Gold Investments

Gold Investments

BY
WWW.PROFITABLEINVESTINGTIPS.COM

The right time for investing in gold (or anything else) is
when the price is low and not when it is high.

http://www.profitableinvestingtips.com/profitableinvesting-tips/gold-investments

We published an article nearly four years ago in which we
noted that what goes up commonly comes back down.


At the time gold was peaking at $1,888 an ounce.


Today gold investments have gone back down with gold
bullion currently selling for $1,195 an ounce.


Gold has fallen 34% in just under three years.


During the same time that gold investments have fallen by
a third the S&P 500 has gone up from 1300 to 1800, a 38%
rise.


Interestingly as private investors are fleeing gold
investments China appears to be buying huge amounts in
an attempt to substantially increase its own gold reserves.


Gold investments by China may be something to watch as
the Asian nation attempts to internationalize the Yuan and
turn it into a reserve currency similar to the US dollar, Euro,
or Yen.


Various Types of Gold
Investments


Despite the fact that gold bugs only want to buy gold bullion
there are other sorts of gold investments.


The problem with holding gold bullion is that you need to
keep it safe in your bank lock box or a larger storage facility
if you have a lot of it.


Gold bullion does not pay interest. And gold bullion is a
commodity that goes up and down based on market
sentiment.


Fundamental analysis of gold investments tells us that gold
goes up in times of chaos and when currencies and
economies are weak.


Gold investments fall when economies strengthen, interest
rates go up, and governments are secure.


Gold mining stocks are great when gold is rising as these
gold investments tend to rise faster than the price of
bullion.


Likewise, rare gold coins tend to outdistance gold in a
rising market.


Both of these types of gold investments fall precipitously
when gold heads down.


A reasonable means of investing in gold without having to
store bullion is to buy shares of an exchange traded fund.


When investing in exchange traded funds such as those
that track gold, one can enter and exit the investment
easily.


However, these are not dividend stocks that send you a
quarterly check or stocks that grow with the economy.


Gold ETFs only track the price of bullion and as such fell as
badly as gold bullion in the last three years.


When to Buy Gold


The Chinese may have gotten it right in buying gold as it
falls.


Their central bank is buying gold at a steady clip.


The country is the largest gold producer in the world and
exports very little of the shiny metal.


Here are the countries with the largest known central bank
gold reserves.


Rank

Country

Gold (Tons)
4/2013

1

United States

8,133.5

2

Germany

3,391.3

3

IMF (International
Monetary Fund)

2,814.0

4

Italy

2,451.8

5

France

2,435.4

6

China

1,054.1

7

Switzerland

1,040.1

8

Russia

976.9

9

Japan

765.2

10

Netherlands

612.5


These 2013 figures are based on the most recent
disclosures by the various central banks concerned.


Regarding China, the nation has not disclosed reserves for
five years and is due to do so again next year.


Some speculate that China may have doubled its gold
reserves along the way.


To the extent that they are keeping domestic gold off world
markets and buying gold on the world markets they are
helping support the price of gold.


At such point as they may choose to quit buying gold the
price could plummet.


To the extent that China may choose to tie its currency to
gold it could be disruptive to world trade.


It is our opinion that China will not choose any route that
dramatically increases the value of its currency as that
would make its goods more expensive in world markets
and threaten an economy already seeing threats to its
export markets.


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