts or government obligations (such as CETES, which depend solely and exclusively on the government).

Should I invest in gold bars?

There is a phrase that says that “a safe investment portfolio is diversified with many assets because the future is not predictable” that is why gold bullion (in physical) is also a good option.

If inflation rises unexpectedly, gold bars will be a powerful weapon that will keep the value of your investment intact.

It may sound “old school,” but it is recommended that when you buy physical gold, you should keep it in a safe (for security reasons).

Another alternative is to keep it in a bank abroad to achieve geographical diversification, and it is an asset that can be sold in absolutely all markets in the world recommends betting on the Asian market because investment in gold is more valued).

If you don’t feel very sure about investing in gold, remember that we have an advisor to help you with this mission. In addition, history has shown that when there are problems with currencies, gold tends to rise rapidly in price and is often the only asset that makes a profit.…

Investing In Gold Pros And Cons

Gold is a precious metal mined by washing rock ore. Gold deposits are rare throughout the world. Most of them are already being developed, and the rest are located in hard-to-reach places. Gold mining is a very labor-intensive and slow process, which provides this metal with the status of a rare one. Gold also has unique physical and chemical properties: anti-corrosion, ductility, and the ability to withstand exposure to chemicals. In addition to durability, it is characterized by excellent electrical conductivity – gold is actively used in the space and aviation industries, creating computer components, etc.

Crises regularly shake world economies. In the late 1970s, world powers decided to abandon the gold standard and switch to the exchange rate, which was regulated only by supply and demand in the market. This made it possible to eliminate many problems of the post-war period but at the same time caused new problems to arise. The standard strategy for investing in gold is based on the assumption that the gold standard will return – in the same or changed form. In this case, gold as a currency standard will significantly strengthen its position in the market in the coming decades.

Experts call the main factors for the increase in the price of gold:

  • a possible reduction in Fed interest rates – up to 2-3 episodes for federal funds in 2020;
  • high risk of a global recession due to trade tensions between the US and China;
  • upcoming US presidential elections;
  • the protracted economic recovery in the US since the 2008 crisis.

In addition to all of the above, the global trend towards the de-dollarization of settlements and the propensity of the central banks of various powers to increase the share of gold metal in gold and foreign exchange reserves should be noted. An obstacle to the growth of the cost of gold may be an increase in interest rates by the Fed, the successful conclusion of an agreement on mutual trade between China and the United States, and stimulating the economies of developed countries with an effective fiscal policy. However, experts consider all these events unlikely.

Investing in a precious metal allows you to save savings and increase them in the long run. Some of the benefits of investing in gold include:

  • High liquidity. Regardless of the global economic or political turmoil, gold can be sold, albeit with minimal losses – unlike currencies and various securities. Gold can fall in value or rise but never depreciate.
  • Stability. The price of precious metals is rising slowly but steadily.
  • Recognition. In various countries, gold has served as a universal means of payment.

Among the disadvantages of this type of investment, experts note:

  • Duration. A noticeable effect from investing in gold is observed within 10-15 years.
  • Low profitability. Investing in precious metals is not one of the most profitable portfolio instruments.
  • Increased spread. With minimal investment, to generate income, you will have to wait for a serious increase in the cost of the metal.
  • A large interval of losses and profits – gold allows you to get a good income in a short period and also lose money in a similar distance. An investor cannot accurately predict price movements.

Also, unlike bank deposits, the client does not receive a percentage of the money invested – income is possible only when selling the metal.…

Investing In Gold And Precious Metals Top 3 Books

Gold and precious metals are an asset that allows you to save money during crises in the financial system. But before you start investing in gold, you should learn about the nuances, for example, what is better to buy – physical gold bullion, shares of gold mining companies, or funds.

We have selected three books on investing in gold and precious metals that will help you better understand this topic. But remember that the book is the author’s personal opinion, who got his experience in another country and under other conditions. Hence, it is unreasonable to consider it as a guide to action.

Michael Maloney’s “A Guide to Investing in Gold and Silver”

The book has four parts: “Yesterday,” “Today,” “Tomorrow,” and “How to invest in precious metals.” In the first three chapters, the author tells what lessons can be learned from the history of precious metals to understand the current state of affairs in the global economy and benefit in the future.

The author prophesies the coming boom of precious metals and the redistribution of wealth due to the depreciation of money. The only things of real value are gold and silver. Your choice is to take advantage of the situation and become rich yourself or make someone else rich.

John Jagerson and Wade Hansen “All About Investing in Gold”

This is a practical guide based on my own experience. The authors recommend adding gold-based derivatives to the investment portfolio as key assets and stocks, and currencies. Unlike Michael Maloney, who considers only investments in real gold assets promising, Jagerson and Hansen suggest using exchange products: ETFs, futures, options.

The book details the types of financial products based on gold, on what platforms they can be traded, investment strategies are given for various market movements.

Robert Kiyosaki Conspiracy of the Rich. 8 new rules for handling money.”

These are reflections on the global economy and the coming financial crisis, complete with practical advice on countering the “conspiracy of the rich.”

The main essence of the author’s recommendations: increase financial literacy, give up the usual financial instruments and create passive income by investing in real, not “inflated” assets.

Kiyosaki considers gold and silvers the most promising investments, the value of which is backed by real collateral, in contrast to currencies and exchange instruments. In second place in his investment preferences is real estate.

In the book, Kiyosaki gives 8 rules for dealing with money, following which, in his opinion, you can change your life. For example, here is what he considers proper diversification.

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