Borrowing money (also known as buying on margin) to make a bigger investment in gold is a risky game. Say, for example, you invest $4,000 and then leverage your investment five-to-one, so that you control $20,000 worth of gold coins or bars in an account set up by a dealer or brokerage firm. To start, the price of gold is volatile, and if the price dips far enough (below the minimum margin requirement), you’ll have to kick in more money to keep your account, or you’ll have to sell some or all of your investment. Also, the salesman’s commission is based on the total amount of the purchase. So he’ll get, say, 5% of the $20,000, or $1,000. Although 5% is a fair commission, it’s 25% of your $4,000 equity stake. On top of that, you’re paying interest on the money borrowed.
Gold coins seem like they are everywhere. Popular products such as the American Gold Eagle coin and the South African Krugerrand have been traded for decades. Some investors think that they only way to buy silver is in coins with numismatic value, such as silver dollars. The truth is that you can buy one-ounce silver American Eagle coins — the silver version of the gold coins — for just a small premium over the current silver spot price.
The gold you purchase from a dealer is kept in a storage depository that is responsible to keep it secured and segregated from other people’s assets. Expect to pay around 0.5 to 1 percent of the value of your assets to the storage depository every year. In addition to the value of gold, the fee charged by a storage depository also depends on its type and other features that it offers. A segregated depository is likely to charge you more as compared to a non-segregated depository.
When you purchase Precious Metals, you are buying an asset valued since ancient times. Recognized viscerally by humans, Gold always has been and always will be a viable investment and commodity. But why? What makes Gold a good investment now? Why is buying physical Gold a good idea today? Let’s examine what makes buying physical Gold an excellent investment and collecting opportunity.
Buying Gold bars is one of the most cost-effective, safest and easiest ways to own physical Gold. Gold bars generally match sovereign coins in content and purity, but cost less over Gold spot price than Gold coins because they’re usually minted privately. APMEX sells Gold bars produced by Heraeus, Credit Suisse, Valcambi, Perth Mint and other respected Gold companies. Each Gold bar is stamped with its exact Gold weight, fineness and a serial number for added security.
Gold vs. the National Debt: The national debt is massive, and only expected to keep on growing. At current levels many believe the national debt has become unstable and unmanageable, which has historically resulted in panic setting into the market in many global theaters. Physical assets like gold are considered by many to be immune to most market cycles and are a hedge against market uncertainty – crucial when protecting your retirement plan.
In a direct custodian-to-custodian IRA transfer, you do not have to worry about the 60 day transfer rule since you never receive the money. The transfer may is usually accomplished by wire transfer directly between the respective IRA custodians. The original IRA custodian can also accomplish the transfer by issuing a check made out to the custodian of the receiving IRA and mailing it out.
James Fraser and Kevin Pederson, authors of the book “The Mining Stocks Investor Guide” (Miningstocksguide.com), recommend that investors stick to “the old saying ‘sell in May and go away’ as the summer months set in and prices tend to flat line.” By September, volumes pick up and continue to rise going into October and November. December can vary and depends heavily on the gains investors have earned throughout the year.
Despite headwinds related to the likelihood of additional interest rate hikes, gold may be poised to deliver solid returns again during the fourth quarter of 2018. The precious metal has traditionally been perceived as a safe haven investment in times of economic uncertainty and the recent concerns – along with the slide in stock prices – certainly fit the bill.