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Gold’s Seasonality: Time to Get Positioned Ahead of Strongest Months

Despite the recent weakness, the price of gold is still up 9% year to date and may be poised for a strong second half of 2017. This is not unusual: the yellow metal also had a strong start in 2016, only to give back some gains but ended the year in an uptrend, setting up a rally as the calendar moved to 2017.

So is there a seasonal pattern to the gold price? To answer that question, we dissected gold’s performance dating back to 1975 and identified some trends investors can use to their advantage.

March/April Are Gold’s Worst Months…Often Followed by Weakness in the Spring and Summer

Source: LBMA

Since 1975, March has been the worst month for gold, followed by April as the second-worst. The months of June and July tend to be a quieter period as investors shift their focus prior to strong later summer and fall months.

September has been the best month for gold over the past 41 years. Coincidentally (or not), September is also the worst month for the S&P 500.

As the chart shows, three-quarters of gold’s top-performing months are in the latter half of the year—a good reason to consider buying in June or July if you want to add physical precious metals to your portfolio.

Bearing in mind the volatile nature of commodities, gold included, an experienced investor will build a position after periods of market weakness. As June comes to a close, we’re near the end of the seasonal weakness for gold—soon to enter its historical prime time from August to October.

Attempting to time the market is an exercise in futility. While it will work for a fortunate few, most investors will end up wasting time staring at charts and reading countless opinion pieces by so-called “experts” and talking heads.

To make gold’s volatility your friend, focus on buying when the market has been down for several days, or even a couple of weeks in a row. Then, perhaps more importantly, focus on enjoying your summer vacation.

The Third Quarter Is the Strongest—So Act Now

Source: LBMA

Since 1975, the second quarter of the year has been by far gold’s worst—with returns dead flat over the 41-year period—and this year has been no exception, with gold down about 1%. On the flip side, the third quarter has been the best, outperforming its closest rival, Q4, by a whopping 40%.

Given the clear seasonal patterns gold has exhibited over the past four decades, investors can use these trends to make strategic purchases when the market is the weakest.

Add Gold to Your Portfolio Now

Based on gold’s seasonal patterns, adding bullion to your portfolio sometime in the next month or two could prove a very smart move.

As stated above, gold is up 9% since the beginning of the year, rivaling the performance of the S&P 500, which makes it one of the top-performing assets.

In comparison, since making multi-year highs in March, the 10-year Treasury yield (which moves inversely to its price) is down 15%, and the S&P 500 has traded mostly sideways despite stronger-than-expected first-quarter earnings. Based on declining Treasury yields and gold’s overall strong performance, investors clearly have taken a more cautious approach the past few months.

With gold rallying close to $1,300/oz. earlier this month, many people have waited patiently for a pullback to invest. But based on the following chart, the current pullback might be temporary:

After gold started this year at $1,150 per ounce, it has moved in a “two steps forward and one back” fashion. Each new, higher support level that is tested and holds gives the market more resilience—and investors more confidence to take a position. It also serves to shake out those who panic and sell at the first sign of weakness, only to buy back in at higher prices down the road.

If this pattern continues through the remainder of 2017, we’ll likely see gold prices well north of $1,300, potentially approaching $1,400 by mid-2018.

Armed with the knowledge that the lows of the year—along with the lowest bullion premiums—usually occur during the late spring to early summer months, an investor can take the contrarian approach and “buy low” right now.

Get A Free Ebook On Precious Metals Investing

Before you buy physical gold, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.


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Gold’s Seasonality: Time to Get Positioned Ahead of Strongest Months

Despite the recent weakness, the price of gold is still up 9% year to date and may be poised for a strong second half of 2017. This is not unusual: the yellow metal also had a strong start in 2016, only to give back some gains but ended the year in an uptrend, setting up a rally as the calendar moved to 2017.

So is there a seasonal pattern to the gold price? To answer that question, we dissected gold’s performance dating back to 1975 and identified some trends investors can use to their advantage.

March/April Are Gold’s Worst Months…Often Followed by Weakness in the Spring and Summer


Source: LBMA

Since 1975, March has been the worst month for gold, followed by April as the second-worst. The months of June and July tend to be a quieter period as investors shift their focus prior to strong later summer and fall months.

September has been the best month for gold over the past 41 years. Coincidentally (or not), September is also the worst month for the S&P 500.

As the chart shows, three-quarters of gold’s top-performing months are in the latter half of the year—a good reason to consider buying in June or July if you want to add physical precious metals to your portfolio.

Bearing in mind the volatile nature of commodities, gold included, an experienced investor will build a position after periods of market weakness. As June comes to a close, we’re near the end of the seasonal weakness for gold—soon to enter its historical prime time from August to October.

Attempting to time the market is an exercise in futility. While it will work for a fortunate few, most investors will end up wasting time staring at charts and reading countless opinion pieces by so-called “experts” and talking heads.

To make gold’s volatility your friend, focus on buying when the market has been down for several days, or even a couple of weeks in a row. Then, perhaps more importantly, focus on enjoying your summer vacation.

The Third Quarter Is the Strongest—So Act Now


Source: LBMA

Since 1975, the second quarter of the year has been by far gold’s worst—with returns dead flat over the 41-year period—and this year has been no exception, with gold down about 1%. On the flip side, the third quarter has been the best, outperforming its closest rival, Q4, by a whopping 40%.

Given the clear seasonal patterns gold has exhibited over the past four decades, investors can use these trends to make strategic purchases when the market is the weakest.

Add Gold to Your Portfolio Now

Based on gold’s seasonal patterns, adding bullion to your portfolio sometime in the next month or two could prove a very smart move.

As stated above, gold is up 9% since the beginning of the year, rivaling the performance of the S&P 500, which makes it one of the top-performing assets.

In comparison, since making multi-year highs in March, the 10-year Treasury yield (which moves inversely to its price) is down 15%, and the S&P 500 has traded mostly sideways despite stronger-than-expected first-quarter earnings. Based on declining Treasury yields and gold’s overall strong performance, investors clearly have taken a more cautious approach the past few months.

With gold rallying close to $1,300/oz. earlier this month, many people have waited patiently for a pullback to invest. But based on the following chart, the current pullback might be temporary:

After gold started this year at $1,150 per ounce, it has moved in a “two steps forward and one back” fashion. Each new, higher support level that is tested and holds gives the market more resilience—and investors more confidence to take a position. It also serves to shake out those who panic and sell at the first sign of weakness, only to buy back in at higher prices down the road.

If this pattern continues through the remainder of 2017, we’ll likely see gold prices well north of $1,300, potentially approaching $1,400 by mid-2018.

Armed with the knowledge that the lows of the year—along with the lowest bullion premiums—usually occur during the late spring to early summer months, an investor can take the contrarian approach and “buy low” right now.

Get A Free Ebook On Precious Metals Investing

Before you buy physical gold, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.

 

Read our Terms of Use

Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

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North Korea: Is War the Inevitable Outcome?

There’s little doubt that from the moment Kim Jong-un took power in 2011, he has been on a mission to accelerate North Korea’s nuclear program.

There’s also little doubt this is of extreme concern to the US and the Trump administration.

Daily reports of US warships and submarines moving in along the Korean Peninsula and unrelenting missile tests in North Korea have sparked worries that a strike may be imminent. Will we end up in a war with North Korea, and what would be the consequences?

The Trump administration says “all options are on the table” regarding North Korea—from  military force, to pressuring China to intercede, to negotiation with Kim Jong-un.

In a recent interview with John Dickerson of CBS, President Trump said that North Korea is determined to develop “a better delivery system” for its nuclear stockpile, and “we can’t allow it to happen.”

The next day, US National Security Advisor H.R. McMaster warned that North Korea might soon be able to develop the technology to strike the United States with a nuclear weapon—likely within Trump’s first term in office.

As Kim Jong-un’s actions and his inflammatory rhetoric continue week after week, many analysts fear the worst.

Bruce Bennett, a senior defense analyst for the RAND Corporation, says the situation is dangerous: “The real question now is somebody going to make a stupid mistake because some kind of minor escalation could get out of hand.”

Bennett believes Kim Jong-un wants to prove his strength as a leader, and the only way to do that is through nuclear power.

Could This Become World War III, and Was It Predicted Years Ago?

Generational researchers Neil Howe and (the late) William Strauss predicted this conflict might happen in their eerily prescient 1997 book, The Fourth Turning.

Basing their forecasts on the cyclical nature of “turnings” and generations, they accurately predicted many events over the last two decades—from 9/11, to the financial crisis in 2008, to the anti-establishment slant of the last presidential election.

In Howe and Strauss’s theory of historical cycles, there are four turnings in a saeculum, which averages 80–90 years. The First Turning is a High, an era of rebuilding and renewed optimism. The Second Turning is an Awakening, a time of spiritual unrest where established norms and values are questioned. The Third Turning is an Unraveling, an era of strong individualism and faltering institutions.

The Fourth Turning is a Crisis. This period, which is marked by social unrest, political turmoil, and the destruction of traditional institutions, typically includes a major war. Previous Crisis turnings involved World War II, the Civil War, and the American War of Independence.

According to Howe, we are in the middle of the Fourth Turning right now.

In a recent speech at the 2017 Strategic Investment Conference hosted by investment research firm Mauldin Economics, Howe said he believes the last 10 years have been a parallel to the 1930s—with slow economic growth, underemployment, growing inequality, and a new appeal of authoritarian political models. Just like in the 1930s, we are seeing a rise of isolationism, nationalism, falling fertility rates, and a decrease in homeownership.

The current Fourth Turning began in 2008 with the Lehman Brothers collapse and the ensuing Global Financial Crisis. The silver lining: If we can solve the conflict without war, Howe said, this period could have a positive outcome.

As the book states, “America could enter a new golden age, triumphantly applying shared values to improve the human condition. The rhythms of history do not reveal the outcome of the coming Crisis: all they suggest is the timing and dimension.”

If there’s any hope of avoiding conflict, though, it’s hard to envision at this point. According to The Fourth Turning, “The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. If there is a war, it is likely to be one of maximum risk and effort—in other words, a total war. Every Fourth Turning has registered an upward ratchet in the technology of destruction and in mankind’s willingness to use it.”

Potential Fourth Turning Battle: The War with North Korea

George Friedman, global-intelligence expert and chairman of Geopolitical Futures, believes that war with North Korea is imminent.

In his keynote speech at the Strategic Investment Conference, Friedman shocked the crowd when he said, “I’m usually the guy to tell you about the next decade, but today I’m going to tell you about next week. It has become apparent that the US is preparing to attack North Korea.”

Friedman said his prediction is based on the measures being taken by the US government in response to North Korea. He suggests the increase in US military presence is telling.

The USS Carl Vinson supercarrier along with the USS Ronald Reagan are stationed off the Korean Peninsula. In addition, over 100 F-16 airplanes have been conducting daily exercises, and F-35 aircraft are being deployed to the area.

One proof point that a conflict may be imminent is the fact that the US has been briefing Guam’s citizens on civil defense and the possibility of war. Friedman doesn’t believe North Korea has the capability at this point to target the US directly, but “Guam is part of the United States, and they have to be protected.”

Seoul is in serious danger as well, he said. Over 25 million people in Seoul’s metropolitan area are vulnerable to North Korea’s “stunning mass of artillery.”

Friedman doesn’t believe that President Trump is escalating the problems with North Korea. He stated firmly that Trump is just following US policy: “A red line has been crossed and we must do something about it.”

So, are we really going to war with North Korea? Friedman’s reply: “If we’re not going to war, we’re doing a really good imitation.”

Gold: The Ultimate Fourth Turning Asset

Gold has proven to be a lifesaver in times of crisis and economic turmoil. But before you consider buying physical gold, make sure to do your homework. Read Investing in Precious Metals 101, a quick-read e-book that tells you all about: “good” vs. “bad” gold… when and where to buy physical gold and silver… common scams and errors inexperienced investors fall prey to… the best storage options… why pooled accounts aren’t safe places… and much more. Click here to get your free copy now.


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7 Signs You Should Add Gold To Your Portfolio Now

Gold got crushed in the post-election rally, but a little over five months into 2017, the yellow metal is up 10.5%—making it one of the best-performing assets of the year so far.

While the outlook for the US economy is more positive than it was 12 months ago, if we zoom out for a moment, the big picture “ain’t so rosy.”

Gold has historically done well in times of uncertainty and panic… and with these seven worrisome signs, there could be plenty ahead.

#1: Interest Rates Are Still Near Record Lows

Source: St. Louis Fed

In the wake of the financial crisis, the Fed lowered the federal funds rate—the main determinate of interest rates—to 0%. That zero-interest-rate-policy (ZIRP) has had wide-ranging implications for conservative investors.

And even though the Fed has been hiking rates recently, rates are still nowhere near a range that would provide savers and income investors the healthy 4–6% yields they saw before the 2008 Financial Crisis.

Gone are the days when people could keep their savings in a bank account and watch their money compound. This is also a major problem for pension funds (and retirees) that rely on high-grade investments like US Treasuries to earn returns.

Which brings us to…

#2: Bonds Offer Measly Returns

Source: St. Louis Fed

A direct consequence of the Fed’s ZIRP is that bond yields have collapsed.

Although the benchmark US 10-year Treasury yield is up around 60% from its July 2016 lows, it’s still way below its 40-year average.

Meager returns on offer have pushed investors into riskier assets in search of decent yield. That includes dividend stocks, which have seen a huge influx of capital.

#3: Dividend Stocks Aren’t What They Used To Be

Source: multpl

As ZIRP sent bond yields south, investors piled into dividend-paying stocks as a way to generate returns. A direct consequence of this is that dividend yields on S&P 500 stocks have fallen to 1.91% and are now 32% below their long-term average.

Along with falling yields, investors who want to buy income-producing stocks these days are facing rich valuations. The average price-to-earnings ratio of the S&P 500 Dividend Aristocrats ETF (NOBL) is 21.1—higher than that of the broader S&P 500 index. An ETF tracking that index, SPDR S&P 500 ETF (SPY), has an average P/E ratio of 18.7. This number is itself high, which only reinforces the point that dividend-paying stocks have reached unsustainable levels of valuation.

As such, dividend stocks are richly valued and a poor alternative to bonds today, especially as they are reliant on economic growth. And, well…

#4: Economic Growth Is Anemic

Source: St. Louis Fed

Between 1967 and 2007, the US economy grew at an average nominal rate of 7.3% per annum. However, in the last nine years, GDP growth has averaged just 2.8%.

President Trump said he can get the economy growing “bigly” again. But that’s unlikely, given major barriers to growth, such as a massive debt burden…

And it looks like he will have to face the fact that US economic growth is losing its momentum. Second-quarter GDP growth projections were lowered by Wall Street analysts and the Fed forecasting arms alike. Morgan Stanley revised its 2Q17 GDP forecast to 2.5% while the Atlanta Fed has dropped its second-quarter number from 3.4% to 3%.

Whether Mr. Trump can reverse this trend is yet to be seen. But it appears that he is looking at an uphill battle.

#5: The Federal Debt Has Exploded

Source: St. Louis Fed

From George Washington, to George W., the federal debt went from $0 to $9.2 trillion. Since 2008, US government debt has skyrocketed to $19.85 trillion—a 116% increase in just eight years.

The non-partisan Congressional Budget Office (CBO) projects $10 trillion will be added to the federal debt over the next decade and estimates the cost of servicing the debt will triple over the next 10 years. That would bring interest payments alone to over $600 billion per annum.

For some context, that’s more than the total 2016 outlays for the Department of Defense and Education… combined.

#6: The Dollar Has Lost 87% Of Its Value

Source: St. Louis Fed

The US dollar may be rising against other fiat currencies like the euro and the yen, but its purchasing power has fallen 86.5% in 50 years.

The dollar’s decline has slowed somewhat in the last decade. However, with the Federal Reserve doing its level best to create inflation, you can be sure it will continue.

But there’s something that may not continue for much longer…

#7: We Are Overdue For A Bear Market

Source: S&P Global

In March, the bull market in common stocks celebrates its eighth birthday—making it the second longest of its kind in US history. With the current bull run having exceeded the average length by over three years, it may be time to take some money off the table.

So, how can savers and investors protect their wealth from any negative consequences that could arise from these unhealthy trends?

Now Is The Time Add Gold To Your Portfolio

With the measly returns offered up by bonds, an overextended bull market, and a bleak economic outlook, adding gold to your portfolio is a wise move.

Gold bullion has proven to be a store of value and a reliable wealth preservation tool over many centuries… unlike the dollar. In the event of a stock selloff, it can serve as “portfolio insurance.”

Even if markets continue to rise in the interim, gold will do well. Since late 2015, the yellow metal has outperformed the S&P 500 by 30%.

Placing 5%–10% of your assets in bullion adds a crisis-nullifier to your portfolio… and the current setup certainly lends itself to it.

Get A Free Ebook On Precious Metals Investing

It’s prudent to add some physical gold to your portfolio now. But before you buy, make sure to do your homework first. Get the comprehensive ebook, Investing in Precious Metals 101, and learn more about which type of gold to buy and which to stay away from… how to spot common scams and mistakes inexperienced investors fall prey to… the best storage options… why pools aren’t safe places… and more. Click here to get your free copy now.


Read our Terms of Use

Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

CLIENT TESTIMONIAL

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7 Signs You Should Add Gold To Your Portfolio Now

Gold got crushed in the post-election rally, but a little over five months into 2017, the yellow metal is up 10.5%—making it one of the best-performing assets of the year so far.

While the outlook for the US economy is more positive than it was 12 months ago, if we zoom out for a moment, the big picture “ain’t so rosy.”

Gold has historically done well in times of uncertainty and panic… and with these seven worrisome signs, there could be plenty ahead.

#1: Interest Rates Are Still Near Record Lows


Source: St. Louis Fed

In the wake of the financial crisis, the Fed lowered the federal funds rate—the main determinate of interest rates—to 0%. That zero-interest-rate-policy (ZIRP) has had wide-ranging implications for conservative investors.

And even though the Fed has been hiking rates recently, rates are still nowhere near a range that would provide savers and income investors the healthy 4–6% yields they saw before the 2008 Financial Crisis.

Gone are the days when people could keep their savings in a bank account and watch their money compound. This is also a major problem for pension funds (and retirees) that rely on high-grade investments like US Treasuries to earn returns.

Which brings us to…

#2: Bonds Offer Measly Returns


Source: St. Louis Fed

A direct consequence of the Fed’s ZIRP is that bond yields have collapsed.

Although the benchmark US 10-year Treasury yield is up around 60% from its July 2016 lows, it’s still way below its 40-year average.

Meager returns on offer have pushed investors into riskier assets in search of decent yield. That includes dividend stocks, which have seen a huge influx of capital.

#3: Dividend Stocks Aren’t What They Used To Be

Source: multpl

As ZIRP sent bond yields south, investors piled into dividend-paying stocks as a way to generate returns. A direct consequence of this is that dividend yields on S&P 500 stocks have fallen to 1.91% and are now 32% below their long-term average.

Along with falling yields, investors who want to buy income-producing stocks these days are facing rich valuations. The average price-to-earnings ratio of the S&P 500 Dividend Aristocrats ETF (NOBL) is 21.1—higher than that of the broader S&P 500 index. An ETF tracking that index, SPDR S&P 500 ETF (SPY), has an average P/E ratio of 18.7. This number is itself high, which only reinforces the point that dividend-paying stocks have reached unsustainable levels of valuation.

As such, dividend stocks are richly valued and a poor alternative to bonds today, especially as they are reliant on economic growth. And, well…

#4: Economic Growth Is Anemic


Source: St. Louis Fed

Between 1967 and 2007, the US economy grew at an average nominal rate of 7.3% per annum. However, in the last nine years, GDP growth has averaged just 2.8%.

President Trump said he can get the economy growing “bigly” again. But that’s unlikely, given major barriers to growth, such as a massive debt burden…

And it looks like he will have to face the fact that US economic growth is losing its momentum. Second-quarter GDP growth projections were lowered by Wall Street analysts and the Fed forecasting arms alike. Morgan Stanley revised its 2Q17 GDP forecast to 2.5% while the Atlanta Fed has dropped its second-quarter number from 3.4% to 3%.

Whether Mr. Trump can reverse this trend is yet to be seen. But it appears that he is looking at an uphill battle.

#5: The Federal Debt Has Exploded


Source: St. Louis Fed

From George Washington, to George W., the federal debt went from $0 to $9.2 trillion. Since 2008, US government debt has skyrocketed to $19.85 trillion—a 116% increase in just eight years.

The non-partisan Congressional Budget Office (CBO) projects $10 trillion will be added to the federal debt over the next decade and estimates the cost of servicing the debt will triple over the next 10 years. That would bring interest payments alone to over $600 billion per annum.

For some context, that’s more than the total 2016 outlays for the Department of Defense and Education… combined.

#6: The Dollar Has Lost 87% Of Its Value


Source: St. Louis Fed

The US dollar may be rising against other fiat currencies like the euro and the yen, but its purchasing power has fallen 86.5% in 50 years.

The dollar’s decline has slowed somewhat in the last decade. However, with the Federal Reserve doing its level best to create inflation, you can be sure it will continue.

But there’s something that may not continue for much longer…

#7: We Are Overdue For A Bear Market


Source: S&P Global

In March, the bull market in common stocks celebrates its eighth birthday—making it the second longest of its kind in US history. With the current bull run having exceeded the average length by over three years, it may be time to take some money off the table.

So, how can savers and investors protect their wealth from any negative consequences that could arise from these unhealthy trends?

Now Is The Time Add Gold To Your Portfolio

With the measly returns offered up by bonds, an overextended bull market, and a bleak economic outlook, adding gold to your portfolio is a wise move.

Gold bullion has proven to be a store of value and a reliable wealth preservation tool over many centuries… unlike the dollar. In the event of a stock selloff, it can serve as “portfolio insurance.”

Even if markets continue to rise in the interim, gold will do well. Since late 2015, the yellow metal has outperformed the S&P 500 by 30%.

Placing 5%–10% of your assets in bullion adds a crisis-nullifier to your portfolio… and the current setup certainly lends itself to it.

Get A Free Ebook On Precious Metals Investing

It’s prudent to add some physical gold to your portfolio now. But before you buy, make sure to do your homework first. Get the comprehensive ebook, Investing in Precious Metals 101, and learn more about which type of gold to buy and which to stay away from… how to spot common scams and mistakes inexperienced investors fall prey to… the best storage options… why pools aren’t safe places… and more. Click here to get your free copy now.

 

Read our Terms of Use

Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

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The Disturbing Trend That Will End in a Full-Fledged Pension Crisis

Some experts think it will be the trigger for the next financial collapse. Others call it a “national crisis” of unprecedented proportions.

But what all of them agree on is that there’s no way US pension funds can keep their promises to the next wave of retirees.

Right now, millions of Americans are hard at work believing their pensions will be their saving grace for retirement. But the predicament pension funds across the United States find themselves in does not just spell trouble for the distant future.

The crisis is happening as we speak.

Though the challenges are well known by now, many believe that public-sector pension funds will be maintained and the gaps filled by strong investment returns, increasing employee contributions, raising taxes, or some combination of the three. They hope with these measures and ongoing strong asset returns, liabilities can be reduced and pensions salvaged. Unfortunately, this is wishful thinking at best.

