The outlook of Buying Gold

February 06 16:17 2014 Print This Article

The current gold prices today for February of 2014 are $1256.00 per ounce – which is a dramatic downfall compared to this time last year where gold was valued at $1677.00 per ounce. This turbulent market has investors scrabbling. With the gold market pegged to the USD which is starting to lose its stability due to the lack of a sound fiscal policy by the US government, no wonder people are buying gold!

However, this was not always the case. In 2010 gold began to rise in value. By the beginning of 2011, with this rise on the increase, gold was making headlines around the world. Two months later, the peak on prices was at $1519.30 and by the Monday of the 25th of April that same year, S&P announced to credit agencies downgraded the US government from stable to negative.

In that same year, very late in the year, gold would peak at a massive rate of $1900.30 per ounce. For anyone interested in selling gold, this would prove a perfect time to trade unwanted gold in for exchange of cash.

The current speculation by investors and those in the gold industry is that gold will continue to fall. There is talk that gold may drop even further and hit an all time drop in the market before the end of the year. This is a clear indication by the markets that no one is believing what the governments around the world are trying to push on the public that the recession is over.

Since the Obama administration decided to bail out the financial industry and not force them to help the general public, the US economy is not going to recover for some time. Since the massive debt was built up helping the rich, the poor will suffer even longer and there are no more funds to help them.

Gold always has and always will be an indicator on how well the economic policies of the US government and the other major economies are doing. If record highs in the gold market were at their optimum, the people of the world would know their governments are not deploying a sound fiscal policy. It really is time for a change and not the change Obama did, which was for the worse.

The direction of 2014, for gold investors does not look in it’s finest year. Every time the so called experts predict the worlds’ economy is mending, there seems to be another disaster that negatively influences the markets. As we all know, when the markets are unsettled, the price of gold rises.

Unfortunately we have been listening to this same rhetoric for over 2 years now. The private sector is doing what it can to help the economy, but the federal government has done nothing but sink the country deeper in debt.

One thing we do know for certain is that a lot of investors take the gold market very seriously. We’ve also learned that many gold investors, especially those relatively new to the game, are making some very common and deadly mistakes. Here are those most common mistakes and how you can avoid them.

Mistake 1 – Unrealistic Short-Term Expectations

Probably the most common gold buying mistakes that we see from new investors center around their expectations for their investments. Gold is a long term investment, not a short-term gainer. Sure, your investment today might gain $50 tomorrow as gold jumps for some reason, but most gains are slow and even over time. At the very least, gold will always gain at inflation’s pace, even if the economy is otherwise perfect. At best, it can skyrocket in a relatively short amount of time. Those jumps, however, are rarely overnight and take time.

Mistake 2 – Overpaying Premiums

Gold’s spot price is not the same as what you’ll pay to purchase bullion. Most people who purchase physical gold coins – usually from a well-known mint. The premium you pay will depend upon the mint as well as the handler (seller’s) markup. If you’re investing as part of a financial portfolio and not as a collector, then don’t overpay the premium just to get a “good mint.” Standard “rounds” like the American Eagle and Canadian Leaf are lower-cost and just as accepted amongst gold investors as the Credit Suisse.

Mistake 3 – Discounting Ownership of Physical Commodity

Many investors only invest in one kind of gold, often ETFs or futures. That is only one type of gold and is not guaranteed against market crashes. Physical gold (whether stored by yourself or someone else) is one of the best ways to solidify a portfolio.

Mistake 4 – Numismatics as Your Only Choice

Numismatic coins are nice and can be nostalgic for many investors, but they are not the same as .999 fine rounds. Most of their value is in their collect-ability – something that fluctuates wildly and is more market-dependent than simple gold value. IF collectors can’t afford to keep collecting, the market dries up. New finds in the same series or type of coin may also drive down values unexpectedly.

Mistake 5 – Nuggets and jewellery

The largest problem with owning pure gold nuggets or gold jewellery is that its value is a matter of opinion. They can be a great part of an investment portfolio, but by themselves they are some of the least portable options for gold investing. The value of jewellery is dependent on what someone is willing to pay for it and whether it can be tested for its actual gold content. Nuggets are similar, though not as difficult.

Avoiding these five mistakes and keeping a diverse, rounded, and thoughtful portfolio of gold to fit with the rest of your investment goals is the key to maximising both the returns you can expect over time and the security of your finances.

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