INVEST IN GOLD NOW!
Thought of getting bank into Gold…
With the Gold price back down to about $580 an ounce, it seems too good an opportunity to pass up. If we were to consider that the long-term likelihood that the USD will continue to depreciate in value against the other major currencies. If I were a USD denominated investor, I would definitely try to diversify out of the USD so that if it continues to loose value, my funds would maintain their purchasing power. An ideal way for this to be achieved it to buy precious metals and/or other currencies. A traditional hedge against a depreciating currency, is Gold, especially when it is relating to the USD because Gold is priced in USD.
Another option open for investors is to invest in Mining stocks, these are plainly stocks in the companies that mine precious metals. The idea is that you are not only purchasing the current inventory and trading power of the company but are also purchasing the future production, so the stock price should theoretically appreciate more (in percentage terms) than the gold itself. This is because the higher gold price would mean a higher turnover in the future. There is a risk with this strategy though that people tend to underestimate… What would happen if there was a strike or an accident at a specific mine and production was stopped for months? Profits for the company would tumble and the share price would go through the floor with just the news breaking. In the long run, it should not be too bad but if you want to sell in the meantime, then you are positioned in a bad place. The other major risk is that you are not only investing in a metals related stock but are also investing in the specific market. If you were to buy a South African or Australian mining stock, you are also affected by their local market conditions as well as their currency fluctuations!!!
If I were to put myself out there and make a prediction, I would choose to buy gold at any price below $580 and have a target price of about $670. I would also buy a fund that focuses on mining stocks so that the risk of investing in individual stocks is minimized. I would also make sure to that my exposure to the USD is limited to this investment and have all my other investments diversified into other currencies.
That’s all the time we have for at the moment… until the next thought, goodbye.
With the Gold price back down to about $580 an ounce, it seems too good an opportunity to pass up. If we were to consider that the long-term likelihood that the USD will continue to depreciate in value against the other major currencies. If I were a USD denominated investor, I would definitely try to diversify out of the USD so that if it continues to loose value, my funds would maintain their purchasing power. An ideal way for this to be achieved it to buy precious metals and/or other currencies. A traditional hedge against a depreciating currency, is Gold, especially when it is relating to the USD because Gold is priced in USD.
Another option open for investors is to invest in Mining stocks, these are plainly stocks in the companies that mine precious metals. The idea is that you are not only purchasing the current inventory and trading power of the company but are also purchasing the future production, so the stock price should theoretically appreciate more (in percentage terms) than the gold itself. This is because the higher gold price would mean a higher turnover in the future. There is a risk with this strategy though that people tend to underestimate… What would happen if there was a strike or an accident at a specific mine and production was stopped for months? Profits for the company would tumble and the share price would go through the floor with just the news breaking. In the long run, it should not be too bad but if you want to sell in the meantime, then you are positioned in a bad place. The other major risk is that you are not only investing in a metals related stock but are also investing in the specific market. If you were to buy a South African or Australian mining stock, you are also affected by their local market conditions as well as their currency fluctuations!!!
If I were to put myself out there and make a prediction, I would choose to buy gold at any price below $580 and have a target price of about $670. I would also buy a fund that focuses on mining stocks so that the risk of investing in individual stocks is minimized. I would also make sure to that my exposure to the USD is limited to this investment and have all my other investments diversified into other currencies.
That’s all the time we have for at the moment… until the next thought, goodbye.
posted by Private Banker at 9/20/2006 04:37:00 pm
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