Even though the facts are on the table, state and local governments continue to underestimate the crisis at hand. According to Hidden Debt, Hidden Deficits, a 2017 data-rich study of US pension systems by Hoover Institution Senior Fellow Joshua Rauh, almost every state or local government has an unbalanced budget—due to runaway pension fund costs that are continually chipping away at already inadequate budgets.

In 2016, Rauh stated, “while state and local governments across the US largely claimed they ran balanced budgets, in fact they ran deficits through their pension systems of $167 billion.” That amounts to 18.2% of state and local governments’ total tax revenue.

According to the 2017 report, total unfunded pension liabilities have reached $3.85 trillion. That’s $434 billion more than last year. Amazingly, of that $3.85 trillion, only $1.38 trillion was recognized by state and local governments.

The difference between funded levels under Governmental Accounting Standards Board (GASB) metrics and more realistic expectations reveals a massive amount of “hidden debt,” commonly referred to as unfunded liabilities. Under GASB metrics, public pension systems assume they will see annual returns of 7.5%. This assumption ignores the increased risks associated with stocks, hedge funds, real estate, and private equity to realize these returns.

Using that 7.5% annual return, unfunded liabilities for city and state plans are $1.38 trillion. However, when we use a more conservative return of 2.8% based on the Treasury yield curve, unfunded liabilities balloon to $3.85 trillion. Realistically, the truth probably lies somewhere between these two numbers, which still results in a huge increase in unfunded liabilities.

An Alternative Approach

Massive financial market losses in 2000–2001 and 2008–2009 led many pension funds to invest in high-fee and higher-risk alternatives such as hedge funds and private equity. But this strategy only exacerbated the funding gap over the past decade, failing to deliver expected returns.  

The California Public Employees’ Retirement System (CalPERS) is one of the largest public pension funds with over $300 billion in assets and nearly 2 million members. After years of poor performance—including a meager 0.6% net return in the most recent fiscal year—the fund is now embracing a lower-cost, diversified investment approach, including exposure to gold.

Failing to meet its 7.5% return objective for several years, CalPERS recently has adopted a “Funding Risk Mitigation” strategy to meet the challenges of a maturing workforce, negative cash flow, longer life expectancies, and underperforming investments.

The facts clearly show that the states’ pension systems are on a losing track and retiree benefits are at risk of being slashed.

South Carolina: Canary in the Coal Mine

The looming pension fund crisis could leave already cash-strapped Americans without a safety net for retirement.

Take South Carolina, whose government pension plan covers around 550,000 individuals. One out of nine residents are invested in the plan… which is $24.1 billion in debt.

According to the Post and Courier of Charleston, government workers and their employers have seen five hikes in their pension plan contributions since 2012, and there’s no end in sight. And this isn’t an anomaly but the norm for many states throughout the country.

The worst-funded US state is currently New Jersey, closely followed by Kentucky and Illinois. By the end of 2016, New Jersey had a $135.7 billion deficit in its pension funds—$22.6 billion more than the year before—while Illinois’ gap grew by $7.6 billion.

This disturbing trend is all too real, with nearly one million US workers and retirees covered by pension plans on the verge of collapse. As GDP growth remains minimal, the situation is less than ideal for those who are depending on these pensions for their golden years. And with the uncertain future of Social Security and Medicare hanging in the balance, it’s a scary thought that for many Americans, even this promised safety net isn’t guaranteed.

Corporate pensions, too, are “in the worst position to meet obligations in more than a decade,” states a recent Bloomberg article. Suffering from deficits due to an overallocation to long-term bonds with diminishing yields, corporate pensions are struggling to meet their ever-increasing obligations.

Demographics Don’t Help

Shifting demographics in the US and around the world only further complicate the pension crisis. We are living longer and experiencing lower birth rates than in past decades. This dilemma increases the number of retirees while decreasing the pool of workers. The population of Americans 65 years of age and older has grown by 35% over the last 50 years.

Americans born in 2010 can anticipate to live nine years longer than those born in 1960. Today, retirees are collecting pensions for up to 20 years. If the well runs dry, Social Security, at this point, is not the answer. This leaves Millennials and Gen-Xers in a financial bind. Even those who aren’t in line to receive a pension will be affected indirectly by the falling value of retirement assets worldwide.

Crisis Insurance for the “Golden Years”

As governments and corporate employers may no longer be able to step up to their promises, it is important to take your retirement savings into your own hands. A strong portfolio should include a mix of stocks, solid funds, and physical precious metals.

For many centuries, hard assets like gold have preserved wealth and will undoubtedly continue to do so. Unlike the dollar, stocks, bonds, or pension funds, gold is an asset without counterparty risk, that means its value doesn’t depend on someone else’s ability or willingness to keep their promises.

Financial professionals often advise investors to hold 5% to 15% of their investable assets in gold bullion—depending on age, risk tolerance, and available cash flow.

With the current state of pension plans in steady decline, now is a good time to consider hard and secure assets like precious metals.

Get Your Free Precious Metals IRA Guide

In the past, purchasing physical gold for your retirement account was complicated and involved a self-directed IRA custodian, an approved storage facility, and a precious metals dealer. The Hard Assets Alliance has simplified the process by combining all of these entities on one platform. No more redundant paperwork, multiple accounts, or locating a buyer when you are ready to sell your precious metals. Get your free guide here.


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North Korea: Is War the Inevitable Outcome?

There’s little doubt that from the moment Kim Jong-un took power in 2011, he has been on a mission to accelerate North Korea’s nuclear program.

There’s also little doubt this is of extreme concern to the US and the Trump administration.

Daily reports of US warships and submarines moving in along the Korean Peninsula and unrelenting missile tests in North Korea have sparked worries that a strike may be imminent. Will we end up in a war with North Korea, and what would be the consequences?

The Trump administration says “all options are on the table” regarding North Korea—from  military force, to pressuring China to intercede, to negotiation with Kim Jong-un.

In a recent interview with John Dickerson of CBS, President Trump said that North Korea is determined to develop “a better delivery system” for its nuclear stockpile, and “we can’t allow it to happen.”

The next day, US National Security Advisor H.R. McMaster warned that North Korea might soon be able to develop the technology to strike the United States with a nuclear weapon—likely within Trump’s first term in office.

As Kim Jong-un’s actions and his inflammatory rhetoric continue week after week, many analysts fear the worst.

Bruce Bennett, a senior defense analyst for the RAND Corporation, says the situation is dangerous: “The real question now is somebody going to make a stupid mistake because some kind of minor escalation could get out of hand.”

Bennett believes Kim Jong-un wants to prove his strength as a leader, and the only way to do that is through nuclear power.

Could This Become World War III, and Was It Predicted Years Ago?

Generational researchers Neil Howe and (the late) William Strauss predicted this conflict might happen in their eerily prescient 1997 book, The Fourth Turning.

Basing their forecasts on the cyclical nature of “turnings” and generations, they accurately predicted many events over the last two decades—from 9/11, to the financial crisis in 2008, to the anti-establishment slant of the last presidential election.

In Howe and Strauss’s theory of historical cycles, there are four turnings in a saeculum, which averages 80–90 years. The First Turning is a High, an era of rebuilding and renewed optimism. The Second Turning is an Awakening, a time of spiritual unrest where established norms and values are questioned. The Third Turning is an Unraveling, an era of strong individualism and faltering institutions.

The Fourth Turning is a Crisis. This period, which is marked by social unrest, political turmoil, and the destruction of traditional institutions, typically includes a major war. Previous Crisis turnings involved World War II, the Civil War, and the American War of Independence.

According to Howe, we are in the middle of the Fourth Turning right now.

In a recent speech at the 2017 Strategic Investment Conference hosted by investment research firm Mauldin Economics, Howe said he believes the last 10 years have been a parallel to the 1930s—with slow economic growth, underemployment, growing inequality, and a new appeal of authoritarian political models. Just like in the 1930s, we are seeing a rise of isolationism, nationalism, falling fertility rates, and a decrease in homeownership.

The current Fourth Turning began in 2008 with the Lehman Brothers collapse and the ensuing Global Financial Crisis. The silver lining: If we can solve the conflict without war, Howe said, this period could have a positive outcome.

As the book states, “America could enter a new golden age, triumphantly applying shared values to improve the human condition. The rhythms of history do not reveal the outcome of the coming Crisis: all they suggest is the timing and dimension.”

If there’s any hope of avoiding conflict, though, it’s hard to envision at this point. According to The Fourth Turning, “The risk of catastrophe will be very high. The nation could erupt into insurrection or civil violence, crack up geographically, or succumb to authoritarian rule. If there is a war, it is likely to be one of maximum risk and effort—in other words, a total war. Every Fourth Turning has registered an upward ratchet in the technology of destruction and in mankind’s willingness to use it.”

Potential Fourth Turning Battle: The War with North Korea

George Friedman, global-intelligence expert and chairman of Geopolitical Futures, believes that war with North Korea is imminent.

In his keynote speech at the Strategic Investment Conference, Friedman shocked the crowd when he said, “I’m usually the guy to tell you about the next decade, but today I’m going to tell you about next week. It has become apparent that the US is preparing to attack North Korea.”

Friedman said his prediction is based on the measures being taken by the US government in response to North Korea. He suggests the increase in US military presence is telling.

The USS Carl Vinson supercarrier along with the USS Ronald Reagan are stationed off the Korean Peninsula. In addition, over 100 F-16 airplanes have been conducting daily exercises, and F-35 aircraft are being deployed to the area.

One proof point that a conflict may be imminent is the fact that the US has been briefing Guam’s citizens on civil defense and the possibility of war. Friedman doesn’t believe North Korea has the capability at this point to target the US directly, but “Guam is part of the United States, and they have to be protected.”

Seoul is in serious danger as well, he said. Over 25 million people in Seoul’s metropolitan area are vulnerable to North Korea’s “stunning mass of artillery.”

Friedman doesn’t believe that President Trump is escalating the problems with North Korea. He stated firmly that Trump is just following US policy: “A red line has been crossed and we must do something about it.”

So, are we really going to war with North Korea? Friedman’s reply: “If we’re not going to war, we’re doing a really good imitation.”

Gold: The Ultimate Fourth Turning Asset

Gold has proven to be a lifesaver in times of crisis and economic turmoil. But before you consider buying physical gold, make sure to do your homework. Read Investing in Precious Metals 101, a quick-read e-book that tells you all about: “good” vs. “bad” gold… when and where to buy physical gold and silver… common scams and errors inexperienced investors fall prey to… the best storage options… why pooled accounts aren’t safe places… and much more. Click here to get your free copy now.

 

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The Disturbing Trend That Will End in a Full-Fledged Pension Crisis

Some experts think it will be the trigger for the next financial collapse. Others call it a “national crisis” of unprecedented proportions.

But what all of them agree on is that there’s no way US pension funds can keep their promises to the next wave of retirees.

Right now, millions of Americans are hard at work believing their pensions will be their saving grace for retirement. But the predicament pension funds across the United States find themselves in does not just spell trouble for the distant future.

The crisis is happening as we speak.

Though the challenges are well known by now, many believe that public-sector pension funds will be maintained and the gaps filled by strong investment returns, increasing employee contributions, raising taxes, or some combination of the three. They hope with these measures and ongoing strong asset returns, liabilities can be reduced and pensions salvaged. Unfortunately, this is wishful thinking at best.

Even though the facts are on the table, state and local governments continue to underestimate the crisis at hand. According to Hidden Debt, Hidden Deficits, a 2017 data-rich study of US pension systems by Hoover Institution Senior Fellow Joshua Rauh, almost every state or local government has an unbalanced budget—due to runaway pension fund costs that are continually chipping away at already inadequate budgets.

In 2016, Rauh stated, “while state and local governments across the US largely claimed they ran balanced budgets, in fact they ran deficits through their pension systems of $167 billion.” That amounts to 18.2% of state and local governments’ total tax revenue.

According to the 2017 report, total unfunded pension liabilities have reached $3.85 trillion. That’s $434 billion more than last year. Amazingly, of that $3.85 trillion, only $1.38 trillion was recognized by state and local governments.

The difference between funded levels under Governmental Accounting Standards Board (GASB) metrics and more realistic expectations reveals a massive amount of “hidden debt,” commonly referred to as unfunded liabilities. Under GASB metrics, public pension systems assume they will see annual returns of 7.5%. This assumption ignores the increased risks associated with stocks, hedge funds, real estate, and private equity to realize these returns.

Using that 7.5% annual return, unfunded liabilities for city and state plans are $1.38 trillion. However, when we use a more conservative return of 2.8% based on the Treasury yield curve, unfunded liabilities balloon to $3.85 trillion. Realistically, the truth probably lies somewhere between these two numbers, which still results in a huge increase in unfunded liabilities.

An Alternative Approach

Massive financial market losses in 2000–2001 and 2008–2009 led many pension funds to invest in high-fee and higher-risk alternatives such as hedge funds and private equity. But this strategy only exacerbated the funding gap over the past decade, failing to deliver expected returns.  

The California Public Employees’ Retirement System (CalPERS) is one of the largest public pension funds with over $300 billion in assets and nearly 2 million members. After years of poor performance—including a meager 0.6% net return in the most recent fiscal year—the fund is now embracing a lower-cost, diversified investment approach, including exposure to gold.

Failing to meet its 7.5% return objective for several years, CalPERS recently has adopted a “Funding Risk Mitigation” strategy to meet the challenges of a maturing workforce, negative cash flow, longer life expectancies, and underperforming investments.

The facts clearly show that the states’ pension systems are on a losing track and retiree benefits are at risk of being slashed.

South Carolina: Canary in the Coal Mine

The looming pension fund crisis could leave already cash-strapped Americans without a safety net for retirement.

Take South Carolina, whose government pension plan covers around 550,000 individuals. One out of nine residents are invested in the plan… which is $24.1 billion in debt.

According to the Post and Courier of Charleston, government workers and their employers have seen five hikes in their pension plan contributions since 2012, and there’s no end in sight. And this isn’t an anomaly but the norm for many states throughout the country.

The worst-funded US state is currently New Jersey, closely followed by Kentucky and Illinois. By the end of 2016, New Jersey had a $135.7 billion deficit in its pension funds—$22.6 billion more than the year before—while Illinois’ gap grew by $7.6 billion.

This disturbing trend is all too real, with nearly one million US workers and retirees covered by pension plans on the verge of collapse. As GDP growth remains minimal, the situation is less than ideal for those who are depending on these pensions for their golden years. And with the uncertain future of Social Security and Medicare hanging in the balance, it’s a scary thought that for many Americans, even this promised safety net isn’t guaranteed.

Corporate pensions, too, are “in the worst position to meet obligations in more than a decade,” states a recent Bloomberg article. Suffering from deficits due to an overallocation to long-term bonds with diminishing yields, corporate pensions are struggling to meet their ever-increasing obligations.

Demographics Don’t Help

Shifting demographics in the US and around the world only further complicate the pension crisis. We are living longer and experiencing lower birth rates than in past decades. This dilemma increases the number of retirees while decreasing the pool of workers. The population of Americans 65 years of age and older has grown by 35% over the last 50 years.

Americans born in 2010 can anticipate to live nine years longer than those born in 1960. Today, retirees are collecting pensions for up to 20 years. If the well runs dry, Social Security, at this point, is not the answer. This leaves Millennials and Gen-Xers in a financial bind. Even those who aren’t in line to receive a pension will be affected indirectly by the falling value of retirement assets worldwide.

Crisis Insurance for the “Golden Years”

As governments and corporate employers may no longer be able to step up to their promises, it is important to take your retirement savings into your own hands. A strong portfolio should include a mix of stocks, solid funds, and physical precious metals.

For many centuries, hard assets like gold have preserved wealth and will undoubtedly continue to do so. Unlike the dollar, stocks, bonds, or pension funds, gold is an asset without counterparty risk, that means its value doesn’t depend on someone else’s ability or willingness to keep their promises.

Financial professionals often advise investors to hold 5% to 15% of their investable assets in gold bullion—depending on age, risk tolerance, and available cash flow.

With the current state of pension plans in steady decline, now is a good time to consider hard and secure assets like precious metals.

Get Your Free Precious Metals IRA Guide

In the past, purchasing physical gold for your retirement account was complicated and involved a self-directed IRA custodian, an approved storage facility, and a precious metals dealer. The Hard Assets Alliance has simplified the process by combining all of these entities on one platform. No more redundant paperwork, multiple accounts, or locating a buyer when you are ready to sell your precious metals. Get your free guide here.

 

Read our Terms of Use

Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


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A Gold IRA Explained: 10 Steps to Add Precious Metals to Your IRA

A gold IRA is a great way to add the security of precious metals to your retirement nest egg while enjoying certain tax benefits.

This guide is designed as your roadmap to understanding how a precious metals IRA works. We’ll explain how much and what type of gold to buy, how to find the best gold IRA companies, how to be sure you don’t get tripped up by IRS rules, and more.

Jump to:

1. Understand gold’s investment value.

2. Know the difference between a conventional and a self-directed IRA.

3. Decide when you want your tax savings.

4. Consider a rollover or transfer from an existing account.

5. Determine how much gold to buy.

6. Choose the right type of investment for your gold IRA.

7. Understand how the buying process works.

8. Find a fully integrated gold IRA program.

9. Brush up on IRS Rules & Regulations.

10. Fund your account and buy metal.

How to Get Started with a Gold IRA

1. Understand gold’s investment value.

When economic growth slows, nearly all investments lose value. In the case of a stock market crash, you can be at risk of losing 50% of your life savings.

To protect your retirement savings during a recession or financial crisis, you want to own some assets that tend to move opposite of most others.

Gold is a good example of an uncorrelated asset. Its inverse relationship with stocks makes it one of the best financial safe havens known to man.

But reducing risk isn’t the only reason to own gold. Even if a recession doesn’t destroy the value of your paper assets, the purchasing power of your nest egg can still be eaten up by inflation.

Think about this: something that cost $10,000 in 1977 would cost $40,974.96 in 2017. What will it cost in 2047?

When you want your savings to last through retirement—but expenses like health insurance and medical care keep increasing—how far your money goes in thirty years can become a life or death question.

It is essential to consider inflation in your retirement planning and having a gold backed IRA is a great start.

2. Know the difference between a conventional and a self-directed IRA.

A gold IRA is simply an IRA that allows you to invest in physical precious metals.

Conventional IRAs don't allow this; you can only invest in traditional options like stocks, bonds, ETFs, and mutual funds.

When you don’t want your savings tied entirely to paper assets, a self-directed IRA gives you tangible choices like oil, gas, real estate, and precious metals.

There are more IRS rules for self-directed precious metals IRAs, but the peace of mind that comes with owning gold is worth a little extra attention to detail.

3. Decide when you want your tax savings.

The appeal of a gold IRA is that it is a tax-advantaged retirement savings account. When you benefit from those tax advantages depends on the type of IRA you invest through.

A traditional IRA lets you make tax-deductible contributions now (as long as you are younger than 70½). Your money then grows tax-free until you reach retirement age. When you start making withdrawals, also referred to as distributions, you’ll likely be in a lower tax bracket and pay less tax on your savings.

A Roth IRA has no age limit, but single filers must earn less than $117,000 (joint filers may earn up to $184,000). You don’t get a deduction when you put money into the account, but you won’t owe any tax at all when you reach retirement age and begin distributions.

Traditional IRA:
Tax-free contributions –> your money grows tax-free –> you pay tax on withdrawals after retirement.

Roth IRA:
Contributions are taxed –> money grows tax-free –> you can withdraw money tax-free after retirement.

4. Consider a rollover or transfer from an existing account.

When opening a gold backed IRA, you don’t have to start your savings from scratch. Investors can move funds from an existing IRA or private retirement plan, such as a 401k or 403b, into the gold IRA.

People often use the term “rollover” to refer to both a gold IRA rollover and a transfer, but the IRS distinguishes between the two, and there are important differences between them.

Direct IRA-IRA Transfer:

  • The custodian of your existing retirement account transfers your savings directly to the new custodian.
  • No 60-day rule and no tax consequences since cash is not sent to you.
  • Simplest way to move funds into a new precious metals IRA.

Indirect IRA to IRA Transfer:

  • Your existing IRA is liquidated and the money is sent to you.
  • You use the cash to fund your new gold IRA.
  • In this case, you have 60 days to make the deposit or you pay tax on the withdrawal plus a 10% early withdrawal penalty.

In-Kind Gold IRA-IRA transfer:

  • Gold IRAs can be transferred to new custodians and storage facilities without having to liquidate the holdings.
  • Metal can be shipped directly from an existing custodian to the new custodian without triggering a taxable event.
  • Fed up with poor customer service, inability to easily buy and sell gold, or take delivery of the metal?… consider a new custodian and metal dealer for your gold IRA.

You can also do a rollover when moving funds from an employer-sponsored retirement plan, such as a 401(k), to your self-directed precious metals IRA.

401K to IRA Rollover:

  • You contact the administrator of the retirement plan and request paperwork to rollover to the new self-directed, traditional IRA.
  • After the investments are liquidated, funds are transferred directly to the new custodian
  • No money is withheld during the transfer.
  • The transfer process typically takes about two weeks from when the new IRA is opened until funds are moved into the account, and you’re ready to make an investment in precious metals.

5. Determine how much gold to buy.

It’s never wise to put all your money into one asset class or investment, but you do have to put a meaningful amount of gold in your precious metals IRA to truly reap its benefits.

Experts suggest that 5% to 15% of an investment portfolio should be in gold. This will vary based on your age, risk tolerance, and portfolio expectation.

When deciding how much gold to buy, it pays to consider how many investments you perceive to be long-term stores of value. Some of the companies you can own now probably won’t be around in twenty years—let alone forty—but gold has been valuable for thousands of years and will likely continue to be so.

How much gold to hold in your precious metals IRA is a personal decision, but the amount can make all the difference if there’s another recession, terrorist attack, or bank collapse.

6. Choose the right type of investment for your gold IRA.

If you’re considering a gold IRA because you want portfolio insurance for your retirement, it’s important to understand the difference between physical gold bullion and gold ETFs.

Exchange Traded Funds (ETFs) are a proxy for gold that trade on an exchange just like shares of stock. However, the gold backing most funds is in the form of large 400 oz. bars, so at the end of the day, you don’t actually own gold since taking delivery is not an option.  

ETFs are a convenient and cost-effective option for investors who want to trade actively and capture quick price movements (i.e. not individuals saving for retirement). The bad is that they’re more volatile investments than physical bullion and expose you to counterparty risks.

What do we mean by counterparty risks?

It’s up to another party—known to you or not—to make good on the investment. With a gold ETF, you are dependent upon, among other things:

  • management prowess
  • fund structure
  • chain of custody
  • operational integrity
  • regulatory oversight
  • delivery protocols (which are available only to very large shareholders)

If any of those break down, your investment is at risk. All it would take is another bank failure, and ETF shareholders could see their investments go up in smoke.

When you purchase a gold ETF, your investment may increase or decrease at roughly the same rate as gold bullion, but at the end of the day, you won’t get the same protection and peace of mind from your owning fully allocated gold bullion through a self-directed IRA.

7. Understand how the buying process works.

The IRS doesn’t give any free lunches. When they give a tax benefit, they have to make sure people follow the rules.

