Money Doctor John Lowe: Invest In Gold In 2019
By John Lowe, The Money Doctor via RTE
Diamonds may have the edge when it comes to a girl’s best friend but as the world becomes more volatile year by year, investing in the yellow metal is de rigueur and a prudent strategy in a balanced portfolio.
They say 10% of your wealth should be in precious metals.
Wonder will this apply to the Euromillions 6 and their €30 million each? John Lowe the Money Doctor gives the background.
If the so-called ‘gold bugs’ – investors who believe passionately in the long-term value of buying gold – are right, then this could be a good time to add a little glitter to your portfolio. Over the last few years, we have seen massive swings in the price of gold from its all-time 1980 high then of US$850 per troy ounce – in today’s money, about $2,500 – to its current price of c. US$1305 ( c. €1,154.87) per troy ounce.
Bear in mind the gold price in 2011 stood at its highest ever at US$1913 per troy ounce – slightly heavier than avoirdupois ounces – and was expected at the time to go even higher. It didn’t but with such recent global uncertainty – gold is now a barometer of volatility in the world – and its effect on the financial markets plus a natural desire to stay solvent and have an asset that is easily bartered, gold could still be the very commodity to take off. Self administered pensions (SSAPs) are ideal for this investment, too.
There are three sound reasons to believe that prices will rise:
Firstly, the growing economies of Asia and the Middle East have resulted in a huge surge in demand – especially for gold jewellery. For proof one need look no further than global gold jewellery sales, which increased at a very steady pace over the last few years.
Secondly, a rising number of private investors all over the world have been putting some or all of their savings into gold as a hedge against economic or political instability and, as in maybe the case of Syria and ISIS war.
When investors feel the future is uncertain (as many appear to at the moment) demand for gold always surges. This is doubtless in no small part due to the fact that the price of gold tends to move in the opposite direction to virtually all other conventional asset classes – making it ideal when investors wish to diversify.
Thirdly, the mining industry can’t keep up with demand. Figures show that in excess of 4,000 tonnes of gold were purchased, but only 2,700 tonnes were mined in 2011 and 2,860 tonnes in 2014 – 260 tonnes more than the previous highest peak in 2001.
What’s more, production is falling by an average of 4% a year and it will take the industry anything up to ten years to increase supply by the required volume. In the past, when demand outstripped supply, the shortfall was met by many of the world’s central banks. No longer. Countries, which had been disposing of their gold reserves, have slowed down sales or even stopped selling altogether. Many central banks, notably those of Russia, Iran and China, are actually now buying bullion.
Although I believe that gold prices are likely to carry on moving upward after the recent drops, I would only suggest buying if you already have a range of other investments including shares, bonds and property.
I would recommend various ways of investing in gold:
Gold bullion coins and bars weighing nearly 2,000 troy ounces (over 60 kilos) and worth more than €2m were recently transferred in recent weeks into the country from the UK. This is believed to be the largest legitimate movement of gold bullion into Ireland in decades.
Brexit, of course, is helping but the leading bullion dealer in Ireland, GoldCore, said it is seeing a growing preference amongst Irish investors to store their gold domestically here rather than Perth, Zurich, Singapore, Hong Kong, Singapore and especially London.
Gold held in the company’s Dublin vaults is a fraction of GoldCore’s client holdings in other jurisdictions, and has already surpassed Hong Kong as a favoured jurisdiction for storing gold with Goldcore clients. Zurich remains the favourite location with client bullion holdings there worth nearly €40 million. Zurich is followed by Singapore, then London, Dublin and Hong Kong.
Perth Mint Gold Certificate programme
The bullion is held in Perth Mint, the only mint in the world guaranteed by a AAA-rated government (the Western Australian government) The fee is 2% to 3.9% depending on the amount bought and 1.5% when you sell. Minimum investment is €7,000 but it is safe in every respect.
Incidentally, if you are planning to invest in gold it is worth noting that it can be held in self-administered pension schemes (SSAPs or Self Directed Trusts for company owners, directors and senior executives), which could mean some tasty tax savings depending on your circumstances.
Chess grandmaster, Professor of Economics in Harvard and former IMF Chief Economist, Ken Rogoff advises that gold is an “extremely low risk asset” and “investing in and owning gold as a hedge will become more important as it will have enormous value in a cashless society.”
News and Commentary
Gold Prices (LBMA PM)
01 Mar: USD 1,309.95, GBP 989.27 & EUR 1,152.23 per ounce
28 Feb: USD 1,325.45, GBP 996.21 & EUR 1,162.82 per ounce
27 Feb: USD 1,326.45, GBP 998.02 & EUR 1,164.09 per ounce
26 Feb: USD 1,327.55, GBP 1005.79 & EUR 1,168.11 per ounce
25 Feb: USD 1,329.15, GBP 1016.80 & EUR 1,170.32 per ounce
22 Feb: USD 1,322.25, GBP 1016.15 & EUR 1,166.49 per ounce
Silver Prices (LBMA)
01 Mar: USD 15.56, GBP 11.75 & EUR 13.67 per ounce
28 Feb: USD 15.81, GBP 11.89 & EUR 13.85 per ounce
27 Feb: USD 15.86, GBP 11.91 & EUR 13.92 per ounce
26 Feb: USD 15.83, GBP 11.98 & EUR 13.93 per ounce
25 Feb: USD 15.95, GBP 12.19 & EUR 14.04 per ounce
22 Feb: USD 15.87, GBP 12.20 & EUR 14.00 per ounce
Recent Market Updates
– “Gold Is A Global Thermometer Of Risk” – CEO Q+A: Stephen Flood, GoldCore
– U.S. Mint Suspends Silver Bullion Coin Sales After Sales Double In February
– MMT: Modern Monetary Madness Will Lead To Higher Taxes and Inflation
– Gold Broker Has Good Sense and Prefers Gold To All That Glitters (The Times)
– The Utterly Unbelievable Scale of U.S. Debt Right Now
– The Best Time In History To Buy GOLD
– Jim Willie Interviews Mark O’Byrne – Prepare Now For Global Financial Crisis II
– 7 Major Flaws Of The Global Financial System – Excellent Infographic
– The Case for Gold In 2019 – The Economist
– Invest In Gold As a Hedge In Cashless Society – Ex IMF Rogoff