Monthly Archives: March 2013

Investing in Gold

Investing in Gold

If you were offered 100k in cash or 100k in Gold but you couldn’t touch either for 5 years, which would you take? Most people who are educated about the subject would take gold, let’s find out why.

Supply plays a very large role in the price of gold. It is impossible to say exactly how much gold has ever been produced. The best estimate suggests that if you add up all the gold ever produced it would fill up 2.9 Olympic sized swimming pools. This illustrates that there isn’t an unlimited supply of gold, frankly every year the world only produces about 14 cubic feet of gold, that just enough to fill an average sized living room. Till this day there isn’t any means of creating artificial gold, therefore the metals we do have cannot be diluted, unlike the US dollar supply. Gold has been something of value for the last 5,000 years and it’s always has been a world-wide recognized currency.

Although supply is an important factor of gold’s prices, demand has as much importance if not more.  There are five big reasons why gold has a very high demand, and why most investors choose to purchase gold over other investments.

Security against Inflation:

Gold is in such demand is because it offers security against inflation. Currently the U.S is in debt 16.6 trillion dollars. As more money is printed goods and services cost more. This causes the purchasing power of the dollar to decline due to inflation.

Tangible Asset:

No matter what happens in the paper currency market gold will always maintain some intrinsic value and therefore a stable “safe haven” for investors whenever there is an uncertain economic climate.

Highly Liquid:

Just like how real estate is a tangible asset, precious metals are also tangible assets. However unlike real estate gold is very liquid and can be easily converted into cash. Selling precious metals is as easy as calling your precious metals dealer and making a request. Unlike real estate there is no need to market or open escrow in order to liquidate your asset.

Diversification:

As mentioned before gold is considered a “safe haven” investment. We normally recommend our clients to have 20-30% of their portfolio in precious metals. This is because the metals market typically counter acts the equities markets. So when stocks, bonds, and mutual funds go down. Precious metals go up in value. Having a diversified portfolio is an important factor in successful investing.

Profit Potential

As mentioned before gold has been of value for the last 5,000 years, and just in the last 10 years gold has given investors an annual return of 20% on their investment. Even thou Gold is a great way to protect your money against the declining dollar, it is also a great way to increase your portfolio value.

Numis Financial offers two ways of purchasing gold, the first way is by physical delivery, and second is to hold gold within your retirement account. If you are new to precious metals Numis Financial offers a Free Precious Metals Guide  to help you during due-diligence  and educational period. Requesting a Free Precious Metals Guide is very simple, simply go to www.NumisFinancial.com and submit your request. After your request has been submitted, a account executive will call you to verify shipping address and also answer any questions you may have. This service is done free of charge even if you’re not quite ready to invest yet.