Because of these regulations, it takes four different parties to complete the buying process for a precious metals IRA:

  • the investor
  • the IRA custodian
  • the gold dealer
  • the storage facility

Here’s how it works:

  1. You find a custodian and transfer your funds to them. Your gold IRA’s custodian can be a bank, a brokerage firm, a trust company, or a private company approved by the IRS.
  1. You choose a precious metals dealer and place your order.
  1. The dealer contacts your custodian to verify funds.
  1. The custodian contacts you to confirm your order.
  1. Your dealer places the order on your behalf.
  1. Dealer notifies the custodian.
  1. You choose the storage facility you will use to hold your gold and your dealer ships your order to the facility.
  1. The facility verifies receipt of your metal.
  1. Once your gold is safely in storage, your custodian releases funds to your dealer.
  1.  Your custodian credits your precious metals IRA account.
  1. The custodian ensures you invest only in assets the IRS allows and files reports with the IRS each year. They also check what you report on your own tax filings and make sure you are paying the right amounts.  

As you can see, this process requires a lot of paperwork and coordination among participants, and it takes up to 4–6 weeks to complete. And anytime you want to make a transaction, you have to do it all over again. Should the market move quickly or you need to liquidate some holdings, you may end up having to scramble to find a dealer to work with, at less than competitive prices.

Luckily, there’s a better way.

8. Find a fully integrated gold IRA program.

If you want to save yourself the paperwork, time, and hassle of coordinating each part of the process (and who wouldn’t?), it’s worth it to find a fully integrated precious metals IRA program.

The best gold IRA companies offer one streamlined service that includes:

  • An online custodial account so you don’t have to source a custodian yourself.
  • Access to a robust dealer network to buy and, perhaps more importantly, be able to sell bullion 24 hours per day.
  • An ultra-secure purchasing and management platform.
  • A buy-and-store program with domestic and international storage options.
  • The ability to make an online request and take a physical distribution of metal any time, without added fees, in a few days.

With everything under one roof, you can easily add physical precious metals to your gold IRA and manage the entire process online, anytime.

Look for a company that offers these additional benefits:

Access to more dealers

An online purchasing platform with a large dealer network will ensure you get the best prices when buying metal for your gold IRA.

Ease of use

A secure online account lets you buy (or sell) quickly, 24 hours a day.

IRS compliance

A platform that displays only products approved for a precious metals IRA eliminates the chance of being penalized for buying the wrong asset.

Control over your metals allocations     

A wide selection of approved bullion products lets you diversify your holdings for even more protection.

Domestic and international storage options

Non-bank storage locations, both at home and abroad, give you greater freedom in storing your metal.

9. Brush up on IRS Rules & Regulations

With the tax benefits of a precious metals IRA comes a bunch of rules. And violations can result in stiff penalties.

To make the best investment with your retirement dollars, it’s important to know the basic dos and don’ts of gold IRAs.

Contribution Limits

An IRA’s tax advantages sound great to you, but the government is deferring income it would normally be earning on your dollars. Because of this, the IRS limits how much money you can contribute in a year.

Individuals are allowed contributions of up to $5,500 (if you are 50 or older, it’s $6,500).

Storage Regulations

Despite a few false claims, mostly through purveyors of IRA LLCs, precious metals IRA holders are not allowed to store their gold at home (if you take delivery, it is considered a distribution and subject to tax). The IRS stipulates that you must store it in an IRS-approved vault.

This third-party facility will charge an annual storage and insurance fee (these fees can be paid for outside of IRA contributions).

Selling vs. Withdrawing

The whole point of a gold IRA is to set yourself up for retirement.

To discourage people from tapping into their nest egg early, there’s a 10% penalty on savings withdrawn before age 59½. (There are some exceptions, like using funds to cover medical expenses.)

But taking your gold out of the IRA and selling it are two different things. You can buy and sell your precious metals as often as you like while it is still inside the IRA without tax consequences.

If you sell your gold at a profit, you won’t owe any tax on the gain until you retire and begin withdrawals (or possibly never if you have a Roth IRA).If you withdraw cash and bullion from the account before retirement, it will be taxed as ordinary income and possibly be subject to an early withdrawal penalty.

Age Limits & Required Mandatory Distribution

You’re never too old to contribute to a Roth IRA as long as you’re still earning income. For a Traditional IRA, once you hit 70 ½, you can no longer make contributions.

The penalties for withdrawals from your gold IRA go away starting at age 59½, but you don’t have to take a required mandatory distribution (RMD) each year until age 70½.

Failure to use your savings after that will result in penalties.

10. Fund your account and buy metal.

Once you’ve found a company offering a precious metals IRA that meets your needs, you’re ready to fund the IRA and start investing.

But buyer beware! If you don’t know the right kind of gold or other metals to buy, and your dealer doesn’t distinguish between IRS-approved and non-approved products, you run the risk of disqualifying the IRA.

The IRS requires that IRA funds can only be invested in highly refined bullion (not collectible coins). The minimum purity requirements are .995 for gold and .999 for silver.

For a handy reference, here are the precious metals approved for IRAs:

Gold Silver Platinum Palladium

American Gold Eagle

American Silver Eagle

American Platinum Eagle

Canadian Palladium Maple Leaf

Canadian Gold Maple Leaf

Canadian Silver Maple Leaf

Canadian Platinum Maple Leaf

Palladium bars and rounds from approved mints that meet the purity standards

Austrian Gold Philharmonic

Austrian Silver Philharmonic

Isle of Man Noble

 

Australian Kangaroo

Australian Silver Kookaburra

Australian Platinum Koala

 

Chinese Gold Panda

Chinese Silver Panda

Platinum bars and rounds from approved mints that meet the purity standards

 

American Gold Buffalo uncirculated coins (proofs not allowed)

Mexican Libertad

 

 

Gold bars and rounds from approved mints that meet the purity standards

Silver bars and rounds from approved mints that meet the purity standards

 

 


As you can see, gold isn’t the only precious metal that can secure your retirement savings. In fact, owning other types of metal will only protect your assets further.

In certain situations, increasing exposure to one metal or another can offer greater returns.

Silver has unique attributes that help it perform well even when gold is in a slump. Its industrial uses are growing at a staggering rate and show no signs of slowing.

As demand grows and supply is squeezed, investors holding a meaningful amount of silver stand to make substantial profits.

Platinum is more expensive than silver, but can also help diversify your precious metals portfolio. Its price movements can be quite different from gold or silver because it has different industrial uses and supply/demand dynamics.

Your largest allocation in a precious metals IRA should be in gold, but holding more than one type of metal will limit your risk and reduce volatility specific to one market. Consider adding silver and eventually platinum or even palladium to your stash.

Final Thoughts

It’s hard to have peace of mind about retirement if your savings are tied up entirely in traditional paper investments.

A gold IRA makes it easy to diversify your nest egg with the security of physical precious metals, while still reaping the tax benefits associated with IRAs.

Given the uncertainty investors face in today's global economy, it has never been more important to diversify and add security to your retirement plans.

With the information included in this guide, you’re well on your way to securing your retirement with a gold IRA.

Free Ebook: Investing in Precious Metals 101: How to Buy and Store Physical Gold and Silver

Download Investing in Precious Metals 101 for everything you need to know before buying gold and silver. Learn how to make asset correlation work for you, how to buy metal (plus how much you need), and which type of gold makes for the safest investment. You’ll also get tips for finding a dealer you can trust and discover what professional storage offers that the banking system can’t. It’s the definitive guide for investors new to the precious metals market. Get it now.

 

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Video Interview: George Friedman—We’re on the Verge of War with North Korea

On Monday, George Friedman, global-intelligence expert and chairman of Geopolitical Futures, dropped a bombshell: “I’m usually the guy to tell you about the next decade, but today I’m going to tell you about the next week. It has become apparent that the US is preparing to attack North Korea.”

Friedman—who in his long career has advised the US government and military as well as Fortune 500 companies—held the keynote speech at the annual Strategic Investment Conference hosted by investment research firm Mauldin Economics.

In the speech, he asserted that the US is very close to launching a strike on the rogue Asian nation, whose leadership has escalated its grandstanding in recent weeks.

“A second carrier battle group has joined the Vinson off Korea,” Friedman told Jonathan Roth of Mauldin Economics in an interview, ticking off the indicators. “There’s an indication a third is moving to join it. F-35s, our most advanced fighters, have deployed to North Korea. You have an exercise going on with over 100 F-16s in the skies over South Korea. And most ominous, civil defense briefings are taking place in Guam.”

Guam is an unincorporated and organized territory of the United States, located in the western Pacific Ocean. The US military’s B-52, B-2, and B-1 bombers are based there, Friedman stated, and “that would be the main axis of attack.”

The reason for the civil defense briefings: “Guam is part of the United States, and they have to be protected. […] And when you start getting the civilian population ready, you’ve sort of made a decision, because that is going to panic a lot of people.”

Gold investors should take heed of Friedman’s prediction, because gold historically has done well in times of crisis and war.

So, what are the odds of Pyongyang striking back on US soil? Friedman doesn’t think that North Korea has offensive capabilities against the US mainland. “But remember, South Korea is an ally. We have large numbers of troops stationed there, and Seoul is a metropolitan area of 25 million people.”

North Korea could do massive damage there, Friedman said, “so a great part of this war is not going to have to do with taking out the nuclear facilities—it’s going to have to do with silencing the guns.”

Where is China in all of this? The Chinese have been using North Korea as a means of extortion, Friedman said. Whenever the US has been pressuring the Chinese on a certain issue, suddenly North Korea has acted up. However, he doesn’t believe that the Chinese will intervene in this case.

“Now the Russians and the Chinese are saying, let’s follow the diplomatic course,” Friedman said, “but I think the American view is, what diplomatic course? You have to have somebody to negotiate with. They’re not ready to negotiate.”

Trump opponents might suspect that the president is leading the country into war to cover up the recent political scandals, but Friedman doesn’t believe it: “Trump is following US policy as it’s been laid down since the Bush administration, all through the Obama administration. There’s a red line where [the North Koreans] may very well have nuclear capabilities to attack their neighbors or the United States. At that point, we intervene.”

The timeline to military action, he suggests, could be very short. “I would normally say let’s look for the third carrier to show up, but I’m not sure that that plays a major role. Certainly, I would think that Trump should be back in the country—he’s in Israel right now—before anything happens.”

Watch the full interview below.

Times of political and economic turmoil, as dreadful as they are for most of us, are typically bullish for gold–so if the United States indeed strikes North Korea, we’ll probably see the gold price rise substantially. You might want to consider adding some gold as “crisis insurance” to your portfolio today.

 

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Shari’ah-Compliant Crypto Gold: Could Islam Be Preparing for a New World Reserve Currency?

It all started pretty harmlessly: in December 2016, after about 12 months of deliberations, the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the World Gold Council announced a new “Shari’ah Standard on Gold.”

The new standard was celebrated as a potentially big boost for global gold demand as it would give more than 2 billion Muslims in the world access to gold-based financial products that were previously forbidden to them.

That included vaulted gold, gold accumulation plans, gold certificates, gold-backed ETFs like GLD, and gold mining stocks.

Under Shari’ah law, physical gold was considered a “ribawi item,” which means it could only be used as a currency and worn as jewelry, but it couldn’t be traded for speculation or future value. However, Muslim investors were well aware that the $1.8 trillion Islamic finance business was missing out on important opportunities.

Under the new standard, Shari’ah-compliance is guaranteed as long as physical gold is the underlying asset.

And we didn’t have long to wait for a brand-new financial product coming from the Islamic world that combines the popularity of Bitcoin with the timeless value of physical gold: OneGram, a gold-backed, fully Shari’ah-compliant crypto currency.

The new currency was announced on May 4 at the Ritz Carlton, Dubai International Financial Center—with the official ICO (Initial Coin Offering) following only 17 days later.

“In recent years, the Middle East has seen incredible growth in fintech innovations including digital tokens and smart contracts,” said Ibrahim Mohammed, the founder and CEO of OneGram, in his first press release. “With OneGram, we’re excited to provide an opportunity for investors who care about Islamic financial markets and the security of commodity-backed investments to benefit from rapid technological advances in the blockchain industry.”

According to OneGram’s website, initially each OneGram coin (OGC) is backed by one gram of gold and can be used for digital payments, just like Bitcoin.

The total number of OGCs is fixed and won’t change after the ICO. The digital transaction fees (minus admin costs) will be reinvested to buy more gold.

“Therefore,” states the website, “the amount of gold backing each OGC will increase with time.”

Plus, of course, a rising gold price and the growing acceptance of OneGram in the market are also poised to pump up its value.

Gold and crypto-currency experts are already speculating about the implications of the launch. A recent CoinDesk review stated:

Bitcoin is often referred to as a “good” money because of its limited supply, relative fungibility and ease of exchange. If gold can also start to satisfy those requirements, a seismic shift from fiat to digital could be easier to “sell”—the public is predisposed to trust gold, certainly more so than cryptography.

It could also open the door to the creation of a new global currency as an alternative to the dollar, something that Russia and China are rumored to be looking at.

[Emphasis mine.]

We sure do live in interesting times—and it is not all that far-fetched to think that OneGram, or another gold-backed crypto currency like it, could be a stealthy way to introduce a new global gold standard.

Get A Free Ebook On Precious Metals Investing

Right now is a good time to add some physical gold to your portfolio. But before you buy, make sure to do your homework first. Get the comprehensive ebook, Investing in Precious Metals 101, and learn more about which type of gold to buy and which to stay away from… how to spot common scams and mistakes inexperienced investors fall prey to… the best storage options… why pools aren’t safe places… and more. Click here to get your free copy now.


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Shari’ah-Compliant Crypto Gold: Could Islam Be Preparing for a New World Reserve Currency?

It all started pretty harmlessly: in December 2016, after about 12 months of deliberations, the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the World Gold Council announced a new “Shari’ah Standard on Gold.”

The new standard was celebrated as a potentially big boost for global gold demand as it would give more than 2 billion Muslims in the world access to gold-based financial products that were previously forbidden to them.

That included vaulted gold, gold accumulation plans, gold certificates, gold-backed ETFs like GLD, and gold mining stocks.

Under Shari’ah law, physical gold was considered a “ribawi item,” which means it could only be used as a currency and worn as jewelry, but it couldn’t be traded for speculation or future value. However, Muslim investors were well aware that the $1.8 trillion Islamic finance business was missing out on important opportunities.

Under the new standard, Shari’ah-compliance is guaranteed as long as physical gold is the underlying asset.

And we didn’t have long to wait for a brand-new financial product coming from the Islamic world that combines the popularity of Bitcoin with the timeless value of physical gold: OneGram, a gold-backed, fully Shari’ah-compliant crypto currency.

The new currency was announced on May 4 at the Ritz Carlton, Dubai International Financial Center—with the official ICO (Initial Coin Offering) following only 17 days later.

“In recent years, the Middle East has seen incredible growth in fintech innovations including digital tokens and smart contracts,” said Ibrahim Mohammed, the founder and CEO of OneGram, in his first press release. “With OneGram, we’re excited to provide an opportunity for investors who care about Islamic financial markets and the security of commodity-backed investments to benefit from rapid technological advances in the blockchain industry.”

According to OneGram’s website, initially each OneGram coin (OGC) is backed by one gram of gold and can be used for digital payments, just like Bitcoin.

The total number of OGCs is fixed and won’t change after the ICO. The digital transaction fees (minus admin costs) will be reinvested to buy more gold.

“Therefore,” states the website, “the amount of gold backing each OGC will increase with time.”

Plus, of course, a rising gold price and the growing acceptance of OneGram in the market are also poised to pump up its value.

Gold and crypto-currency experts are already speculating about the implications of the launch. A recent CoinDesk review stated:

Bitcoin is often referred to as a “good” money because of its limited supply, relative fungibility and ease of exchange. If gold can also start to satisfy those requirements, a seismic shift from fiat to digital could be easier to “sell”—the public is predisposed to trust gold, certainly more so than cryptography.

It could also open the door to the creation of a new global currency as an alternative to the dollar, something that Russia and China are rumored to be looking at.

[Emphasis mine.]

We sure do live in interesting times—and it is not all that far-fetched to think that OneGram, or another gold-backed crypto currency like it, could be a stealthy way to introduce a new global gold standard.

Granted, digital blockchain/OneGram technology cannot replace having actual gold bullion in your possession—however, they could complement each other. Just know that for true safety and portfolio “insurance,” physical gold is still hard to beat.

Get A Free Ebook On Precious Metals Investing

Right now is a good time to add some physical gold to your portfolio. But before you buy, make sure to do your homework first. Get the comprehensive ebook, Investing in Precious Metals 101, and learn more about which type of gold to buy and which to stay away from… how to spot common scams and mistakes inexperienced investors fall prey to… the best storage options… why pools aren’t safe places… and more. Click here to get your free copy now.

 

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Wealth Protection: Two Cautionary Tales from France and the American South

On May 7, Marine Le Pen's defeat in France's presidential election secured an integrated EU and had many investors breathing a sigh of relief.

Had the election gone her way, French workers could have seen the devaluation of their euro-denominated pensions if Le Pen had made good on plans to quit the currency in favor of returning to the franc.

Monetary sovereignty sounds all well and good until it claims a huge chunk of your life savings.

Currency shifts like the one France just avoided are hardly unique. Throughout history, paper currencies have come and gone, taking with them the security so many work their entire lives to achieve.

Those who successfully weather the upending of their nation’s monetary system usually have one very important protection in place: they own assets with intrinsic value that act as a long-term store of wealth.

As a historical safe-haven asset, gold has many benefits—such as portability, durability, and divisibility—that others, like real estate and certain commodities, don’t possess.

Here in the US, it’s been more than 150 years since our last major currency shift: the end of the Confederate States of America dollar. Just like today’s fiat currencies, this money was not backed by hard assets but simply by a promise to pay the bearer after the Civil War was over, on the prospect of Southern victory and independence.

If that sounds like a recipe for disaster, it was—but not for a man named George Walton Williams.

A grocer and hardware store owner in Charleston, SC, Williams was tapped by the Confederation to be a “blockade runner,” sending his ships from Charleston Harbor to England and back.

During the war, the Union Navy blockaded Charleston’s port and then attacked the city for months. The blockade runners would sneak past the Navy ships and bring necessary supplies to the city under siege.

Blockade runners made a lot of money—often tens of thousands of dollars per trip, back then a princely sum—and George Walton Williams was one of the investors and directors of those enterprises.

There was only one caveat: In return for his assistance, Williams insisted on being paid back in gold and silver.

By the end of the war, after the collapse of the southern states, Williams was one of the few businessmen whose wealth wasn’t wiped out along with the Confederate dollar. While most other people were left with nothing, Williams managed to survive and thrive.

In fact, his wealth was so great that he singlehandedly bailed out the Broad Street banks. He also built a 24,000-square-foot mansion that still stands in Charleston. It cost $200,000 to build—back in the 1860s!

The lesson here is that anyone who relies on a fiat currency for their wealth should think very hard about the strength and endurance of that currency. 

George Walton Williams was smart enough to recognize the risk inherent in the Confederate dollar. He demanded payment in gold and silver not to get rich, but to stay rich. He knew that the value of his hard assets would not evaporate in an instant the way the value of paper money can.

Today, we face different circumstances than George Walton Williams, but it’s still potentially life-saving to insure your future against falling purchasing power with gold and silver.

In the end, it’s about protecting yourself. Owning a meaningful amount of gold can help ensure that you’ll never lose it all if the world you know changes forever.

Get a Free Ebook on Precious Metals Investing

With precious metals in an uptrend, right now is a good time to buy some physical gold. However, before you jump, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, how to spot scammers, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.


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Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

CLIENT TESTIMONIAL

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Wealth Protection: Two Cautionary Tales from France and the American South

On May 7, Marine Le Pen's defeat in France's presidential election secured an integrated EU and had many investors breathing a sigh of relief.

Had the election gone her way, French workers could have seen the devaluation of their euro-denominated pensions if Le Pen had made good on plans to quit the currency in favor of returning to the franc.

Monetary sovereignty sounds all well and good until it claims a huge chunk of your life savings.

Currency shifts like the one France just avoided are hardly unique. Throughout history, paper currencies have come and gone, taking with them the security so many work their entire lives to achieve.

Those who successfully weather the upending of their nation’s monetary system usually have one very important protection in place: they own assets with intrinsic value that act as a long-term store of wealth.

As a historical safe-haven asset, gold has many benefits—such as portability, durability, and divisibility—that others, like real estate and certain commodities, don’t possess.

Here in the US, it’s been more than 150 years since our last major currency shift: the end of the Confederate States of America dollar. Just like today’s fiat currencies, this money was not backed by hard assets but simply by a promise to pay the bearer after the Civil War was over, on the prospect of Southern victory and independence.

If that sounds like a recipe for disaster, it was—but not for a man named George Walton Williams.

A grocer and hardware store owner in Charleston, SC, Williams was tapped by the Confederation to be a “blockade runner,” sending his ships from Charleston Harbor to England and back.

During the war, the Union Navy blockaded Charleston’s port and then attacked the city for months. The blockade runners would sneak past the Navy ships and bring necessary supplies to the city under siege.

Blockade runners made a lot of money—often tens of thousands of dollars per trip, back then a princely sum—and George Walton Williams was one of the investors and directors of those enterprises.

There was only one caveat: In return for his assistance, Williams insisted on being paid back in gold and silver.

By the end of the war, after the collapse of the southern states, Williams was one of the few businessmen whose wealth wasn’t wiped out along with the Confederate dollar. While most other people were left with nothing, Williams managed to survive and thrive.

In fact, his wealth was so great that he singlehandedly bailed out the Broad Street banks. He also built a 24,000-square-foot mansion that still stands in Charleston. It cost $200,000 to build—back in the 1860s!

The lesson here is that anyone who relies on a fiat currency for their wealth should think very hard about the strength and endurance of that currency. 

George Walton Williams was smart enough to recognize the risk inherent in the Confederate dollar. He demanded payment in gold and silver not to get rich, but to stay rich. He knew that the value of his hard assets would not evaporate in an instant the way the value of paper money can.

Today, we face different circumstances than George Walton Williams, but it’s still potentially life-saving to insure your future against falling purchasing power with gold and silver.

In the end, it’s about protecting yourself. Owning a meaningful amount of gold can help ensure that you’ll never lose it all if the world you know changes forever.

Get a Free Ebook on Precious Metals Investing

With precious metals in an uptrend, right now is a good time to buy some physical gold. However, before you jump, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, how to spot scammers, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.

 

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Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

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Could Breakthrough Cancer Treatments Raise Industrial Gold Demand?

Precious metals aren’t just used as investments and for jewelry—some of them have a wide range of industrial applications as well.

Silver, for example, is used (and used up) in a multitude of products, from solar panels to glass coatings, LED chips, semiconductors, touch screens, water purification, and more.

Silver’s big brother gold, on the other hand, has far fewer industrial uses. However, that could change very soon.

According to the latest numbers from market research firm Global Market Insights, the market size for gold nanoparticles is projected to reach $8 billion by 2022.

Most of the growth is expected to come from a growing trend to use gold in medical applications—for imaging, diagnosis, drug delivery, and photo-thermal therapy, as well as coating titanium-based dental implants.

