Investing in physical gold bullion safer than mining companies stock
Possessing physical gold is one of the best ways for every investor to stabilize his portfolio and to protect cash funds from devaluation. Investing in physical gold offers investors protection from the continuously weakening dollar and declining interest rates, while at the same time diversifies investment securities.
According to bullion dealers and analysis from investment banks, the demand for yellow metal in physical bullion form has soared during last month. The main driver for the tendency is gold’s current lower price. A good example is provided by the Indian investors. Recently they are returning to the market and buying physical gold. The recent weakness in the yellow metal’s price has eased the tension over the lower Rupee and in respect the demand for physical gold in one of the largest markets is on the path to rebound.
If you are willing to put your money in a safe asset such as physical gold, then consider the geopolitical facts.
Australia is ranked as the third largest supplier in the world, with approximately 10% of world gold resources. USA and South Africa are holding the leader places, while Australia is world’s third largest producer of yellow metal with 11% of global output on its account.
Primary deposits are where most resources come from, and some deposits could face some level of weathering. The important thing here is that weathered gold deposits are cheaper to mine and precious metal is gathered easier by the gold mining companies.
This data look very promising but there is a certain catch, and future investors must consider the situation wisely. Although an investment into Australian gold mining industry seems a good idea, the type of investment itself should be carefully picked. Yes, gold mines are performing well, though physical gold has less risk than gold mining equities. The reason for that is that equities are connected to producing companies, not to the commodity being produced. For example, a new legislation norm applies certain tax regulations over the mining executive firms. This scenario will cause a serious damage to the stock driving a downfall. Also investors should keep in mind that mine deposits have limits. Other thing, even if the precious metal deposit is not depleted, the expenses of further digging and equipment modernization and backup will cause additional affect on the stock price.
So instead of in investing in gold mining companies’ stock, it may be wiser for investors to place their money into the gold production.
A good advice for most novice individual investors is to buy gold in its most physical form, executed in bars, minted gold coins, or minted proof coins purchasing.
Here is another advice for investors on the look out to place large-scale investment into physical gold bullion. Gold bars’ buying is an effective way to obtain gold assets at an approximately low cost. Gold bars come in different sizes – 1-troy ounce, 10-troy ounce and 32.15-troy ounce, as well as kilo-bar standards. There are also larger billions such as 100-ounce and 400-ounce sized bars. In order to pay the lowest price for the bar manufacturing, gold bullion bars should be bought in the biggest standard possible.
There are various options to invest in physical gold, but most of all it is important to consider the timing, big player’s activity on the market long term direction. A smart move could be to buy physical gold from large output producers such as Australia and sell within markets with high demand like the ever-hungry China.
It is very much likely that the global economic downturn will continue in 2013 and gold will remain portfolio hedge against inflation. Most of the big money managers predict a relatively stable price level of $1.850 for the second half of 2013. So, investing and trading gold will continue to net profits for dedicated traders.
Resources for gold investors:
- Top Rated Books for Silver Traders Review
- Top Rated Books for Gold Traders Review
- Social Media for Stock Market Traders