Here are a few examples of the most exciting new uses for gold nanoparticles.

Knights in Golden Armor

According to laboratory research presented at the 2016 Cancer Conference of the UK-based National Cancer Research Institute (NCRI), the yellow metal might have a bright future in the medical sector.

Research into the best ways to transport a drug directly into the heart of a cancer cell where the chromosomes reside has been going on for years, but it has recently reached the breakthrough stage.

Scientists from the Cancer Research UK/MRC Oxford Institute for Radiation Oncology have figured out how to deploy gold nanoparticles as safe vehicles for a drug that shuts down a molecule called telomerase in the cancer cell—a process that keeps the malignant cell from rejuvenating and growing out of control.

The best part: Only cancer cells are attacked by the miniature knights in golden armor. Unlike the traditional slash-and-burn methods (chemotherapy and radiation), which often do more harm than they help, healthy cells remain completely unharmed with this treatment.

The same gold nanoparticles can also be used to deliver a dose of cancer-killing radioactivity to cancer cells. So far, the best results have been achieved utilizing both approaches in a one-two punch.

Cancer Research UK’s CEO, Sir Harpal Kumar, stated that “this research adds further insight into [gold’s] potential. Ensuring that treatment is accurately targeted at cancer and avoids healthy cells is the goal for much of cancer research, and this is an exciting step towards that.”

Blowing Up Cancer Cells with Heat

Serving as transporters for drugs and radiation is not the only way gold nanoparticles can be utilized in revolutionary new cancer treatments. They are also helpful in “photothermal therapy,” as a 2016 article in the Journal of Nanomaterials describes.

Gold nanoparticles (GNPs) are irradiated by near-infrared light, leading to the excitation of the surface electrons and converting the light into heat. The GNPs form large clusters inside the cancer cells and release their heat load—which destroys the cancer cells’ membranes and proteins and causes irreversible damage.

Granted, there have been setbacks. For example, some of the gold nanoparticles can end up in and around normal cells, so the lasers used to heat up the GNPs could hurt those cells as well. That’s especially precarious in cases where tumors surround vital tissues like nerves or arterial walls.

Some recent improvements in the scientists’ methodology look promising, though. They equipped the GNPs with immune protein antibodies that specifically latched on to cancer cell receptors, and instead of firing continuous laser beams, they used ultrashort infrared pulses.

One unintended but favorable side effect of this new approach was higher temperatures wherever GNPs formed large clusters. As a consequence, the greater heat would vaporize adjacent water molecules, which created tiny bubbles that expanded and “exploded,” blowing up the cancer cells. Normal tissue wasn’t affected.

In cases where most of the tumor was able to be surgically removed, after secondary treatment with GNPs, the survival rate of tested lab mice was 100%. All residual cancer cells had been eradicated.

It remains to be seen if this therapy will work on humans as well as it does on rodents, but if it does, we may be looking at a revolution in the history of cancer treatments that makes the old-school, harmful therapies obsolete.

Cumulative Effect: Every Little Bit Counts

Now, how much gold is actually being used in these therapies?

Not much. A gold nanoparticle is smaller than a red blood cell, and some of the above-mentioned therapies use as little as 3% of the amount found in a typical wedding band.

Let’s do the math. An 18k men’s wedding band with 4 grams of pure gold would yield 0.12 grams of gold nanoparticles (3%).

Assuming that more than one nano injection is needed for a round of cancer treatments (I went with 3), that would be 0.36 grams of gold.

In 2016, 1,685,210 Americans were newly diagnosed with cancer. If the above-mentioned cutting-edge therapies went mainstream and every one of these patients were treated with gold nanoparticles, that would make 606,676 grams of gold, or 19,505 troy ounces.

Granted, it’s not a huge amount. But consider that this is just one year’s worth of new cancer diagnoses—not counting the people who have been living with cancer already or who will be diagnosed in the future—and only in the United States. Multiply this throughout the world and over many years, and the effect on industrial gold demand could be substantial.

Also, unlike most other applications for gold, this one actually uses up the metal (unless some future scientists invent a gold retrieval method from the blood of deceased patients), thus diminishing the overall “above-ground” gold supply.

Add to that the other, non-medical industrial uses for gold nanoparticles—such as specialty inks for the electronics industry that are used in storage devices, hard disks, microchips, thin film transistors, and photo sensors—and it seems heightened industrial demand for the yellow metal is all but unstoppable.

Just one more good reason to incorporate physical gold into your portfolio and capitalize on this emerging trend.

Get a Free Ebook on Precious Metals Investing

It’s a good time to add some physical gold to your portfolio. But before you buy, make sure to do your homework first. Get the comprehensive ebook, Investing in Precious Metals 101, and learn more about which type of gold to buy and which to stay away from… where to get the best deals… how to spot common scams and mistakes inexperienced investors fall prey to… the best storage options… why pools aren’t safe places… and more. Click here to get your free copy now.


Read our Terms of Use

Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

CLIENT TESTIMONIAL

Our Blog

Could Breakthrough Cancer Treatments Raise Industrial Gold Demand?

Precious metals aren’t just used as investments and for jewelry—some of them have a wide range of industrial applications as well.

Silver, for example, is used (and used up) in a multitude of products, from solar panels to glass coatings, LED chips, semiconductors, touch screens, water purification, and more.

Silver’s big brother gold, on the other hand, has far fewer industrial uses. However, that could change very soon.

According to the latest numbers from market research firm Global Market Insights, the market size for gold nanoparticles is projected to reach $8 billion by 2022.

Most of the growth is expected to come from a growing trend to use gold in medical applications—for imaging, diagnosis, drug delivery, and photo-thermal therapy, as well as coating titanium-based dental implants.

Here are a few examples of the most exciting new uses for gold nanoparticles.

Knights in Golden Armor

According to laboratory research presented at the 2016 Cancer Conference of the UK-based National Cancer Research Institute (NCRI), the yellow metal might have a bright future in the medical sector.

Research into the best ways to transport a drug directly into the heart of a cancer cell where the chromosomes reside has been going on for years, but it has recently reached the breakthrough stage.

Scientists from the Cancer Research UK/MRC Oxford Institute for Radiation Oncology have figured out how to deploy gold nanoparticles as safe vehicles for a drug that shuts down a molecule called telomerase in the cancer cell—a process that keeps the malignant cell from rejuvenating and growing out of control.

The best part: Only cancer cells are attacked by the miniature knights in golden armor. Unlike the traditional slash-and-burn methods (chemotherapy and radiation), which often do more harm than they help, healthy cells remain completely unharmed with this treatment.

The same gold nanoparticles can also be used to deliver a dose of cancer-killing radioactivity to cancer cells. So far, the best results have been achieved utilizing both approaches in a one-two punch.

Cancer Research UK’s CEO, Sir Harpal Kumar, stated that “this research adds further insight into [gold’s] potential. Ensuring that treatment is accurately targeted at cancer and avoids healthy cells is the goal for much of cancer research, and this is an exciting step towards that.”

Blowing Up Cancer Cells with Heat

Serving as transporters for drugs and radiation is not the only way gold nanoparticles can be utilized in revolutionary new cancer treatments. They are also helpful in “photothermal therapy,” as a 2016 article in the Journal of Nanomaterials describes.

Gold nanoparticles (GNPs) are irradiated by near-infrared light, leading to the excitation of the surface electrons and converting the light into heat. The GNPs form large clusters inside the cancer cells and release their heat load—which destroys the cancer cells’ membranes and proteins and causes irreversible damage.

Granted, there have been setbacks. For example, some of the gold nanoparticles can end up in and around normal cells, so the lasers used to heat up the GNPs could hurt those cells as well. That’s especially precarious in cases where tumors surround vital tissues like nerves or arterial walls.

Some recent improvements in the scientists’ methodology look promising, though. They equipped the GNPs with immune protein antibodies that specifically latched on to cancer cell receptors, and instead of firing continuous laser beams, they used ultrashort infrared pulses.

One unintended but favorable side effect of this new approach was higher temperatures wherever GNPs formed large clusters. As a consequence, the greater heat would vaporize adjacent water molecules, which created tiny bubbles that expanded and “exploded,” blowing up the cancer cells. Normal tissue wasn’t affected.

In cases where most of the tumor was able to be surgically removed, after secondary treatment with GNPs, the survival rate of tested lab mice was 100%. All residual cancer cells had been eradicated.

It remains to be seen if this therapy will work on humans as well as it does on rodents, but if it does, we may be looking at a revolution in the history of cancer treatments that makes the old-school, harmful therapies obsolete.

Cumulative Effect: Every Little Bit Counts

Now, how much gold is actually being used in these therapies?

Not much. A gold nanoparticle is smaller than a red blood cell, and some of the above-mentioned therapies use as little as 3% of the amount found in a typical wedding band.

Let’s do the math. An 18k men’s wedding band with 4 grams of pure gold would yield 0.12 grams of gold nanoparticles (3%).

Assuming that more than one nano injection is needed for a round of cancer treatments (I went with 3), that would be 0.36 grams of gold.

In 2016, 1,685,210 Americans were newly diagnosed with cancer. If the above-mentioned cutting-edge therapies went mainstream and every one of these patients were treated with gold nanoparticles, that would make 606,676 grams of gold, or 19,505 troy ounces.

Granted, it’s not a huge amount. But consider that this is just one year’s worth of new cancer diagnoses—not counting the people who have been living with cancer already or who will be diagnosed in the future—and only in the United States. Multiply this throughout the world and over many years, and the effect on industrial gold demand could be substantial.

Also, unlike most other applications for gold, this one actually uses up the metal (unless some future scientists invent a gold retrieval method from the blood of deceased patients), thus diminishing the overall “above-ground” gold supply.

Add to that the other, non-medical industrial uses for gold nanoparticles—such as specialty inks for the electronics industry that are used in storage devices, hard disks, microchips, thin film transistors, and photo sensors—and it seems heightened industrial demand for the yellow metal is all but unstoppable.

Just one more good reason to incorporate physical gold into your portfolio and capitalize on this emerging trend.

Get a Free Ebook on Precious Metals Investing

It’s a good time to add some physical gold to your portfolio. But before you buy, make sure to do your homework first. Get the comprehensive ebook, Investing in Precious Metals 101, and learn more about which type of gold to buy and which to stay away from… where to get the best deals… how to spot common scams and mistakes inexperienced investors fall prey to… the best storage options… why pools aren’t safe places… and more. Click here to get your free copy now.

 

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Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

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Warren Buffett Hates Gold… But Here’s Five Reasons You Need To Own It

In a 1998 speech at Harvard, legendary investor Warren Buffett shared his thoughts on gold:

“[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility.

Buffett is correct—gold doesn’t produce earnings or pay dividends. There are, however, some good reasons gold should be an essential part of every investor’s portfolio.

#1: Real Interest Rates Are Still Negative

Even with the Fed raising nominal interest rates, real rates—that is, the nominal interest rate minus inflation—are still in negative territory. And real rates are what really matters to your portfolio.

In the first quarter of 2017, inflation averaged 2.57%.

Today, a one-year bank CD pays about 1.4%. Therefore, to keep all of your money in a bank account means to watch your purchasing power erode.

Of course, there are other options. You can put your money in US Treasuries or dividend-paying stocks. However, with the 10-year Treasury yield hovering around 2.25% and the average dividend yield for a company on the S&P 500 at 2.33%, you would still be in negative territory.

Gold is known as the yellow metal with no yield, but simple math tells us no yield is better than a negative one. In fact, real interest rates are a major determinate of which direction the price of gold moves in.

Source: ETF Securities

So, gold will protect your capital from the eroding forces of negative rates… and help it grow at the same time.

#2: The Dollar’s Value Has Collapsed

The US dollar may be rising against other currencies like the euro and yen. Nonetheless, in the last 50 years, its purchasing power has fallen by 86%.

Source: St. Louis Fed

As this chart shows, keeping your savings in cash is a poor wealth-building strategy. On the other hand, gold has more than kept up with inflation. Since 1972—the first year private ownership of gold became legal again—the price of gold has increased by 2,400%.

#3: Gold Is Money

Why has gold retained its value while fiat currencies have fallen? It’s because gold is money.

2,000 years ago, Greek philosopher Aristotle theorized that any sound form of money must be: durable, portable, divisible, and have intrinsic value.

Gold has all these characteristics— that’s why it has proven to be a long-term store of value. Fiat currencies like the dollar cannot be considered money as they don’t have intrinsic value.

In other words, gold is payment in and of itself, but the dollar is only a promise to pay.

#4: Negative Correlation to Stocks and Bonds

The world’s largest asset manager, BlackRock, pointed out recently that in the last decade, the correlation between stocks and bonds has been at almost double its long-term average.

Therefore, a portfolio comprised of 60% stocks/40% bonds no longer offers investors adequate diversification. Sure, it’s great when markets are rising—but when the tide turns, that’s going to be a problem.

To keep all your eggs “out of one basket”—buy gold. Recently, the correlation between gold and the S&P 500 stood at its second-lowest level in over 30 years. That’s also the case with gold and bonds.

#5: No Counterparty Risk

Gold is one of the few assets that has no counterparty risk. What does that mean?

No counterparty risk means that once you have physical gold in your possession, you don’t depend on someone else to fulfill a contract or keep a promise for it to retain its value.

Stocks, bonds, ETFs—essentially all paper assets require another party to make good on their end of the deal. Physical gold’s value does not hinge on someone else’s obligation to pay.

Aside from being a long-term store of value and diversification tool, there’s another reason you should buy gold.

Bonus Round: A Profitable Portfolio

Since the beginning of 2017, gold is up over 10%, making it one of the best-performing assets of the year. And this is no anomaly.

Since late 2015, gold has outperformed the S&P 500 by 30%. In fact, gold has been the best-performing asset class since the turn of the millennium.

Not only will gold preserve your wealth and insulate your portfolio from market sell-offs, it can earn you a profit at the same time.

Given the negative real rates, a falling dollar, and heightened correlation between stock and bonds, gold should be an essential part of every investor’s portfolio today.

Get A Free Ebook On Precious Metals Investing

Before you buy physical gold, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101. Find out which type of gold to buy and which type to stay away from, how to spot scammers, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.


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Warren Buffett Hates Gold… But Here’s Five Reasons You Need To Own It

In a 1998 speech at Harvard, legendary investor Warren Buffett shared his thoughts on gold:

“[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility.

Buffett is correct—gold doesn’t produce earnings or pay dividends. There are, however, some good reasons gold should be an essential part of every investor’s portfolio.

#1: Real Interest Rates Are Still Negative

Even with the Fed raising nominal interest rates, real rates—that is, the nominal interest rate minus inflation—are still in negative territory. And real rates are what really matters to your portfolio.

In the first quarter of 2017, inflation averaged 2.57%.

Today, a one-year bank CD pays about 1.4%. Therefore, to keep all of your money in a bank account means to watch your purchasing power erode.

Of course, there are other options. You can put your money in US Treasuries or dividend-paying stocks. However, with the 10-year Treasury yield hovering around 2.25% and the average dividend yield for a company on the S&P 500 at 2.33%, you would still be in negative territory.

Gold is known as the yellow metal with no yield, but simple math tells us no yield is better than a negative one. In fact, real interest rates are a major determinate of which direction the price of gold moves in.


Source: ETF Securities

So, gold will protect your capital from the eroding forces of negative rates… and help it grow at the same time.

#2: The Dollar’s Value Has Collapsed

The US dollar may be rising against other currencies like the euro and yen. Nonetheless, in the last 50 years, its purchasing power has fallen by 86%.


Source: St. Louis Fed

As this chart shows, keeping your savings in cash is a poor wealth-building strategy. On the other hand, gold has more than kept up with inflation. Since 1972—the first year private ownership of gold became legal again—the price of gold has increased by 2,400%.

#3: Gold Is Money

Why has gold retained its value while fiat currencies have fallen? It’s because gold is money.

2,000 years ago, Greek philosopher Aristotle theorized that any sound form of money must be: durable, portable, divisible, and have intrinsic value.

Gold has all these characteristics— that’s why it has proven to be a long-term store of value. Fiat currencies like the dollar cannot be considered money as they don’t have intrinsic value.

In other words, gold is payment in and of itself, but the dollar is only a promise to pay.

#4: Negative Correlation to Stocks and Bonds

The world’s largest asset manager, BlackRock, pointed out recently that in the last decade, the correlation between stocks and bonds has been at almost double its long-term average.

Therefore, a portfolio comprised of 60% stocks/40% bonds no longer offers investors adequate diversification. Sure, it’s great when markets are rising—but when the tide turns, that’s going to be a problem.

To keep all your eggs “out of one basket”—buy gold. Recently, the correlation between gold and the S&P 500 stood at its second-lowest level in over 30 years. That’s also the case with gold and bonds.

#5: No Counterparty Risk

Gold is one of the few assets that has no counterparty risk. What does that mean?

No counterparty risk means that once you have physical gold in your possession, you don’t depend on someone else to fulfill a contract or keep a promise for it to retain its value.

Stocks, bonds, ETFs—essentially all paper assets require another party to make good on their end of the deal. Physical gold’s value does not hinge on someone else’s obligation to pay.

Aside from being a long-term store of value and diversification tool, there’s another reason you should buy gold.

Bonus Round: A Profitable Portfolio

Since the beginning of 2017, gold is up over 10%, making it one of the best-performing assets of the year. And this is no anomaly.

Since late 2015, gold has outperformed the S&P 500 by 30%. In fact, gold has been the best-performing asset class since the turn of the millennium.

Not only will gold preserve your wealth and insulate your portfolio from market sell-offs, it can earn you a profit at the same time.

Given the negative real rates, a falling dollar, and heightened correlation between stock and bonds, gold should be an essential part of every investor’s portfolio today.

Get A Free Ebook On Precious Metals Investing

Before you buy physical gold, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101. Find out which type of gold to buy and which type to stay away from, how to spot scammers, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.

 

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Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

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This Event Could Lead To A Collapse Of The Euro… And Send Gold Skyrocketing

The first round of the French presidential election takes place this Sunday, April 23… and the future of the European Union depends on the outcome.

Establishment candidate Emanuel Macron leads in the polls, but Marine Le Pen, leader of the far-right Front National is trailing him by only 1%. However, the real story of the past month has been the rise of far-left candidate Jean-Luc Mélenchon.

In the latest polls, Mélenchon sits only 4% behind the leader—and if we learned anything from Brexit and the US election, it’s that polls can be “slightly off.”

France has a two-round election process, where the two candidates who receive the most votes make it to a final showdown. It’s quite possible Le Pen and Mélenchon, both of whom are running on an anti-EU platform, could lock up the two spots.

Why should you care about French politics? Here’s why…

A Golden Rerun

To quote Mark Twain, “History doesn’t repeat itself, but it does rhyme.”

If one (or both) anti-EU candidates make it through the first round, gold could have a “Brexit rerun.” To refresh your memory, following Brexit last June, the price of gold jumped almost 8% in just two weeks.

As France is Europe’s second-largest economy and a critical piece of the EU puzzle, the implications of an anti-EU candidate winning are severe. As such, gold’s Brexit move would likely be amplified.

Even if only one of the anti-EU candidates makes it through to the second round, it will create uncertainty and fear—both of which lend themselves to a higher gold price.

Also, the French election has lots of upside, but little downside for gold. If an establishment candidate wins, the gold price is unlikely to be hurt. However, if an outsider wins, gold could skyrocket… à la Brexit.

For those who missed the opportunity to buy gold at a pre-Brexit discount, now is your second crack of the whip.

Besides owning gold for its potential upside, you should also own it for protection.

Crisis Protection

The EU is the second-largest economy in the world behind the US. Therefore, its collapse would likely trigger a global financial crisis.

Sovereigns will default, banks will fail… there will be economic and social chaos.

The takeaway: you don’t want your savings caught up in this mess.

A time-tested method used to insulate wealth from disasters such as this is to own gold bullion.

Those with their savings in the banking system or invested in the markets would face a total wipeout. On the other hand, those who have a portion of their funds in gold will be protected.

With the EU fragmenting, now is an excellent time to add gold to your portfolio. Buying physical gold will offer you both protection from the potential collapse... and the chance to profit from Brussels’ demise.

Get A Free Ebook On Precious Metals Investing

Before you buy physical gold, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.


Read our Terms of Use

Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

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Why Even the “Father of Logic” Thought That Gold Makes the Best Money in the World

In the wee hours of March 27, plucky thieves stole one of the world’s largest gold coins, a 221-pound colossus named the “Big Maple Leaf” from the Bode Museum in Berlin, Germany.

The coin, which takes two to three strong men to carry, had a face value of $1 million, but at current market prices is worth around $4.5 million.

Despite its weight, which is about the same as a refrigerator or an average-size male red kangaroo, the thieves had no problems carrying the coin through the museum and up at least one flight of stairs to hoist it out of a back window.

The first thing that came to mind reading this piece of news was that the existence of a 200-pound gold coin defeats the purpose. To wit, it violates the second Aristotelian principle for a sound form of money: portability, an attribute that gold is especially well known for.

Aristotle, a Greek philosopher, student of Plato, teacher of Alexander the Great, and the father of the field of logic, listed four characteristics of any sound form of money:

  1. Durability. It shouldn’t be perishable. That’s why—despite all claims to the contrary by preppers—stocked, canned food doesn’t make good money.
  1. Portability. It should hold a large amount of value compared to its weight and size. That’s why flat-screen TVs don’t make good money.
  1. Divisibility. It should be easy to separate and distribute, as well as re-combine. That’s why artwork doesn’t make good money.
  1. Intrinsic value. It has value in and of itself; it doesn’t derive its “worth” from something else. That’s why unbacked paper currencies (aka, all of the modern world’s currencies) don’t make good money.

You can see that most things people would consider good investments would not make good money.

Take real estate or farmland, for example, which can be a great asset to have in your portfolio. However, it definitely falls short in the portability and divisibility departments. It can’t be carried around in your pocket, and you can’t divide it into tiny pieces to pay for, say, a loaf of bread.

Commodities like oil and natural gas lack portability. Driving around in a massive tanker truck for your weekly grocery shopping doesn’t seem like a splendid idea.

Stocks and bonds are paper assets, which tells us that they don’t carry any intrinsic value. (And if you think that owning a stock still means you’re owning an actual piece of a company… well, think again.)

Besides, stocks and bonds are largely uncorrelated to gold, which as a hard asset serves as “insurance” against corrections in those sectors.

Diamonds could be considered a form of money, but here we stumble over the inherent-value aspect. It takes an expert to determine a diamond’s actual value (or to tell it from a counterfeit one).

Even silver lacks gold’s inherent portability. At current prices, you would need 546 troy ounces (37.4 lbs.) of silver to carry $10,000 around with you. That’s one big, heavy suitcase full of coins.

$10,000 in gold, on the other hand, or 8 troy ounces, would fit comfortably in your pocket.

It’s certainly no coincidence that gold has kept its reputation as a store of value across millennia. The first recorded use of gold as money was around 700 B.C., when merchants in Lydia, an Iron Age kingdom in the western part of modern Turkey, produced the first coins by stamping lumps of electrum, a natural gold/silver alloy.

Why You Should Own Some Gold Today

It’s safe to say that gold will always keep its value. It’s also one of the few assets that don’t have counterparty risk.

What does that mean?

Counterparty risk means that as soon as one or more entities are involved in a monetary transaction, they might be unable to fulfill their financial obligations.

The US dollar, backed by nothing but the “full faith and trust of the US government,” has counterparty risk. If the US government defaults on its debts and/or America faces hyperinflation, the dollar could become worthless—as we’ve seen with many paper currencies around the globe.

In contrast, gold is intrinsically valuable—and therefore the ultimate form of money. In its entire history, gold’s value has never gone to zero. You sure can’t say the same for stocks, funds, and bonds… so get some gold right now.

Get a Free Ebook on Precious Metals Investing

You want at least 10% of your investable assets to be in physical gold. However, before you buy, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, how to spot scammers, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.


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Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

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3 Reasons Why “Spring Forward, Fall Back” Also Applies To Gold

Year to date, the price of gold is up 12%. This is not unusual: the yellow metal also had a strong start into 2016, rising 18% over the same period.

So is there a seasonal pattern to the gold price? To answer that question, we dissected gold’s performance dating back to 1975 and identified some trends investors can use to their advantage.

1. March/April Are Gold’s Worst Months… And The Best Time To Buy


Source: LBMA

Since 1975, March has been the worst month for gold, followed by April as the second-worst.

In contrast, September has been the best month for gold over the past 41 years. Coincidentally (or not), September is also the worst month for the S&P 500.

As the chart shows, three-quarters of gold’s top-performing months are in the latter half of the year.

Based on this, an inexperienced investor might conclude that you should sell before the bad months (March, April) and buy prior to the good months (August to October). However, as Rick Rule, CEO of Sprott Global Resource Investments, says, “You’re either a contrarian, or you will become a victim.”

So the gold price is usually at its lowest point in March and April, which makes these two months the best time to buy.

In contrast, when gold has been rising steadily through the year into October, that may be a good time to sell.

Given gold’s attribute as a long-term store of value, we don’t recommend trying to trade it. However, when you want to liquidate some of your holdings, following seasonal patterns can prove very lucrative, as the next chart demonstrates.

2. Buy The Spring, Sell The Fall


Source: LBMA

If you had simply bought gold on April Fool’s day and sold it on Halloween every year since 1975, you would have made an average return of 4.6%.

Not a bad return on your money for two days’ worth of work and seven months of tying up your money.

We think you should hold your gold for a lot longer than seven months. Nonetheless, this four-decade-long pattern suggests that the gold price will repeat its pattern again this year.

The next chart amplifies this point.

3. The Only Quarter In Town


Source: LBMA

Since 1975, the second quarter of the year has been by far gold’s worst… with returns dead flat over the 41-year period. On the flip side, the third quarter has been the best, outperforming its closest rival, Q4, by a whopping 40%.

Given the clear seasonal patterns the gold price has exhibited over the past four decades, how can investors take advantage of it in 2017?

Add Gold to Your Portfolio Now

Based on gold’s seasonal patterns, adding bullion to your portfolio sometime in the next few weeks could prove a profitable endeavor.

As stated above, gold is up 12% since the beginning of the year. This makes it one of the top-performing assets—alongside silver, which is up almost 20% year to date.

In comparison, since making multi-year highs in March, the 10-year Treasury yield (which moves inversely to its price) is down 15%. Also, after roaring higher post-election, the S&P 500 has moved sideways since late January.

Considering gold’s recent rise, many investors are waiting for a pullback. But armed with the knowledge that the lows usually occur in the spring, you can take the contrarian approach and “buy low” right now.

Given that the reflation trade is all but dead in the water, you may be able to “sell high” in the not-too-distant future.

Get A Free Ebook On Precious Metals Investing

Before you buy physical gold, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.


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Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

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Why Even the “Father of Logic” Thought That Gold Makes the Best Money in the World

In the wee hours of March 27, plucky thieves stole one of the world’s largest gold coins, a 221-pound colossus named the “Big Maple Leaf” from the Bode Museum in Berlin, Germany.

The coin, which takes two to three strong men to carry, had a face value of $1 million, but at current market prices is worth around $4.5 million.

Despite its weight, which is about the same as a refrigerator or an average-size male red kangaroo, the thieves had no problems carrying the coin through the museum and up at least one flight of stairs to hoist it out of a back window.

The first thing that came to mind reading this piece of news was that the existence of a 200-pound gold coin defeats the purpose. To wit, it violates the second Aristotelian principle for a sound form of money: portability, an attribute that gold is especially well known for.

Aristotle, a Greek philosopher, student of Plato, teacher of Alexander the Great, and the father of the field of logic, listed four characteristics of any sound form of money:

  1. Durability. It shouldn’t be perishable. That’s why—despite all claims to the contrary by preppers—stocked, canned food doesn’t make good money.
  1. Portability. It should hold a large amount of value compared to its weight and size. That’s why flat-screen TVs don’t make good money.
  1. Divisibility. It should be easy to separate and distribute, as well as re-combine. That’s why artwork doesn’t make good money.
  1. Intrinsic value. It has value in and of itself; it doesn’t derive its “worth” from something else. That’s why unbacked paper currencies (aka, all of the modern world’s currencies) don’t make good money.

You can see that most things people would consider good investments would not make good money.

Take real estate or farmland, for example, which can be a great asset to have in your portfolio. However, it definitely falls short in the portability and divisibility departments. It can’t be carried around in your pocket, and you can’t divide it into tiny pieces to pay for, say, a loaf of bread.

Commodities like oil and natural gas lack portability. Driving around in a massive tanker truck for your weekly grocery shopping doesn’t seem like a splendid idea.

Stocks and bonds are paper assets, which tells us that they don’t carry any intrinsic value. (And if you think that owning a stock still means you’re owning an actual piece of a company… well, think again.)

Besides, stocks and bonds are largely uncorrelated to gold, which as a hard asset serves as “insurance” against corrections in those sectors.

Diamonds could be considered a form of money, but here we stumble over the inherent-value aspect. It takes an expert to determine a diamond’s actual value (or to tell it from a counterfeit one).

Even silver lacks gold’s inherent portability. At current prices, you would need 546 troy ounces (37.4 lbs.) of silver to carry $10,000 around with you. That’s one big, heavy suitcase full of coins.

$10,000 in gold, on the other hand, or 8 troy ounces, would fit comfortably in your pocket.

It’s certainly no coincidence that gold has kept its reputation as a store of value across millennia. The first recorded use of gold as money was around 700 B.C., when merchants in Lydia, an Iron Age kingdom in the western part of modern Turkey, produced the first coins by stamping lumps of electrum, a natural gold/silver alloy.

Why You Should Own Some Gold Today

It’s safe to say that gold will always keep its value. It’s also one of the few assets that don’t have counterparty risk.

What does that mean?

Counterparty risk means that as soon as one or more entities are involved in a monetary transaction, they might be unable to fulfill their financial obligations.

The US dollar, backed by nothing but the “full faith and trust of the US government,” has counterparty risk. If the US government defaults on its debts and/or America faces hyperinflation, the dollar could become worthless—as we’ve seen with many paper currencies around the globe.

In contrast, gold is intrinsically valuable—and therefore the ultimate form of money. In its entire history, gold’s value has never gone to zero. You sure can’t say the same for stocks, funds, and bonds… so get some gold right now.

Get a Free Ebook on Precious Metals Investing

You want at least 10% of your investable assets to be in physical gold. However, before you buy, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, how to spot scammers, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.

 

Read our Terms of Use

Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

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This Event Could Lead To A Collapse Of The Euro… And Send Gold Skyrocketing

The first round of the French presidential election takes place this Sunday, April 23… and the future of the European Union depends on the outcome.

Establishment candidate Emanuel Macron leads in the polls, but Marine Le Pen, leader of the far-right Front National is trailing him by only 1%. However, the real story of the past month has been the rise of far-left candidate Jean-Luc Mélenchon.

In the latest polls, Mélenchon sits only 4% behind the leader—and if we learned anything from Brexit and the US election, it’s that polls can be “slightly off.”

France has a two-round election process, where the two candidates who receive the most votes make it to a final showdown. It’s quite possible Le Pen and Mélenchon, both of whom are running on an anti-EU platform, could lock up the two spots.

Why should you care about French politics? Here’s why…

A Golden Rerun

To quote Mark Twain, “History doesn’t repeat itself, but it does rhyme.”

If one (or both) anti-EU candidates make it through the first round, gold could have a “Brexit rerun.” To refresh your memory, following Brexit last June, the price of gold jumped almost 8% in just two weeks.

As France is Europe’s second-largest economy and a critical piece of the EU puzzle, the implications of an anti-EU candidate winning are severe. As such, gold’s Brexit move would likely be amplified.

Even if only one of the anti-EU candidates makes it through to the second round, it will create uncertainty and fear—both of which lend themselves to a higher gold price.

Also, the French election has lots of upside, but little downside for gold. If an establishment candidate wins, the gold price is unlikely to be hurt. However, if an outsider wins, gold could skyrocket… à la Brexit.

For those who missed the opportunity to buy gold at a pre-Brexit discount, now is your second crack of the whip.

Besides owning gold for its potential upside, you should also own it for protection.

Crisis Protection

The EU is the second-largest economy in the world behind the US. Therefore, its collapse would likely trigger a global financial crisis.

Sovereigns will default, banks will fail… there will be economic and social chaos.

The takeaway: you don’t want your savings caught up in this mess.

A time-tested method used to insulate wealth from disasters such as this is to own gold bullion.

Those with their savings in the banking system or invested in the markets would face a total wipeout. On the other hand, those who have a portion of their funds in gold will be protected.

With the EU fragmenting, now is an excellent time to add gold to your portfolio. Buying physical gold will offer you both protection from the potential collapse... and the chance to profit from Brussels’ demise.

Get A Free Ebook On Precious Metals Investing

Before you buy physical gold, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.

 

Read our Terms of Use

Subscribe to our Blog...

...and be the first to read what we post the moment we post it!

Receive email notification whenever precious metals news, analysis and commentary is posted to our blog.


Your email address is safe with us. We will never rent or sell it to anyone. Period. Read our Terms of Use.

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Gold IRAs: How to Lessen or Avoid That Pesky Capital Gains Tax

Since we just finished tax season, many first-time gold investors might wonder what to do about their precious metals holdings. How are they taxed, and are there any legal ways to lessen those taxes?

Precious metals like gold, silver, and platinum are considered capital assets, so you will have to pay capital gains taxes when you sell them for a profit.

For almost any asset class, the amount of time you hold them plays an important role in how much you pay in taxes.

Short-term capital gains are taxed differently than long-term capital gains—in fact, the difference can be quite substantial.

In 2016, the rates for long-term capital gains were 0%, 15%, and 20% for most investments, whereas short-term gains are taxed on your ordinary income tax rate. A potentially huge savings for smart investors.

Gold, on the other hand, is treated somewhat differently.

The bad news: The IRS classifies precious metals as collectibles and taxes them at the long-term capital gains rate of 28% for high-income earners and even more for the highest earners, who have to pay a net investment income tax.

The reason is the US government doesn’t consider gold to be a “productive” investment in the sense that it increases gross domestic product. It would rather you put your money into stocks and bonds. So, in the eyes of the IRS, gold is the proverbial red-headed stepchild.

The good news: Investors who purchase gold through retirement accounts can substantially reduce their tax liability, if not eliminate it altogether.

An IRA allows you to buy gold with pre- or post-tax dollars. And once you start making withdrawals, whether in gold or cash, they will be taxed at your ordinary income tax rate if coming from a traditional IRA or not at all in a Roth IRA.

But how? Conventional retirement accounts such as 401(k)s or 403(b)s don’t allow physical gold to be bought and stored.

The easiest way to earn a tax-deferred status for your gold holdings is to open a designated gold IRA with a reliable precious metals dealer and administrator.

The Hard Assets Alliance offers a unique gold IRA, making it very simple to invest and store precious metals for your “golden nest egg.”

Gold provides true diversification in a retirement portfolio, limiting your exposure to market volatility and corrections. Its price moves independently of stocks and many fixed-income investments, and it makes for an ideal inflation and crisis hedge.

Unlike other gold IRAs, which involve many players and a rather complicated process, the Hard Assets Alliance gold IRA makes it easy to open an account and manage it from one site.

It seamlessly combines an online custodial account, access to HAA’s vast network of bullion dealers, private non-bank domestic and international storage options, and an ultra-secure purchasing platform. Thanks to this revolutionary model, your ease of use and convenience are guaranteed.

Learn more about the four different types of gold IRAs the Hard Assets Alliance offers. Get your free copy of our comprehensive special report, Precious Metals IRA—Secure Your Retirement in Turbulent Times.

Or visit this page to open a gold IRA with the Hard Assets Alliance right now.

 

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Gold IRAs: How to Lessen or Avoid That Pesky Capital Gains Tax

Since we just finished tax season, many first-time gold investors might wonder what to do about their precious metals holdings. How are they taxed, and are there any legal ways to lessen those taxes?

Precious metals like gold, silver, and platinum are considered capital assets, so you will have to pay capital gains taxes when you sell them for a profit.

For almost any asset class, the amount of time you hold them plays an important role in how much you pay in taxes.

Short-term capital gains are taxed differently than long-term capital gains—in fact, the difference can be quite substantial.

In 2016, the rates for long-term capital gains were 0%, 15%, and 20% for most investments, whereas short-term gains are taxed on your ordinary income tax rate. A potentially huge savings for smart investors.

Gold, on the other hand, is treated somewhat differently.

The bad news: The IRS classifies precious metals as collectibles and taxes them at the long-term capital gains rate of 28% for high-income earners and even more for the highest earners, who have to pay a net investment income tax.

The reason is the US government doesn’t consider gold to be a “productive” investment in the sense that it increases gross domestic product. It would rather you put your money into stocks and bonds. So, in the eyes of the IRS, gold is the proverbial red-headed stepchild.

The good news: Investors who purchase gold through retirement accounts can substantially reduce their tax liability, if not eliminate it altogether.

An IRA allows you to buy gold with pre- or post-tax dollars. And once you start making withdrawals, whether in gold or cash, they will be taxed at your ordinary income tax rate if coming from a traditional IRA or not at all in a Roth IRA.

But how? Conventional retirement accounts such as 401(k)s or 403(b)s don’t allow physical gold to be bought and stored.

The easiest way to earn a tax-deferred status for your gold holdings is to open a designated gold IRA with a reliable precious metals dealer and administrator.

The Hard Assets Alliance offers a unique gold IRA, making it very simple to invest and store precious metals for your “golden nest egg.”

Gold provides true diversification in a retirement portfolio, limiting your exposure to market volatility and corrections. Its price moves independently of stocks and many fixed-income investments, and it makes for an ideal inflation and crisis hedge.

Unlike other gold IRAs, which involve many players and a rather complicated process, the Hard Assets Alliance gold IRA makes it easy to open an account and manage it from one site.

It seamlessly combines an online custodial account, access to HAA’s vast network of bullion dealers, private non-bank domestic and international storage options, and an ultra-secure purchasing platform. Thanks to this revolutionary model, your ease of use and convenience are guaranteed.

Learn more about the four different types of gold IRAs the Hard Assets Alliance offers. Get your free copy of our comprehensive special report, Precious Metals IRA—Secure Your Retirement in Turbulent Times.

Or visit this page to open a gold IRA with the Hard Assets Alliance right now.

 

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The 3 Types Of Life-Changing Crisis That Make You Wish You Had Some Gold

On November 8, Indian Prime Minister Narendra Modi took to the airwaves to declare that Rs500 and Rs1,000 banknotes—which made up 86% of the currency in circulation—would be invalid effective from midnight. While the policy created chaos at banks, the real story lies elsewhere.

When rumors of a ban on gold spread two weeks later, Indians began rioting. To quell the panic, the Finance Ministry was forced to release a statement saying there was “no plan to restrict gold holdings.”

So, Indians took demonetization lying down, but rioted on the rumor of a gold ban. The people of India have a deep-rooted affinity for gold. As such, they understand it is a store of wealth and intrinsically valuable. Rupees? They are just paper.

Gold is known as an inflation hedge; however, its role as a crisis hedge is even more important. Gold is antifragile, to use the term coined by risk analyst and bestselling author Nassim Taleb. When currencies collapse and economies falter, gold can ensure your survival—financially and literally.

Below are three examples of crises during which you would have been lucky to own gold.

#1: An Economic Crisis

During the Great Depression, 37% of all nonfarm workers were unemployed and many families were financially destitute. Investments and economic growth were at abysmal levels: from 1929 to 1933, the Dow Jones fell by 90% and GDP dropped 30%.

Up until 1934, the US was on a gold standard, which allowed citizens to redeem paper dollars for gold. There are many indications that Americans flock to gold when economic problems begin to emerge.

After the initial crash of 1929, redemptions of paper for gold skyrocketed. Withdrawals were so large throughout 1929–1930 that interest rates had to be raised to halt outflows.

Just like Indians today, Americans understood that gold was superior to paper currency. As gold is money, it is payment in and of itself. Paper currency is simply a promise to pay.

Withdrawals eventually became so overwhelming that on April 5, 1933, President Franklin D. Roosevelt signed Executive Order 6102, which prohibited private ownership of gold. The following year, as part of the Gold Reserve Act, the government changed the gold price from $20.67 to $35 per ounce.

Another indicator of the move into gold was the performance of the largest gold mining company at the time, Homestake Mining. While the Dow Jones fell 90%, Homestake was up 474% between 1929 and 1933.


Source: Longwave Group

From increasing redemptions to investing in gold companies, the actions of Americans show that even in a deflationary collapse, gold is the “go-to” asset.

#2: A Currency Crisis

During Weimar Germany’s episode of hyperinflation, inflation peaked at 200,000,000,000% (that’s 200 billion) in 1923. Prices doubled every 15 hours. Millions of hard-working, thrifty Germans found that their life’s savings would not buy a cup of coffee.

While the German mark was being inflated out of existence, the price of gold increased exponentially. In January 1919, one ounce of gold sold for 170 marks; by November 1923, it cost 87 trillion marks.


Source: BullionMark

As in many currency crises throughout history, those who held a portion of their savings in gold escaped total wipeout.

But gold doesn’t need a full-blown currency crisis to perform well. In the two weeks in 2016 following Britain’s Brexit vote, gold priced in pound sterling rose 24%. The same happened in Russia in late 2014 when gold priced in rubles rose 79% in just three months.

#3: A Banking Crisis

Bank holidays are directly punishing depositors and savers, as the citizens on the Mediterranean island of Cyprus discovered first hand.

Needing a cash injection to stay afloat, Cypriot banks raided customer accounts in early 2013, taking 6.75% of deposits in accounts under €100,000 and a whopping 40% in accounts over €100,000. This happened overnight, without warning.

By the time depositors pulled their money out of the banks, it was too late.


Source: Central Bank of Cyprus

Cypriots with savings outside of the banking system—such as in gold—escaped intact. During the debacle, gold priced in euros rose by around €50.

Gold has proved a useful asset to own during banking crises throughout history. Not only is it useful when thieving banks try to take your savings, gold also profits from the uncertainty that arises from these events.

Having looked at the yellow metal’s performance during different crises, what lessons can we learn?

Gold Is Crisis Insurance

Whether there’s an episode of hyperinflation or a banking collapse, gold has historically been the asset to own in times of turmoil. Given its intrinsic value and safe-haven status, there’s no doubt that gold will remain a wealth preservation tool during future crises.

The reaction of the Indian people to a potential gold ban is just the latest reminder of why owning gold is important. Crises do not come along often… but when they do, you’d better be prepared before they hit.

Get A Free Ebook On Precious Metals Investing

You want at least 10% of your investable assets to be in physical gold. However, before you buy, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.

 

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The Last Time This Happened, Gold Rallied 20%

With much of the price action in gold driven by sentiment and technical analysis, you should keep an eye on the broader trends, even if you consider yourself a buy-and-hold investor.

Traders use technical analysis to predict future market moves based on recent price action. Most of it sounds complicated, but it really boils down to simple math.

One of the most commonly cited technical indicators is a moving average. Day traders often use moving averages based on very short time frames—sometimes as short as one minute—while longer-term investors refer to 50-day and 200-day moving averages to spot opportunities.  

According to Newton’s First Law of Motion, a body in motion will remain in motion unless acted upon by an outside force. Investments work the same way: once a trend has gained momentum, it tends to continue—be it up, down, or sideways.

This has largely been the case for gold, which kept trending down over the past five years.

But now the trend seems to be reversing: gold is up over 20% since its December 2015 low of $1,050/oz. and over 10% since the beginning of 2017.

That means opportunities to get gold “on the cheap” may be dwindling, as the most recent price hike to $1,275/oz. this week indicates.

But How Can We Be Sure? 

The short answer is, we can’t. But one technical indicator has proved extraordinarily reliable in forecasting larger trend changes. It’s known as the “Golden Cross.”

We see this cross (which has nothing to do with gold itself) when a shorter-term moving average crosses “up” through a longer-term moving average. Longer-term moving averages typically are better predictors of significant trend changes.

The following chart of GLD, a good proxy for the price of gold, contains three simple moving averages, 50-, 100-, and 200-day.

Note that the 50-day crossed up through the 100-day in mid-March, and gold subsequent rallied from $1,200 to $1,275/oz.

With the strong rise this week, gold has moved above its 200-day moving average.

The 50-day average is also getting close to crossing above this critical threshold. If the move materializes, it would form the above-mentioned Golden Cross.

This is a strong, supportive technical indicator for the coming months.

The last time gold crossed above its 200-day moving average, in early 2016, gold went on to rally $230/oz., from $1,130 to $1,360. The Golden Cross occurred a few weeks later.

While past is not prologue, the reasons for owning gold are as strong as ever. Whether it’s mounting tensions with Russia/Syria and North Korea, a US stock market looking more vulnerable to a correction, the Fed attempting to unwind its massive balance sheet and tighten monetary policy, or the upcoming election in France—there are ample catalysts to propel gold higher.

If the Golden Cross fails to materialize and gold consolidates some of the gains from this year, you should view this as a buying opportunity before the next move toward $1,400/oz.

Since December 2015, gold has consistently moved a few steps forward and then taken a step back, making higher lows in the process, a constructive view from a technical standpoint. I recommend you watch gold’s price action closely in the coming months and use the fluctuations to be opportunistic in building your position.

Free Ebook: Investing in Precious Metals 101: How to Buy and Store Physical Gold and Silver

Download Investing in Precious Metals 101 for everything you need to know before buying gold and silver. Learn how to make asset correlation work for you, how to buy metal (plus how much you need), and which type of gold makes for the safest investment. You’ll also get tips for finding a dealer you can trust and discover what professional storage offers that the banking system can’t. It’s the definitive guide for investors new to the precious metals market. Get it now.


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Pitbull And 2 Other Signs That Canadians Should Buy Some Gold In A Hurry

By Shannara Johnson

For centuries, physical gold has served as an effective crisis hedge. When economies take a severe downturn and paper money gets devalued, a stash of gold can save you from losing your shirt.

Our friendly neighbors to the north would do well to remember that wisdom—because they’ve been experiencing the mother of all housing bubbles.

“At this point,” says Jared Dillian, a former Wall Street trader and contrarian analyst who predicted Canada's looming economic crash early on, “you’d have to live under a rock to not realize what’s going on. Three years ago, I got laughed at when I said Canadian real estate was in a bubble. No one’s been laughing recently, though.”

Unlike three years ago, today the tell-tale signs of a bubble waiting for a pin are ubiquitous.

Here are just a few:

Sign #1: When a million-dollar tear-down starts feeling like an amazing bargain, run.

In February, Toronto home prices hit another record high. The average selling price for a detached home was $1.57 million, up 29.8% in one year. Even modest single-family homes sell for fantastic amounts of money.

Recently, a three-bedroom, three-bathroom home sold for $2.6 million after being listed at a price of “only” $1.5 million… that’s more than a million over the asking price.

And a dilapidated bungalow built in 1912 in Toronto’s East York neighborhood sold for $1.05 million—$370,000 over asking.

“It’s a sign of what little $1-million now buys in Toronto’s soaring housing market,” quipped the Canadian Globe and Mail, “a tear-down home on a skinny lot fetching a premium price in a neighbourhood known for its blue-collar roots.”

Sign #2: When reality TV hosts and musicians give you real estate advice, run.

At the recently concluded Toronto Real Estate Wealth Expo, US rapper Armando Christian Pérez, aka Pitbull, did just that.

Aside from performing his greatest hits, he egged on the audience to start speculating in real estate with profundities like, “The biggest risk you take is not taking a risk at all.”

Pitbull’s sidekicks at the Toronto Real Estate Wealth Expo were infomercial king Tony Robbins, Boston firefighter-turned-house-flipper Dave Seymour, Flip or Flop reality star Christina El Moussa, and Jim Treliving, the Canadian equivalent of a Shark Tank host.

The goal of this knowledgeable cast was to tell 15,000 enraptured Canadians how to get rich quick by investing in real estate.

“Get started flipping property in your area,” advises the expo registration website. “Once you learn our system, it’s fast and easy. And we help you get the money to fund good deals." Here’s how, according to blogger Tim Bergin, the attendees were encouraged to find that cash:

Not everyone has money, so what can they do? The answers were shocking. Be “creative” was the first response. Pool your money, borrow from friends and family, own just 5% of a house, get the money however you can and just do it—remember, it only goes up. […] The presentations all suggested that you can borrow money, if you don’t have it, at 4% and then buy these investments at 10%—easy money.

Sure. What could possibly go wrong?

Sign #3: When daycare moms and cab drivers tell you the market will go up forever, run.

Staying with the Toronto Real Estate Wealth Expo for another moment, who were those 15,000 participants that heeded the speakers’ millionaire-making advice? Professional investors, hedge fund managers, wealthy retirees?

Not if you look at this “exit poll” of Canadians who had just attended the event.

Melanie B., a 33-year-old children’s entertainer, sums up her takeaway from the Wealth Expo: “Don’t take advice from non-doers and keep only positive people around you.” Her projection for Toronto real estate? “I think it’s going to go even more sky-high.”

Daud S., an 18-year-old investor, also thinks “the market will continue to exponentially increase.” And Rania P., a foster mom, is now convinced that “I need to invest” and that the market “will continue to grow for a while.”

Famous last words if we ever heard any.

Contrarian investment guru and gold bug Doug Casey once said that you know a market has reached its peak when the masses dive into it head first and you get investment tips from your friendly cab driver.

We think that time may have come for Canadian real estate. Definitely time to buy some gold.

The right time to buy gold is now, but make sure to do your homework first. Find out everything you need to know about which type of gold to buy and which to stay away from at all costs… how to safely store your gold… and much more… in the revealing ebook, Investing in Precious Metals 101. Click here to get your free copy now.


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The Last Time This Happened, Gold Rallied 20%

With much of the price action in gold driven by sentiment and technical analysis, you should keep an eye on the broader trends, even if you consider yourself a buy-and-hold investor.

Traders use technical analysis to predict future market moves based on recent price action. Most of it sounds complicated, but it really boils down to simple math.

One of the most commonly cited technical indicators is a moving average. Day traders often use moving averages based on very short time frames—sometimes as short as one minute—while longer-term investors refer to 50-day and 200-day moving averages to spot opportunities.  

According to Newton’s First Law of Motion, a body in motion will remain in motion unless acted upon by an outside force. Investments work the same way: once a trend has gained momentum, it tends to continue—be it up, down, or sideways.

This has largely been the case for gold, which kept trending down over the past five years.

But now the trend seems to be reversing: gold is up over 20% since its December 2015 low of $1,050/oz. and over 10% since the beginning of 2017.

That means opportunities to get gold “on the cheap” may be dwindling, as the most recent price hike to $1,275/oz. this week indicates.

But How Can We Be Sure? 

The short answer is, we can’t. But one technical indicator has proved extraordinarily reliable in forecasting larger trend changes. It’s known as the “Golden Cross.”

We see this cross (which has nothing to do with gold itself) when a shorter-term moving average crosses “up” through a longer-term moving average. Longer-term moving averages typically are better predictors of significant trend changes.

The following chart of GLD, a good proxy for the price of gold, contains three simple moving averages, 50-, 100-, and 200-day.

Note that the 50-day crossed up through the 100-day in mid-March, and gold subsequent rallied from $1,200 to $1,275/oz.

With the strong rise this week, gold has moved above its 200-day moving average.

The 50-day average is also getting close to crossing above this critical threshold. If the move materializes, it would form the above-mentioned Golden Cross.

This is a strong, supportive technical indicator for the coming months.

The last time gold crossed above its 200-day moving average, in early 2016, gold went on to rally $230/oz., from $1,130 to $1,360. The Golden Cross occurred a few weeks later.

While past is not prologue, the reasons for owning gold are as strong as ever. Whether it’s mounting tensions with Russia/Syria and North Korea, a US stock market looking more vulnerable to a correction, the Fed attempting to unwind its massive balance sheet and tighten monetary policy, or the upcoming election in France—there are ample catalysts to propel gold higher.

If the Golden Cross fails to materialize and gold consolidates some of the gains from this year, you should view this as a buying opportunity before the next move toward $1,400/oz.

Since December 2015, gold has consistently moved a few steps forward and then taken a step back, making higher lows in the process, a constructive view from a technical standpoint. I recommend you watch gold’s price action closely in the coming months and use the fluctuations to be opportunistic in building your position.

Free Ebook: Investing in Precious Metals 101: How to Buy and Store Physical Gold and Silver

Download Investing in Precious Metals 101 for everything you need to know before buying gold and silver. Learn how to make asset correlation work for you, how to buy metal (plus how much you need), and which type of gold makes for the safest investment. You’ll also get tips for finding a dealer you can trust and discover what professional storage offers that the banking system can’t. It’s the definitive guide for investors new to the precious metals market. Get it now.

 

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5 Events This Year That Could Spark The Next Gold Bull Market

Gold had a satisfying first quarter, rising 9% since the beginning of the year. While that can be considered a good start, five events sprinkled throughout 2017 could send it much higher.

Event #1: Gridlock In Washington

With Republicans winning the presidency and both houses of Congress, the gridlock that has plagued Washington since 2010 was sure to be broken. The scaling back of regulation and $1 trillion in fiscal stimulus would return the US to 4% annual growth.

While we’re only 11 weeks into proceedings under the Trump administration, it looks as if Washington’s arteries are still clogged by politics. With healthcare reform failing to even make it to a vote, the pressure is now on the GOP to see if they can push through tax reform and fiscal stimulus.

Given the healthcare debacle, there’s a real worry about their ability to do so. If the pro-growth policies aren’t passed, markets will likely come crashing back down to earth. This would create panic—and that’s good for gold.

Event #2: Populists Take Over Europe

There are several elections in Europe this year that could spell trouble for the future of the EU.

In the Netherlands, although populist candidate Geert Wilders and his Party for Freedom failed to win the election, they did come in second. As such, they may be able to force concessions on the EU from the winning party. Remember, British Prime Minister David Cameron was partly forced to call the Brexit referendum by the UK Independence Party, which only won a single seat in the 2015 election.

Next up is the French election on April 23. The latest polls have Marine Le Pen, leader of the National Front, tied for first place.

Then there’s Germany in September. Although the populist Alternative for Germany has gained in the polls, its chances of recording a victory are slim. Then again, pundits once thought the same about Donald Trump.

The real wildcard in Europe is Italy whose anti-euro Five Star Movement is leading by around 4 points in the polls. While an election doesn’t have to be held until May 2018, the three biggest political parties have called for one to take place this year.

As the continent continues to be shrouded in political uncertainty, gold will do well. If populists actually win, the yellow metal could take off as it did following 2016’s Brexit vote.

It’s no coincidence gold hit its all-time high of $1,896 per ounce amid the 2011 European sovereign debt crisis.

Event #3: China’s Domestic Problems Explode

China’s domestic difficulties have been going on for a while, but it seems the situation has deteriorated further in the last few weeks.

The first quarter of 2017 was the worst-ever start to a year for defaults on corporate bonds in China. Seven companies defaulted on a total of nine bonds year to date, compared to a grand total of 29 for all of 2016.

As a result, bond yields are rising, which will likely lead to more defaults.

With a slowing economy and a total debt-to-GDP ratio of 277%, China’s issues won’t be easily fixed. As the world’s second-largest economy, China has accounted for over 30% of global growth since 2008, and a severe downturn would have global implications.

If the cracks become craters, there will likely be a shift into safe-haven assets like gold. Chinese investors and the central bank are already accumulating gold at a record pace. If the economy does crash, it will only accelerate this trend.

Event #4: Indian Gold Demand Returns

In 2016, Indian gold demand was the lowest since 2003. This was due to the shock of Prime Minister Narendra Modi’s demonetization in November, which brought gold imports to a standstill.

However, with imports for February up 175% year over year, the Indian gold market looks to be back on track.

With pent-up demand for gold plus wedding season in full swing, we should see strong buying over the coming months, which would support higher prices.

In fact, demand could be even higher this year as Indians are still reeling from the government’s move to eliminate 86% of the currency in circulation. Indians don’t trust banks with their money. As such, they are choosing to buy gold instead of keeping their money in an account.

Event #5: Unrest In South Africa

Last week, President Zuma fired most of his cabinet and chose to replace them with close allies. On the news, the South African rand plunged to its lowest levels since December. The country’s credit rating was later downgraded to junk for the first time since 2000.

In February, the ruling party passed a bill that will expropriate more land from white farmers, without compensation. With rising political and social tensions, unrest could break out anytime.

This matters to gold investors because South Africa is the world’s sixth-largest producer and the fourth-largest exporter of the precious metal.

There are already calls for Zuma to step aside, and social tensions are running high, so anything from a civil war to a political revolt could happen. That, in turn, would cause labor disruptions—and any disruption to gold mines would negatively affect supply.

Economics 101 tells us if supply takes a hit and demand stays the same, prices will rise.

Add Gold To Your Portfolio

If the aforementioned events come to fruition, it will likely create uncertainty and panic… and that’s good for gold. Therefore, now could be an excellent time to add some bullion to your portfolio.

As gold is known as crisis insurance, doing so buys you protection from the fallout of these events. Along with serving as insurance, it could be an excellent investment given today’s low prices.

Get A Free E-book On Precious Metals Investing

To create an effective safety net, at least 10% of your investable assets should be in physical gold. However, before you buy, make sure to do your homework first. You’ll find everything you need to know in the definitive e-book, Investing in Precious Metals 101: which type of gold to buy and which type to stay away from, how to spot scammers, where to securely store your gold, why pools aren’t safe places, and more. Click here to get your free copy now.


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The 3 Best Strategies To Survive A Financial Crisis In Your Home Country

Praised be the 17th-century Italian wisecrack who noted that you shouldn’t “keep all your eggs in one basket.” It’s still true today and just as applicable to life as to investing.

If you live and work in the US, bank in the US, invest with a US brokerage, and hold your savings in US dollars—your eggs could use some diversification.

A prudent investor would never put all his money into just one company—no matter how healthy the firm’s balance sheet. So why would anyone put it all in one country, then? If you have all your assets in one place, you are taking a great deal of risk.

Take, for example, the German hyperinflation of 1922–1923. Germans who held all their assets in the banks of the Weimar Republic lost everything to hyperinflation. Those who had savings or property across the border in France escaped total wipeout.

One doesn’t have to travel to Germany to find examples of 20th-century wealth transfer. In 1933, Franklin D. Roosevelt used his quill to sign away the right of Americans to “hoard” gold.

The executive order required citizens to trade in any gold they owned in exchange for $20.67 in paper dollars. Eight months later, Congress fixed the price of gold at $35 an ounce. As the United States was on the gold standard at the time, this move eroded the value of Americans’ dollars by 69%—a double whammy.

If history has taught us anything, it’s that when governments get desperate, they take desperate measures.

When the next downturn hits in the US, how will the over-indebted federal government react? Bank deposits, retirement accounts—they may all be fair game.

If you have all your assets in the US, you are taking on a great deal of political risk. In order to mitigate this, you must diversify your assets across many countries.

So where does one start?

Action #1: Open a Foreign Bank Account

Most people think opening a foreign bank account is a good option, but it’s actually not. In fact, for Americans, the option isn’t even on the table these days.

That’s because Uncle Sam has made reporting requirements for foreign banks with US citizens as customers so onerous, to them, it’s no longer worth the hassle.

US citizens can still open an account in Canada. However, given that when Washington says, “Jump,” Ottawa says, “How high?” this can’t be considered a true safe haven.

Action #2: Buy Foreign Real Estate

Owning foreign real estate is an excellent way to diversify your assets. No government agency can force you to repatriate real estate from another country. If your bank accounts are seized and capital controls enacted, your investment is safe.

Foreign property is also largely insulated from adverse economic conditions outside of the country it’s located in. Buying real estate overseas does require a big investment of time, capital, and effort, but it could be a viable option if things turn sour stateside.

Action #3: Store Gold Offshore

As mentioned above, 84 years ago, President Roosevelt signed an executive order that outlawed gold ownership in the US. The order only applied to bullion held inside America. Gold held outside the country was safe. This shows why storing your gold across many jurisdictions is necessary.

So, how does one go about storing gold offshore?

You could buy gold from a bullion dealer in the US and transport it to an offshore storage facility yourself. However, moving gold overseas from the US is risky.

When physically transporting gold, declaration of that gold is a bit of a twilight zone. Do you have to declare it, or don’t you? The rules state that you don’t. Nonetheless, there have been several cases of individuals being stopped and questioned about their bullion at airports.

Taking this option leaves you open to potential seizure through money laundering or asset forfeiture abuse… and that’s just from US Customs. How will your yellow metal be viewed by foreign customs agents? Clearly, it’s not a risk worth taking.

Instead, you could buy gold abroad, then choose a vault to store it in. This option also has many pitfalls. How will you source a reputable dealer and a safe storage facility? Finding both requires that you do substantial due diligence.

The best option for anyone looking to purchase and store gold abroad is to find a company that provides international buy-and-store programs. Firms like JM Bullion, APMEX, and the Hard Assets Alliance provide such services. Buying gold through this avenue ensures your bullion is kept within your chain of custody and can easily be liquidated if need be.

You must make sure the firm stores your bullion in an allocated, private storage facility. It’s also essential you have the option to take physical delivery of your gold. This option gives you the full benefit of owning physical gold abroad, but with none of the headaches.

To optimize gold’s attribute as disaster insurance, you should store some overseas. For those who already own bullion located in the US, moving at least a portion into an offshore storage account would be prudent.

An important caveat here is that if the government really, really wants to get to your gold or foreign real estate, it will. However, taking these steps greatly increases the safety of your wealth.

In closing, diversifying your assets across multiple countries frees you from dependency on any one country… and its government. History has shown crises can hit suddenly. Therefore, you must take these steps before a crisis hits, not when you’re in the midst of one.

Get a Free E-book on Precious Metals Investing

Before you buy physical gold, make sure to do your homework first. You’ll find everything you need to know in the definitive e-book, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.

 

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How to Buy Precious Metals Like a Pro—The Most In-Depth Guide for Investors

Looking to diversify your portfolio? Choose investments with a low correlation to stocks and bonds. Hard assets like oil, real estate, natural gas, and other commodities fit the bill. But seasoned investors usually go for physical precious metals.

Why?

Because physical precious metals carry no counterparty risk. The security of being able to hold your investment in your hands if things go sour makes them the perfect insurance against any financial turmoil.

However, with so many options for buying metals, it’s crucial to do your due diligence before dipping your toes into the market. In this guide, we will tell you everything you need to know about how to buy precious metals:

Why Precious Metals Make Good Investments

All investors should have an allocation to physical precious metals. Here are four main reasons why:

1. Precious metals are largely uncorrelated to stocks and other investments.

When traditional investments take a tumble, gold and other metals tend to rally. This makes them an excellent hedge against catastrophic loss during periods of financial downturn.

While silver, platinum, and palladium are slightly more correlated to stocks due to their role in industry (more on that later), they still offer many of the same protections as gold: namely that they won’t evaporate in an instant the way paper assets can. How many stocks and bonds have lasted for centuries the way precious metals have?

2. Precious metals don’t expose you to counterparty risk.

Physical metals are the only financial assets that are not simultaneously someone else's liability. No bank, government, or brokerage firm needs to back them. When you own them, you own them outright.

This is significant when you think about stocks, bonds, and ETFs, which all require another party to make good on a contract. If our financial system ever collapses (or just goes into crisis), these types of investments will be at high risk.

Precious metals protect against financial turmoil like no other asset. Inflation or deflation, recession or depression, terrorism, debt implosions, credit defaults, bank failure—some of these will happen in your lifetime, and precious metals will protect your portfolio from the fallout.

3. Precious metals are a safe haven in worst-case scenarios.

Precious metals are tangible monetary investments backed up by their own intrinsic value. They’re durable, universally recognizable, easily divisible, and value dense.

With inflationary fiscal policy devaluating fiat currencies, the benefit of maintaining a sufficient precious metals stockpile is obvious. And while we hope it never comes to this, gold, silver, platinum, or palladium coins can be used to buy goods and services if our paper currency ever collapses.

4. Besides being a hedge, precious metals can deliver decent capital gains.

Gold has never gone to zero, and its value has steadily increased over time, making it a solid long-term investment. Look at the chart below, which shows the significant spike in the gold price over the last 30 years:

Silver prices are much more volatile than gold, but that’s just part of the landscape in a small market. The advantage of these big price swings is that buying on down days can pay off when the price shoots back up again (it never takes long).

The investment potential of platinum and palladium is still in its infancy; industrial use of the metals far outweighs the demand from investors.

But like silver, the platinum and palladium markets are small. Demand keeps soaring, but supply is limited. In short, these metals are riskier and more speculative, but their gains can be much higher.

How Much of Your Portfolio Should Be in Precious Metals?

Precious metals are something you buy and hold on to. You may want to evaluate your position on an annual basis and adjust up or down accordingly, but generally, you keep metal as portfolio insurance and you hope you never have to use it.

How much to invest in precious metals is a personal decision. But the three core benefits of owning precious metals are:

  • Risk reduction
  • Long-term store of value
  • Crisis insurance

So, how much of your portfolio should you invest in metal? It depends on the level of these benefits you want or need, but the conventional wisdom is 5­­–15%.

If your main concern is preserving your wealth, you should choose an allocation on the larger side.

Consider that the dollar has lost 98.2% of its purchasing power since 1900—and the trend is not going to reverse. Here’s how gold has offset the loss of the purchasing power of the US dollar:

Insider’s Tip: Buy a meaningful amount of bullion—enough that will make a difference to your wealth and standard of living if things go sour.

To get the absolute most protection, it pays to diversify within your metals holdings, too. While the different metals are closely correlated, there are unique properties of each that you should understand to make the best allocation for your needs.

Here’s what each type of metal has to offer.

Comparing Gold, Silver, Platinum, and Palladium

Gold

As mentioned above, gold has intrinsic financial traits and offers a level of wealth protection unmatched by any other asset. Take a look at the pros and cons of owning gold:

Gold Pros Gold Cons
The price is relatively stable (especially compared to silver). Gold’s value has climbed steadily higher for decades. Gold doesn’t have the strong industrial demand that silver, platinum, and palladium do.
It is extremely liquid. Because gold is highly valued, you’ll always be able to find someone who wants to buy it. In worst-case scenarios, it would be difficult to make everyday purchases with coins worth $1,000 or more.
There’s strong investment demand for gold, from both central banks and individual investors. And in times of financial turmoil, the demand for gold only grows. Fractional coins can be used for everyday purchases, but they come with higher premiums than 1-oz coins.


Investor Takeaway:  Gold belongs in every portfolio as wealth insurance. It is intrinsically valuable, uncorrelated to stocks and other investments, highly liquid, and its price has steadily grown for decades. Gold is for every investor and should make up the largest portion of your precious metals allocation.

Silver

Silver is a sound addition to a precious metals portfolio. Like gold, it has intrinsic value, is highly liquid, can be used as money, and is largely uncorrelated to stocks and other investments.

What makes silver unique is its growing industrial demand. Currently, more than half of the silver mined is used in manufacturing to produce things like electronics, solar panels, and medical equipment.

As this demand continues to increase, it will put a squeeze on supply. Any investor holding a meaningful amount of silver will be positioned for high profits.

Here are some pros and cons of silver as an investment:

Silver Pros Silver Cons
Silver delivers the safety of a hard asset and the potential for significant returns if industrial demand outpaces supply. Silver comes with a little more risk than gold because of its ties to industry. If manufacturing drops off, silver will stagnate.
Silver is more practical than gold for making everyday purchases. Because it is a smaller store of wealth, it’s easier to trade for goods and services. Silver’s price volatility can make trying to buy on the “right” days frustrating for investors.
Because the silver market is smaller than gold, it doesn’t take as much money moving into silver as an investment to move the market up. Silver is not bought by central banks, so one source of demand for gold is not present with silver.


Investor Takeaway:  Silver is a good portfolio diversifier. With its many industrial applications and relatively small supply, growing demand for silver is expected to drive prices higher. Silver isn’t for the faint of heart—its price volatility can discourage some investors—but it is an inexpensive, practical store of wealth that has considerable investment potential. Silver shouldn’t be the only asset you own, but it would be a mistake to not have a meaningful amount.

Platinum & Palladium

Platinum and palladium are perhaps most recognized as popular metals for making jewelry. But like silver, they are also used in manufacturing—mainly in the auto industry.

This makes their prices in large part determined by auto sales and production numbers. This can be good or bad.

On the upside, both metals are extremely rare, and their rising demand could easily outpace supply. In fact, palladium is already struggling to meet industrial demand:

The downside is that their performance is more dependent on the health of the global economy than gold or silver.

The supply and demand dynamics of platinum and palladium offer the opportunity to invest at the beginning of a potential bull market. But a diversification into platinum and/or palladium has its own set of pros and cons:

Platinum/Palladium Pros Platinum/Palladium Cons
There’s growing demand for platinum and palladium in both the industrial and investment worlds. Due to the very small supply, prices can be more erratic than silver and gold.
As industrial demand grows and supply is squeezed, investors could eventually see significant returns on their holdings. Because they aren’t as popular a proxy to cash as silver or gold, platinum and palladium coins are not as liquid.
The industrial value of platinum and palladium makes them less vulnerable to dips in the precious metals that affect gold. Investment demand at this point is mostly speculative.


Investor Takeaway:  Platinum and palladium both have investment potential, mostly because growing demand from the auto industry is expected to deplete supply and drive prices higher. They’re not absolutely essential to your precious metals portfolio, but can be a reasonable way to further diversify. If you choose to make an allocation to platinum and/or palladium, it should be only a fraction of your silver and gold holdings.

Physical Metal vs. Paper Metal

There are many types of precious metals, but they all boil down to two categories: paper precious metals and physical precious metals. ETFs are on the rise due to their convenience, but how do they measure up to the real thing?

While each offers investors its own set of benefits, ETFs and bullion are very different investments. Here are the main benefits of each.

If you’re looking for…

  • precious metals you own and control directly
  • a low-risk, enduring asset
  • a last line of defense in an economic crisis or bank collapse
  • an asset that’s always available for physical delivery
  • no counterparty needed to make good on the investment
  • a long-term store of wealth and portfolio insurance

…your best bet is buying gold, silver, platinum, or palladium bullion. When you buy bullion, you own it outright—no one can default on your investment. And physical precious metals are easier than ever to trade via online platforms similar to ETFs.

If you’re looking for…

  • a convenient, low-cost way to gain exposure to the precious metals market
  • no physical ownership of the metal
  • no delivery/storage fees
  • a highly liquid asset that’s easy to trade
  • the ability to employ leverage with options

…you may want to consider a precious metals ETF. If you don’t plan to take delivery of any metal, and are comfortable with a higher degree of risk (there are counterparties involved), ETFs can be great for quick trading and short-term gains.

But investor beware: there are potential hazards inherent in the structure and operation of gold ETFs.

The Hidden Dangers of Precious Metals ETFs

Gold ETFs use what’s called a custodian to source and store gold for the fund. Usually this entity is a large bank.

Before buying shares of a gold ETF, decide how much do you trust the banking system. That’s who makes good on the investment—and ultimately, who is most positioned to put it at risk.

Because a bank is likely to be impaired if a crisis were to happen (not to mention that they’re hardly trustworthy to begin with), gold ETFs don’t offer the portfolio insurance that real, physical bullion—stored in a non-bank vault, of course—gives to investors.

Not only that, but If the fund’s management, structure, chain of custody, operational integrity, regulatory oversight, or delivery protocols break down, that also places your investment at risk.

Insider’s Tip: Precious metals ETFs can be good products for traders, but they’re no substitute for the long-term security an investment in physical precious metals can provide.

Where to Buy Bullion

Picking the right dealer is as important as knowing how to buy precious metals—if not more.

Here, we’ll cover the different types of dealers and what each has to offer so you can decide who you’ll be most comfortable doing business with.

First thing’s first: do not buy gold or other precious metals from TV dealers or gold shows. They have high premiums, very little selection of bullion products, and mostly traffic in numismatic (collectible) coins with high margins and questionable investment value.

Stick with local coin shops or online dealers for a better investment experience.

Local Dealers

The coin shop around the corner isn’t the best place to make major purchases, but it offers a few benefits to investors who just want a couple of coins to have on-hand for emergencies:

  • You can see and touch the metal before you buy it.
  • No need to wait for delivery—you can take your metal home immediately.
  • A face-to-face transaction gives you the opportunity to negotiate prices and buyback fees.
  • They usually give repeat customers their best deal.

However, there are some drawbacks to buying local:

  • Brick and mortar stores have overhead costs to recoup, which typically translates to higher premiums on products.
  • Local shops usually have limited selections.
  • A neighborhood dealer is unlikely to be able to fill large orders (or make large buybacks).

If you do decide to buy precious metals locally, visit a few stores and look for a dealer who isn’t pushy. You want someone who acts as a resource for how to buy precious metals, not someone who is only interested in pressuring you into a sale. If you feel even a little unsure about someone, move on.

Insider’s Tip: Avoid any dealer who tries to steer you into rare coins, collectibles, or other products you didn’t ask for.

eBay

For investors who know exactly what they want and have enough knowledge about precious metals to recognize a good deal, eBay can be a decent place to buy gold or silver. But for those not familiar with how to buy precious metals, it’s probably not the best place to invest.

Unscrupulous sellers can misrepresent their products or artificially inflate prices by bidding up their own listings. And counterfeit products (often from China) sometimes wind up on the site.

Online Sellers

Purchasing precious metals from an online dealer offers two distinct advantages that buying from other types of dealers doesn’t:

  • 24/7 trading
  • lower premiums

Online dealers make it possible to invest and take delivery with just a few clicks as well as manage your trading account around the clock.

They can also offer lower prices than other dealers since they don’t have the overhead of a physical store. Some online dealers even give you access to volume pricing because they trade on a platform shared with institutional investors.

In addition to convenience and cost savings, online dealers offer a variety of options for how to buy precious metals. There are a number of account types available for individuals and corporations, and investors can even set up a precious metals IRA or UTMA.

How to Buy Precious Metals Online

It’s easy to find a precious metals dealer online, but a little more difficult determining who you can trust. Before you hand over any money, be sure to do the following:

  1. Find out how long they’ve been in business, ensure they have a physical address, and check their reputation via online reviews and consumer protection agencies.
     
  2. Check the spot price of the metal you wish to buy and compare prices from a few different dealers to determine their premiums (note: the lowest isn’t necessarily the best—look for the dealer that offers the most value).
     
  3. Know your all-in costs, including commission, shipping, insurance, and credit card or bank wire charges.
     
  4. Get a quote for the delivery timeframe before you place an order. It should be within 14 days (30 at the absolute most).
     
  5. If you plan to make a sizable investment, place a small test order for delivery first.

Here are some other things to know to make the most of your investment:

Authentication

  • Bullion coins are legal tender and therefore have a universally recognized value. They require no authentication for resale.
  • Every gold bar should have its weight, purity, refiner, and registration number stamped on it.

Pricing

  • Never buy at or below spot; the metals are probably fake.
  • Coins have higher premiums than bars.
  • The larger the bar, the smaller the premium per ounce you’ll pay over spot, but we recommend 1 oz. bars for the inexperienced investor. Large bars can be easy to counterfeit.

Liquidity

  • If you think you will ever want to sell some of your metal, buy coins. They are highly liquid because of their small, tradable size and status as legal tender.
  • If you’re in North America, buy US or Canadian coins. They’ll be easier to resell than coins from other countries.
  • Don’t put your entire investment in one form of metal. A mix of large bars, small bars, and coins is ideal.

Avoiding Scams

  • Watch out for hidden fees. Be sure to get all costs upfront.
  • Don’t accept “free” storage offers. If a dealer offers to keep your metal in escrow—or if the company has a free storage program—there’s a chance you’re being sold imaginary gold.
  • Beware of bait-and-switch tactics. Don’t be lured in by offers of gold at 1% over spot, don’t buy numismatic coins, and never leverage your investment.

Where to Store Your Precious Metals

Now that you know how to buy precious metals, let’s talk about where to keep them. If you’re buying more than a few coins to keep in a home safe for emergencies, you’ll want to weigh your storage options.

Here’s a breakdown of the options along with the advantages and disadvantages of each:

Facility Pros Cons
Bank safe deposit box Close to home, convenient, and keeps your items relatively secure. Contents are not insured against fire, theft, or natural disasters.
Private vaulting facility Private, secure protection for your metals; operates outside the banking system. Metals may need to be audited before the vault will accept them for storage.
Buy-and-store programs No hassle of sourcing non-bank storage yourself; unbroken chain of custody from dealer to vault. Not all dealers let you diversify your holdings internationally.


For our money, we recommend working with an online dealer that offers a buy-and-store program. Not only is this the most convenient option, but because the dealer transports your metal directly to a depository with a separate custodian, it also is the most secure option.

How to Buy Precious Metals Like a Seasoned Investor

Once you’ve found an online dealer with a buy-and-store program that you’ve vetted thoroughly and feel has competitive pricing, it’s time to think about how to manage your precious metals investments.

Here are three ways experienced investors maximize the value of their holdings:

  1. They dollar-cost average their purchases.

Rather than tracking the daily price of gold, silver, platinum, or palladium and chasing the market, veteran investors automate incremental buys to dollar-cost average into their positions. To do this yourself, decide the amount of metal you want to own, divide your capital into equal dollar amounts, and spread the purchases out over time. (Note: not all online dealers offer this feature, so be sure the dealer you work with does.)

  1. They diversify their holdings internationally.

Every country on earth has its own set of political risks. Investors serious about their precious metals as a safe haven asset store their holdings all over the world. Just as diversifying a portfolio makes sense, and diversifying your precious metals allocation makes sense, diversifying your storage is the best way to ensure complete wealth protection in any scenario.

  1. They include precious metals in their retirement strategy.        

Seasoned investors know that tying their retirement savings exclusively to unstable financial markets is dangerous. To put protections in place, they turn to precious metals IRAs. Find an online dealer with a fully integrated IRA program, and you can buy precious metals, arrange storage, and assign custodial services in one simple transaction.

Closing Thoughts

Every investor portfolio should contain an allocation to gold or other metals. You’ve taken the first step toward ensuring your financial future by reading this primer on how to buy precious metals. With all of the uncertainty in today's global economy, it has never been more important to diversify and add the security of physical precious metals to your investment strategy.

Free Ebook: Investing in Precious Metals 101: How to Buy and Store Physical Gold and Silver

Download Investing in Precious Metals 101 for everything you need to know before buying gold and silver. Learn how to make asset correlation work for you, how to buy metal (plus how much you need), and which type of gold makes for the safest investment. You’ll also get tips for finding a dealer you can trust and discover what professional storage offers that the banking system can’t. It’s the definitive guide for investors new to the precious metals market. Get it now.

 

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How Investors Can Buy Gold At A 6% Discount Today… Before The Reflation Trade Reverses

Since the election, the Dow Jones Industrial Average is up over 13% while the S&P 500 is up 11%. One victim of the move into risk assets was gold, which plunged over 13% in the weeks following the election.

Although gold prices have since recovered some of their losses, the yellow metal’s drop has created a buying opportunity for those wanting to add bullion to their portfolios.

US Demand for Gold Is Weak

As the post-election rally roared through December, gold bullion sales from the US Mint had their second-worst month since May 2015.


Source: US Mint

The weakness in demand has continued into the first quarter of 2017, with sales down 30% year over year.


Source: US Mint

One consequence of weak demand is that premiums on gold bullion—the amount per ounce you pay over the spot price—have fallen.

For example, premiums on one of the most popular gold coins, American Eagles, have dropped by 6% since January. That puts premiums at their lowest levels since November 2016.


Source: Sharelynx.com

This drop effectively acts as a discount for investors looking to purchase gold bullion. However, with a number of bullish gold trends in motion, demand looks set to increase… which in turn will push up premiums.

The Reflation Trade Is Starting to Reverse

Beginning in October, stock markets enjoyed 109 trading days without experiencing a 1% decline—the second longest in history.

However, that run was broken in March, and the arrest seemed to mark the point at which markets started questioning the viability of the reflation trade. The S&P 500 had its worst month since the election, ending down 1.3%, with heaviest trading in declining sessions.

In a reversal of fortunes, the 10-year Treasury yield, which moves inversely to its price, is down over 8% since the beginning of the month.

Add to it the fact that gold demand from India—the world’s second-largest consumer of gold—was up 175% year over year in February, and you get a very bullish picture for the yellow metal.

A Buying Opportunity

As a result of these trends, gold is up over 5% since early March and almost 9% this year. If stocks continue to correct, gold will likely move higher. This, in turn, will cause premiums to rise.

So, if you’ve considered buying physical gold, now is the right time to do so. But you should act fast while the “discount” is still available.

Get a Free E-book on Precious Metals Investing

Before you buy physical gold, make sure to do your homework first. You’ll find everything you need to know in the definitive e-book, Investing in Precious Metals 101. Learn which type of gold you should buy and which type you should stay away from, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.

 

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5 Events This Year That Could Spark The Next Gold Bull Market

Gold had a satisfying first quarter, rising 9% since the beginning of the year. While that can be considered a good start, five events sprinkled throughout 2017 could send it much higher.

Event #1: Gridlock In Washington

With Republicans winning the presidency and both houses of Congress, the gridlock that has plagued Washington since 2010 was sure to be broken. The scaling back of regulation and $1 trillion in fiscal stimulus would return the US to 4% annual growth.

While we’re only 11 weeks into proceedings under the Trump administration, it looks as if Washington’s arteries are still clogged by politics. With healthcare reform failing to even make it to a vote, the pressure is now on the GOP to see if they can push through tax reform and fiscal stimulus.

Given the healthcare debacle, there’s a real worry about their ability to do so. If the pro-growth policies aren’t passed, markets will likely come crashing back down to earth. This would create panic—and that’s good for gold.

Event #2: Populists Take Over Europe

There are several elections in Europe this year that could spell trouble for the future of the EU.

In the Netherlands, although populist candidate Geert Wilders and his Party for Freedom failed to win the election, they did come in second. As such, they may be able to force concessions on the EU from the winning party. Remember, British Prime Minister David Cameron was partly forced to call the Brexit referendum by the UK Independence Party, which only won a single seat in the 2015 election.

Next up is the French election on April 23. The latest polls have Marine Le Pen, leader of the National Front, tied for first place.

Then there’s Germany in September. Although the populist Alternative for Germany has gained in the polls, its chances of recording a victory are slim. Then again, pundits once thought the same about Donald Trump.

The real wildcard in Europe is Italy whose anti-euro Five Star Movement is leading by around 4 points in the polls. While an election doesn’t have to be held until May 2018, the three biggest political parties have called for one to take place this year.

As the continent continues to be shrouded in political uncertainty, gold will do well. If populists actually win, the yellow metal could take off as it did following 2016’s Brexit vote.

It’s no coincidence gold hit its all-time high of $1,896 per ounce amid the 2011 European sovereign debt crisis.

Event #3: China’s Domestic Problems Explode

China’s domestic difficulties have been going on for a while, but it seems the situation has deteriorated further in the last few weeks.

The first quarter of 2017 was the worst-ever start to a year for defaults on corporate bonds in China. Seven companies defaulted on a total of nine bonds year to date, compared to a grand total of 29 for all of 2016.

As a result, bond yields are rising, which will likely lead to more defaults.

With a slowing economy and a total debt-to-GDP ratio of 277%, China’s issues won’t be easily fixed. As the world’s second-largest economy, China has accounted for over 30% of global growth since 2008, and a severe downturn would have global implications.

If the cracks become craters, there will likely be a shift into safe-haven assets like gold. Chinese investors and the central bank are already accumulating gold at a record pace. If the economy does crash, it will only accelerate this trend.

Event #4: Indian Gold Demand Returns

In 2016, Indian gold demand was the lowest since 2003. This was due to the shock of Prime Minister Narendra Modi’s demonetization in November, which brought gold imports to a standstill.

However, with imports for February up 175% year over year, the Indian gold market looks to be back on track.

With pent-up demand for gold plus wedding season in full swing, we should see strong buying over the coming months, which would support higher prices.

In fact, demand could be even higher this year as Indians are still reeling from the government’s move to eliminate 86% of the currency in circulation. Indians don’t trust banks with their money. As such, they are choosing to buy gold instead of keeping their money in an account.

Event #5: Unrest In South Africa

Last week, President Zuma fired most of his cabinet and chose to replace them with close allies. On the news, the South African rand plunged to its lowest levels since December. The country’s credit rating was later downgraded to junk for the first time since 2000.

In February, the ruling party passed a bill that will expropriate more land from white farmers, without compensation. With rising political and social tensions, unrest could break out anytime.

This matters to gold investors because South Africa is the world’s sixth-largest producer and the fourth-largest exporter of the precious metal.

There are already calls for Zuma to step aside, and social tensions are running high, so anything from a civil war to a political revolt could happen. That, in turn, would cause labor disruptions—and any disruption to gold mines would negatively affect supply.

Economics 101 tells us if supply takes a hit and demand stays the same, prices will rise.

Add Gold To Your Portfolio

If the aforementioned events come to fruition, it will likely create uncertainty and panic… and that’s good for gold. Therefore, now could be an excellent time to add some bullion to your portfolio.

As gold is known as crisis insurance, doing so buys you protection from the fallout of these events. Along with serving as insurance, it could be an excellent investment given today’s low prices.

Get A Free E-book On Precious Metals Investing

To create an effective safety net, at least 10% of your investable assets should be in physical gold. However, before you buy, make sure to do your homework first. You’ll find everything you need to know in the definitive e-book, Investing in Precious Metals 101: which type of gold to buy and which type to stay away from, how to spot scammers, where to securely store your gold, why pools aren’t safe places, and more. Click here to get your free copy now.

 

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The 3 Types Of Life-Changing Crisis That Make You Wish You Had Some Gold

On November 8, Indian Prime Minister Narendra Modi took to the airwaves to declare that Rs500 and Rs1,000 banknotes—which made up 86% of the currency in circulation—would be invalid effective from midnight. While the policy created chaos at banks, the real story lies elsewhere.

When rumors of a ban on gold spread two weeks later, Indians began rioting. To quell the panic, the Finance Ministry was forced to release a statement saying there was “no plan to restrict gold holdings.”

So, Indians took demonetization lying down, but rioted on the rumor of a gold ban. The people of India have a deep-rooted affinity for gold. As such, they understand it is a store of wealth and intrinsically valuable. Rupees? They are just paper.

Gold is known as an inflation hedge; however, its role as a crisis hedge is even more important. Gold is antifragile, to use the term coined by risk analyst and bestselling author Nassim Taleb. When currencies collapse and economies falter, gold can ensure your survival—financially and literally.

Below are three examples of crises during which you would have been lucky to own gold.

#1: An Economic Crisis

During the Great Depression, 37% of all nonfarm workers were unemployed and many families were financially destitute. Investments and economic growth were at abysmal levels: from 1929 to 1933, the Dow Jones fell by 90% and GDP dropped 30%.

Up until 1934, the US was on a gold standard, which allowed citizens to redeem paper dollars for gold. There are many indications that Americans flock to gold when economic problems begin to emerge.

After the initial crash of 1929, redemptions of paper for gold skyrocketed. Withdrawals were so large throughout 1929–1930 that interest rates had to be raised to halt outflows.

Just like Indians today, Americans understood that gold was superior to paper currency. As gold is money, it is payment in and of itself. Paper currency is simply a promise to pay.

Withdrawals eventually became so overwhelming that on April 5, 1933, President Franklin D. Roosevelt signed Executive Order 6102, which prohibited private ownership of gold. The following year, as part of the Gold Reserve Act, the government changed the gold price from $20.67 to $35 per ounce.

Another indicator of the move into gold was the performance of the largest gold mining company at the time, Homestake Mining. While the Dow Jones fell 90%, Homestake was up 474% between 1929 and 1933.


Source: Longwave Group

From increasing redemptions to investing in gold companies, the actions of Americans show that even in a deflationary collapse, gold is the “go-to” asset.

#2: A Currency Crisis

During Weimar Germany’s episode of hyperinflation, inflation peaked at 200,000,000,000% (that’s 200 billion) in 1923. Prices doubled every 15 hours. Millions of hard-working, thrifty Germans found that their life’s savings would not buy a cup of coffee.

While the German mark was being inflated out of existence, the price of gold increased exponentially. In January 1919, one ounce of gold sold for 170 marks; by November 1923, it cost 87 trillion marks.


Source: BullionMark

As in many currency crises throughout history, those who held a portion of their savings in gold escaped total wipeout.

But gold doesn’t need a full-blown currency crisis to perform well. In the two weeks in 2016 following Britain’s Brexit vote, gold priced in pound sterling rose 24%. The same happened in Russia in late 2014 when gold priced in rubles rose 79% in just three months.

#3: A Banking Crisis

Bank holidays are directly punishing depositors and savers, as the citizens on the Mediterranean island of Cyprus discovered first hand.

Needing a cash injection to stay afloat, Cypriot banks raided customer accounts in early 2013, taking 6.75% of deposits in accounts under €100,000 and a whopping 40% in accounts over €100,000. This happened overnight, without warning.

By the time depositors pulled their money out of the banks, it was too late.


Source: Central Bank of Cyprus

Cypriots with savings outside of the banking system—such as in gold—escaped intact. During the debacle, gold priced in euros rose by around €50.

Gold has proved a useful asset to own during banking crises throughout history. Not only is it useful when thieving banks try to take your savings, gold also profits from the uncertainty that arises from these events.

Having looked at the yellow metal’s performance during different crises, what lessons can we learn?

Gold Is Crisis Insurance

Whether there’s an episode of hyperinflation or a banking collapse, gold has historically been the asset to own in times of turmoil. Given its intrinsic value and safe-haven status, there’s no doubt that gold will remain a wealth preservation tool during future crises.

The reaction of the Indian people to a potential gold ban is just the latest reminder of why owning gold is important. Crises do not come along often… but when they do, you’d better be prepared before they hit.

Get A Free Ebook On Precious Metals Investing

You want at least 10% of your investable assets to be in physical gold. However, before you buy, make sure to do your homework first. You’ll find everything you need to know in the definitive ebook, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.

 

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The 3 Best Strategies To Survive A Financial Crisis In Your Home Country

Praised be the 17th-century Italian wisecrack who noted that you shouldn’t “keep all your eggs in one basket.” It’s still true today and just as applicable to life as to investing.

If you live and work in the US, bank in the US, invest with a US brokerage, and hold your savings in US dollars—your eggs could use some diversification.

A prudent investor would never put all his money into just one company—no matter how healthy the firm’s balance sheet. So why would anyone put it all in one country, then? If you have all your assets in one place, you are taking a great deal of risk.

Take, for example, the German hyperinflation of 1922–1923. Germans who held all their assets in the banks of the Weimar Republic lost everything to hyperinflation. Those who had savings or property across the border in France escaped total wipeout.

One doesn’t have to travel to Germany to find examples of 20th-century wealth transfer. In 1933, Franklin D. Roosevelt used his quill to sign away the right of Americans to “hoard” gold.

The executive order required citizens to trade in any gold they owned in exchange for $20.67 in paper dollars. Eight months later, Congress fixed the price of gold at $35 an ounce. As the United States was on the gold standard at the time, this move eroded the value of Americans’ dollars by 69%—a double whammy.

If history has taught us anything, it’s that when governments get desperate, they take desperate measures.

When the next downturn hits in the US, how will the over-indebted federal government react? Bank deposits, retirement accounts—they may all be fair game.

If you have all your assets in the US, you are taking on a great deal of political risk. In order to mitigate this, you must diversify your assets across many countries.

So where does one start?

Action #1: Open a Foreign Bank Account

Most people think opening a foreign bank account is a good option, but it’s actually not. In fact, for Americans, the option isn’t even on the table these days.

That’s because Uncle Sam has made reporting requirements for foreign banks with US citizens as customers so onerous, to them, it’s no longer worth the hassle.

US citizens can still open an account in Canada. However, given that when Washington says, “Jump,” Ottawa says, “How high?” this can’t be considered a true safe haven.

Action #2: Buy Foreign Real Estate

Owning foreign real estate is an excellent way to diversify your assets. No government agency can force you to repatriate real estate from another country. If your bank accounts are seized and capital controls enacted, your investment is safe.

Foreign property is also largely insulated from adverse economic conditions outside of the country it’s located in. Buying real estate overseas does require a big investment of time, capital, and effort, but it could be a viable option if things turn sour stateside.

Action #3: Store Gold Offshore

As mentioned above, 84 years ago, President Roosevelt signed an executive order that outlawed gold ownership in the US. The order only applied to bullion held inside America. Gold held outside the country was safe. This shows why storing your gold across many jurisdictions is necessary.

So, how does one go about storing gold offshore?

You could buy gold from a bullion dealer in the US and transport it to an offshore storage facility yourself. However, moving gold overseas from the US is risky.

When physically transporting gold, declaration of that gold is a bit of a twilight zone. Do you have to declare it, or don’t you? The rules state that you don’t. Nonetheless, there have been several cases of individuals being stopped and questioned about their bullion at airports.

Taking this option leaves you open to potential seizure through money laundering or asset forfeiture abuse… and that’s just from US Customs. How will your yellow metal be viewed by foreign customs agents? Clearly, it’s not a risk worth taking.

Instead, you could buy gold abroad, then choose a vault to store it in. This option also has many pitfalls. How will you source a reputable dealer and a safe storage facility? Finding both requires that you do substantial due diligence.

The best option for anyone looking to purchase and store gold abroad is to find a company that provides international buy-and-store programs. Firms like JM Bullion, APMEX, and the Hard Assets Alliance provide such services. Buying gold through this avenue ensures your bullion is kept within your chain of custody and can easily be liquidated if need be.

You must make sure the firm stores your bullion in an allocated, private storage facility. It’s also essential you have the option to take physical delivery of your gold. This option gives you the full benefit of owning physical gold abroad, but with none of the headaches.

To optimize gold’s attribute as disaster insurance, you should store some overseas. For those who already own bullion located in the US, moving at least a portion into an offshore storage account would be prudent.

An important caveat here is that if the government really, really wants to get to your gold or foreign real estate, it will. However, taking these steps greatly increases the safety of your wealth.

In closing, diversifying your assets across multiple countries frees you from dependency on any one country… and its government. History has shown crises can hit suddenly. Therefore, you must take these steps before a crisis hits, not when you’re in the midst of one.

Get a Free E-book on Precious Metals Investing

Before you buy physical gold, make sure to do your homework first. You’ll find everything you need to know in the definitive e-book, Investing in Precious Metals 101: which type of gold you should buy and which type you should stay away from, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.

 

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How Investors Can Buy Gold At A 6% Discount Today… Before The Reflation Trade Reverses

Since the election, the Dow Jones Industrial Average is up over 13% while the S&P 500 is up 11%. One victim of the move into risk assets was gold, which plunged over 13% in the weeks following the election.

Although gold prices have since recovered some of their losses, the yellow metal’s drop has created a buying opportunity for those wanting to add bullion to their portfolios.

US Demand for Gold Is Weak

As the post-election rally roared through December, gold bullion sales from the US Mint had their second-worst month since May 2015.


Source: US Mint

The weakness in demand has continued into the first quarter of 2017, with sales down 30% year over year.


Source: US Mint

One consequence of weak demand is that premiums on gold bullion—the amount per ounce you pay over the spot price—have fallen.

For example, premiums on one of the most popular gold coins, American Eagles, have dropped by 6% since January. That puts premiums at their lowest levels since November 2016.


Source: Sharelynx.com

This drop effectively acts as a discount for investors looking to purchase gold bullion. However, with a number of bullish gold trends in motion, demand looks set to increase… which in turn will push up premiums.

The Reflation Trade Is Starting to Reverse

Beginning in October, stock markets enjoyed 109 trading days without experiencing a 1% decline—the second longest in history.

However, that run was broken in March, and the arrest seemed to mark the point at which markets started questioning the viability of the reflation trade. The S&P 500 had its worst month since the election, ending down 1.3%, with heaviest trading in declining sessions.

In a reversal of fortunes, the 10-year Treasury yield, which moves inversely to its price, is down over 8% since the beginning of the month.

Add to it the fact that gold demand from India—the world’s second-largest consumer of gold—was up 175% year over year in February, and you get a very bullish picture for the yellow metal.

A Buying Opportunity

As a result of these trends, gold is up over 5% since early March and almost 9% this year. If stocks continue to correct, gold will likely move higher. This, in turn, will cause premiums to rise.

So, if you’ve considered buying physical gold, now is the right time to do so. But you should act fast while the “discount” is still available.

Get a Free E-book on Precious Metals Investing

Before you buy physical gold, make sure to do your homework first. You’ll find everything you need to know in the definitive e-book, Investing in Precious Metals 101. Learn which type of gold you should buy and which type you should stay away from, where to securely store your gold, why pools aren’t safe places, and much more. Click here to get your free copy now.

 

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Pitbull And 2 Other Signs That Canadians Should Buy Some Gold In A Hurry

For centuries, physical gold has served as an effective crisis hedge. When economies take a severe downturn and paper money gets devalued, a stash of gold can save you from losing your shirt.

Our friendly neighbors to the north would do well to remember that wisdom—because they’ve been experiencing the mother of all housing bubbles.

“At this point,” says Jared Dillian, a former Wall Street trader and contrarian analyst who predicted Canada's looming economic crash early on, “you’d have to live under a rock to not realize what’s going on. Three years ago, I got laughed at when I said Canadian real estate was in a bubble. No one’s been laughing recently, though.”

Unlike three years ago, today the tell-tale signs of a bubble waiting for a pin are ubiquitous. Here are just a few:

Sign #1: When a million-dollar tear-down starts feeling like an amazing bargain, run.

In February, Toronto home prices hit another record high. The average selling price for a detached home was $1.57 million, up 29.8% in one year.

Even modest single-family homes sell for fantastic amounts of money.

Recently, a three-bedroom, three-bathroom home sold for $2.6 million after being listed at a price of “only” $1.5 million… that’s more than a million over the asking price.

And a dilapidated bungalow built in 1912 in Toronto’s East York neighborhood sold for $1.05 million—$370,000 over asking.

“It’s a sign of what little $1-million now buys in Toronto’s soaring housing market,” quipped the Canadian Globe and Mail, “a tear-down home on a skinny lot fetching a premium price in a neighbourhood known for its blue-collar roots.”

Sign #2: When a rapper gives you real estate advice, run.

At the recently concluded Toronto Real Estate Wealth Expo, US rapper Armando Christian Pérez, aka Pitbull, did just that.


Source: http://realestatewealthexpo.com/toronto/#home

Aside from performing his greatest hits, he egged on the audience to start speculating in real estate with profundities like, “The biggest risk you take is not taking a risk at all.”

Pitbull’s sidekicks at the Toronto Real Estate Wealth Expo were infomercial king Tony Robbins, Boston firefighter-turned-house-flipper Dave Seymour, Flip or Flop reality star Christina El Moussa, and Jim Treliving, the Canadian equivalent of a Shark Tank host.

The goal of this knowledgeable cast was to tell 15,000 enraptured Canadians how to get rich quick by investing in real estate.

“Get started flipping property in your area,” advises the expo registration website. “Once you learn our system, it’s fast and easy. And we help you get the money to fund good deals.”

Here’s how, according to blogger Tim Bergin, the attendees were encouraged to find that cash:

Not everyone has money, so what can they do? The answers were shocking. Be “creative” was the first response. Pool your money, borrow from friends and family, own just 5% of a house, get the money however you can and just do it—remember, it only goes up. […] The presentations all suggested that you can borrow money, if you don’t have it, at 4% and then buy these investments at 10%—easy money.

Sure. What could possibly go wrong?

Sign #3: When daycare moms and cab drivers tell you the market will go up forever, run.

Staying with the Toronto Real Estate Wealth Expo for another moment, who were those 15,000 participants that heeded the speakers’ millionaire-making advice? Professional investors, hedge fund managers, wealthy retirees?

Not if you look at this “exit poll” of Canadians who had just attended the event.

Melanie B., a 33-year-old children’s entertainer, sums up her takeaway from the Wealth Expo: “Don’t take advice from non-doers and keep only positive people around you.” Her projection for Toronto real estate? “I think it’s going to go even more sky-high.”

Daud S., an 18-year-old investor, also thinks “the market will continue to exponentially increase.”

And Rania P., a foster mom, is now convinced that “I need to invest” and that the market “will continue to grow for a while.”

Famous last words if we ever heard any.

Contrarian investment guru and gold bug Doug Casey once said that you know a market has reached its peak when the masses dive into it head first and you get investment tips from your friendly cab driver.

We think that time may have come for Canadian real estate. Definitely time to buy some gold.

The right time to buy gold is now, but make sure to do your homework first. Find out everything you need to know about which type of gold to buy and which to stay away from at all costs… how to safely store your gold… and much more… in the revealing ebook, Investing in Precious Metals 101. Click here to get your free copy now.

 

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The US Could Be One Recession Away from a Civil War

As of late, the ever-growing animosity between the left and the right in the United States has been downright frightening.

Especially for someone like me, who has witnessed close-up how quickly social unrest can turn into something much more serious.

Of course, major crises like civil war are extremely bullish for gold.

I wish I could present this fact as “the bright side,” but I’m afraid there is no such thing when it comes to scenarios where many thousands lose their lives. However, if a major conflict breaks out, gold might become a life saver.

I recall hearing a story about the Vietnamese “boat people” once—refugees arriving in the US after having fled their homeland post-Vietnam War. Some brought bags full of paper currency, and the receiving customs officers sadly had to tell them it was worthless. However, those who had sewed a few gold coins into their clothing were able to exchange the gold for US dollars and get a head start for a new life.

We all hope that it will never get that desperate in our own home country. But it’s good to know that a stash of gold will be waiting for you when you most need it.

And if you feel like there is even the remotest possibility that it could happen here, I encourage you to stock up on your gold bullion.

I recently penned the following article for the website RiskHedge. Please don’t hesitate to share it with your friends and family.

Olivier Garret, CEO
Hard Assets Alliance

The US Could Be One Recession Away from a Civil War

By Olivier Garret

In the early 1990s, I ran an agricultural machinery business. We were manufacturing vegetable harvesters and selling modern equipment to food cooperatives in post-Soviet states.

I happened to fly to Belgrade, Yugoslavia on business in late January 1991. During my visit, there were no visible signs of the brutal civil war that would erupt just a few months later.

It Took Everyone by Surprise

Yugoslavia appeared to be a generally peaceful and friendly nation. Not one person I met appeared anxious or concerned.

There were signs of unrest in some areas of the country, but they seemed to be isolated incidents. Tensions between Serbs and Croats had already erupted in Croatia, yet people wrote them off as trivial riots in established democracies.

Some of the businesses I visited were in close proximity to the site of the Borovo Selo Battle (May 1991) and the siege of Vukovar (August–November 1991), where soon over 1,100 people would die and 500 would disappear.


Destroyed home in Vukovar, Yugoslavia, where a three-month-long siege occurred
in 1991 during the crisis.

But neither my hosts nor I had any idea of what was about to unfold.

It took only a single trigger for the tensions to break out into the most violent European conflict since WWII. In May 1991, Croatian authorities held a referendum on independence, which passed with 94% pro-secession votes. The Yugoslav government responded by declaring the secession to be illegal and unconstitutional. They then supported the Serb-controlled Yugoslav People’s Army (JNA) in taking action to secure the country’s unity.

The rest is history.

Could the Same Happen in the US? 

The Balkans have a long history of ethnic and political divisions. Decades of economic mismanagement and politics imposed by communists resulted in severe economic crises, high inflation, and crippling unemployment.

Eventually, people stood up and demanded change. That gave rise to extreme political factions revolving around regional ethnic diversity. No surprise that political leadership used it as an excuse for their own mishandling of the country.

The tensions then suddenly broke out into civil war.

Today, the US is no different. This election has polarized the nation to an extent not seen for decades. Dividing the country seems to have become a pursuit of political leaders on both sides of the aisle.


Police fire pepper spray at protestors during a demonstration in Washington, DC after the
inauguration of President Donald Trump.

Some may see this as regular political discourse. But there is a lot of evidence that the nation is more divided today than it has been for decades.

Despite the (sluggish) economic recovery, a large portion of the country has been neglected for years. Those people can barely make ends meet and are pushing for change. It’s only a matter of time before the US will plunge into another recession.

What then? Will this be the trigger that could cause all hell to break loose in the US?

The Revolution Won’t Manifest Itself Until It’s Too Late

The current political divide between nationalists and globalists, progressives and “Trump supporters,” has been deepening for over a year now, and the tough stance of both sides will likely lead to more extremism. Politicians and the mainstream media will encourage discord—or even violence—for their personal gain.

Whether you are a fan of Trump or not (I am not), it is worrisome to see liberal leaders pushing their base to fight the result of a democratic election.

The biggest revolutions come by surprise. They sneak up on nations when all seems “fine.” Peace and democracy are privileges of the West—including the US—that we can’t take for granted.

Especially when things go sour in the coming recession.

 

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Why We Could Get Negative Interest Rates Even Though the Fed Is Hiking

At its March meeting, the Federal Reserve raised interest rates by 0.25%. In doing so, it hiked rates for only the third time since 2006. However, in a strange turn of events, the Fed’s move was perceived as a dovish one by the markets.

That’s because even with inflation at its highest level since 2012, the Fed said monetary policy will remain accommodative “for some time.” As has been the case in the past, the Fed is willing to let inflation consolidate above its 2% target before embarking on a more aggressive tightening path.

This willingness to let inflation “run hot” means even as nominal rates rise, real rates—that is, the nominal interest rate minus inflation—are headed into negative territory.

So what are the implications of negative real rates?

Negative Real Rates Drive Gold Higher

The consumer price index (CPI), the most widely used measure of inflation, averaged 2.67% for the first two months of the year. Even if inflation averaged only 2% for all of 2017—the Fed’s target—it would be a big problem for investors and savers alike.

Today, a one-year bank CD pays about 1.4%. Therefore, anyone who keeps their money in a bank is watching their purchasing power erode.

Of course, there are other options. You can put your money in US Treasuries or dividend-paying stocks—both popular sources of fixed income.

However, with both the 10-year Treasury yield and the average dividend yield for a company on the S&P 500 hovering around 2.35%, that doesn’t leave much in the way of real gains if inflation is running at 2% per annum.

If inflation rises or bond yields fall, real interest rates will be pushed into the red… and that’s very bullish for gold.

Gold is known as the yellow metal with no yield, but simple math tells us no yield is better than a negative one. Because of this, gold has done well when real rates are in negative territory. In fact, real US interest rates are a major determinate of which direction the price of gold moves in.

A study from the National Bureau of Economic Research found that from 1997–2012, the correlation between real US interest rates and the gold price was -0.82.

This means as real rates rise, the price of gold falls and vice versa. A -1.0 reading would be a perfect negative correlation, so this is a tight relationship.

The Fed’s hesitation to raise rates faster is contributing to another trend that is also bullish for gold.

A Falling Dollar Equals Higher Gold Prices

In the six weeks following the US election, the dollar skyrocketed 5.6%—a huge move for a currency.

However, since the beginning of the year, the greenback has given back most of its post-election gains. This is in part due to the Fed’s “dovishness” on interest rates.

The strong negative correlation between gold and the US dollar is a major reason the yellow metal is up over 9% year to date.

In the March edition of Bank of America Merrill Lynch’s Global Fund Manager Survey, respondents thought the dollar was at its most overvalued level since 2006. As the chart shows, the survey has a good track record of determining when the dollar is overvalued.


Source: Bank of America Merrill Lynch

Tying it all together, what do these trends mean for gold?

Gold Should Go Higher from Here

With arguably the two biggest drivers of the gold price trending in the yellow metal’s favor, gold is likely to go higher. Although the dollar could rise if Washington implements some structural reform, real rates aren’t headed higher anytime soon based on the Fed’s actions.

Bank of America Merrill Lynch said these two trends were part of the reason why it upgraded its forecast for gold to $1,400 per oz. by year-end. As the chart below shows, the market turned bullish on gold following the Fed’s December rate hike.


Source: Bloomberg

In closing, after nine years of doing its utmost to generate inflation, the Fed has finally succeeded. If past is prologue, as inflation rises over the coming months, gold will do very well.

If you’re considering getting some gold before it goes up, do your homework first. Find out everything you need to know about which type of gold to buy and which to stay away from at all costs… how to safely store your gold… and much more… in the revealing ebook, Investing in Precious Metals 101. Click here to get your free copy now.

 

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Subscribe to our Blog...

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Why We Could Get Negative Interest Rates Even Though the Fed Is Hiking

At its March meeting, the Federal Reserve raised interest rates by 0.25%. In doing so, it hiked rates for only the third time since 2006. However, in a strange turn of events, the Fed’s move was perceived as a dovish one by the markets.

That’s because even with inflation at its highest level since 2012, the Fed said monetary policy will remain accommodative “for some time.” As has been the case in the past, the Fed is willing to let inflation consolidate above its 2% target before embarking on a more aggressive tightening path.

This willingness to let inflation “run hot” means even as nominal rates rise, real rates—that is, the nominal interest rate minus inflation—are headed into negative territory.

So what are the implications of negative real rates?

Negative Real Rates Drive Gold Higher

The consumer price index (CPI), the most widely used measure of inflation, averaged 2.67% for the first two months of the year. Even if inflation averaged only 2% for all of 2017—the Fed’s target—it would be a big problem for investors and savers alike.

Today, a one-year bank CD pays about 1.4%. Therefore, anyone who keeps their money in a bank is watching their purchasing power erode.

Of course, there are other options. You can put your money in US Treasuries or dividend-paying stocks—both popular sources of fixed income.

However, with both the 10-year Treasury yield and the average dividend yield for a company on the S&P 500 hovering around 2.35%, that doesn’t leave much in the way of real gains if inflation is running at 2% per annum.

If inflation rises or bond yields fall, real interest rates will be pushed into the red… and that’s very bullish for gold.

Gold is known as the yellow metal with no yield, but simple math tells us no yield is better than a negative one. Because of this, gold has done well when real rates are in negative territory. In fact, real US interest rates are a major determinate of which direction the price of gold moves in.

A study from the National Bureau of Economic Research found that from 1997–2012, the correlation between real US interest rates and the gold price was -0.82.

This means as real rates rise, the price of gold falls and vice versa. A -1.0 reading would be a perfect negative correlation, so this is a tight relationship.

The Fed’s hesitation to raise rates faster is contributing to another trend that is also bullish for gold.

A Falling Dollar Equals Higher Gold Prices

In the six weeks following the US election, the dollar skyrocketed 5.6%—a huge move for a currency.

However, since the beginning of the year, the greenback has given back most of its post-election gains. This is in part due to the Fed’s “dovishness” on interest rates.

The strong negative correlation between gold and the US dollar is a major reason the yellow metal is up over 9% year to date.

In the March edition of Bank of America Merrill Lynch’s Global Fund Manager Survey, respondents thought the dollar was at its most overvalued level since 2006. As the chart shows, the survey has a good track record of determining when the dollar is overvalued.


Source: Bank of America Merrill Lynch

Tying it all together, what do these trends mean for gold?

Gold Should Go Higher from Here

With arguably the two biggest drivers of the gold price trending in the yellow metal’s favor, gold is likely to go higher. Although the dollar could rise if Washington implements some structural reform, real rates aren’t headed higher anytime soon based on the Fed’s actions.

Bank of America Merrill Lynch said these two trends were part of the reason why it upgraded its forecast for gold to $1,400 per oz. by year-end. As the chart below shows, the market turned bullish on gold following the Fed’s December rate hike.


Source: Bloomberg

In closing, after nine years of doing its utmost to generate inflation, the Fed has finally succeeded. If past is prologue, as inflation rises over the coming months, gold will do very well.

If you’re considering getting some gold before it goes up, do your homework first. Find out everything you need to know about which type of gold to buy and which to stay away from at all costs… how to safely store your gold… and much more… in the revealing ebook, Investing in Precious Metals 101. Click here to get your free copy now.

 

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Pension Crisis Ahead: Why Public Employees Should Think About a Golden Nest Egg Now

75.4 million Baby Boomers in America—about 26% of the US population—have reached or will reach retirement age between 2011 and 2030. And many of them are public-sector employees.

In a 2015 study of public-sector organizations, nearly half of the responding organizations stated that they could lose 20% or more of their employees to retirement within the next five years.

Local governments are particularly vulnerable: a full 37% of local-government employees were at least 50 years of age in 2015.

Seeing those numbers, it is no surprise that public pension funds are completely overwhelmed.

They’re facing two major problems: a severe rise in the old-age dependency ratio and dwindling investment returns.

According to a 2015 study from the National Association of State Retirement Administrators (NASRA), public pension funds are around $1 trillion in the red

A shocking number, but now we know that it was way too optimistic.

The reason is that NASRA’s estimates were based on pension funds earning an average annual return of 7.6%. However, the actual 2015 return came in at only 3.2%—58% less than projected.

The largest US pension fund, the California Public Employees Retirement System, did even worse: it earned a measly 0.6%.

If public pension funds used the same projection method as their private counterparts, their deficit would be around $3.4 trillion—that’s a whopping 19% of US GDP.

Hard to imagine that at the turn of the millennium, just 17 years ago, these funds actually ran a surplus.

Shrinking Yields and Growing Lifespans

By design, pension funds are conservative, low-risk funds, which historically hold around one-third of their capital in high-grade sovereign debt, like US Treasuries.

Up until recently, Treasuries ticked all the boxes. However, the 35-year bull market in high-grade sovereign debt is causing severe problems for pension funds. If we take the bellwether 10-year Treasury note, its yield has fallen from 16% in 1981, to 2.5% today.

The other major problem is the “gray tsunami” that is sweeping across the entire developed world—to wit, an increase in life expectancy and a decline in birth rates among first-world populations.

The US is no exception: America’s age-65-and-over population has grown by 35% in the last 50 years.

And there are not just more retirees, they also live a lot longer. On average, Americans born in 2010 will live nine years longer than those born in 1960, and retirees are now collecting their pensions for almost 20 years.

Many must fall back on Social Security, which itself is in dire straits. If there’s no meaningful reform, the money well is estimated to run dry by 2037. 

Add to this the quagmire that public pension funds as well as the Social Security system find themselves in, and we’re looking at a scenario of near-catastrophic proportions.

It’s Time to Start Stashing Some Gold

It may be too late for cash-strapped Baby Boomers to acquire a sizable nest egg to retire on, but Gen-Xers and Millennials working in the public sector should take heed. Public pension funds are clearly insolvent, so taking care of your own retirement needs is important.

The best portfolio is a balanced mix of solid funds and stocks, as well as physical gold. Most financial advisors recommend that gold bullion should comprise between 5% and 15% of your investable assets. Some companies are now even offering gold IRAs.

Why gold?

Because unlike paper money, equities, or pension funds, gold bullion is the only asset that isn’t simultaneously someone else’s liability—so there’s no counterparty risk.

That means while stock-issuing companies can go bankrupt and governments can default on their pension liabilities or dilute the purchasing power of the currency by cranking up the printing press—the value of gold bullion does not depend on anyone’s goodwill.

That’s why humans have viewed physical gold as a “safety net” and crisis hedge for centuries… and will likely do so for centuries more to come.

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