Posts Tagged ‘gold’

Do Politics Affect the Price of Gold?

by IRA Rollover in Politics & Gold with Comments Off on Do Politics Affect the Price of Gold?

Nearly everything affects the price of gold because human nature being what it is, we want to feel secure. If the market falls or inflation creeps up, people panic financially. When housing prices rise people feel wealthy and spend more freely even though they probably shouldn’t.

We’ve all seen how the market fluctuates during a presidential election cycle and how the price of gold can rise and fall as the campaigns progress. As one or the other candidate moves ahead the price moves accordingly. A candidate with solid fiscal policies might influence the stock market one way while a more socially aggressive candidate can produce the opposite effect. 

Are Politics the Only Factors that Affect Gold Prices?

If you’ve been through a few presidential elections you may have noticed how gold prices fluctuate as one candidate or another moves ahead. Their potential policies either frighten the market or reassure it and it rises and falls accordingly. But gold prices depend on other factors, too, and during election years these factors are substantially impacted by who is running. The price of gold is mainly affected by: 

  1. The global economy
  2. Inflation
  3. Interest rates
  4. Other financial assets such as bonds and currency
  • Inflation Raises Prices, Not Values

Inflation is one factor that frequently affects gold prices. Simply put, inflation means higher prices and high wages, an inflating of the currency. As prices rise and consumers make more money the price of gold also rises because it takes more dollars to buy the gold. The value of gold remains the same as it always was but since the currency is weak you will need more dollars than you used to in order to buy an ounce of gold.

Put another way, your favorite steak cost $3 a pound last year but this year it is $3.15. The price has been increased 5%. You are still getting a pound of steak but spending more dollars for the same item. Gold that cost $1200 an ounce last year has risen to $1260, also an increase of 5%. You are still getting an ounce of gold but you have to pay more for it since the dollar isn’t worth as much as it was last year. 

politics effecting economy

  • The Global Economy

The value of a country’s currency is important to every other country that deals with it. If China’s currency falls in value that means that the goods they produce will be cheaper for other countries to buy. Of course, that means that selling goods to China will be more expensive. It also means that consumers will favor Chinese goods over native goods since they are cheaper; the native market will likely suffer from over supply and lack of demand. Employers may have to let some workers go, reduce production, and raise prices in order to make a profit. This can result in inflation and cause the price of gold to rise.

gold ira world economy

  • Interest Rates

In Mid-March of 2015 gold hit a low of $1,142 because investors thought that the Fed might raise interest rates. Low interest rates means that bonds won’t perform well so people buy gold and other precious metals. High interest rates make bonds and fixed-income investments more attractive; demand for gold is low and the price for gold falls. Investors will always turn to the assets that increase their wealth.

  • Alternative Financial Assets

Bonds and currency trading can be very profitable for investors. When interest rates are high, bonds are a good investment. (A bond is a loan wherein the investor makes money on the interest) Currency trading can also be profitable depending on how good an investor is at tracking trends and buying at the right time.

gold ira financial assets

It All Ties In

So how do these four financial aspect factor into the effect of presidential elections on gold prices? Every presidential election since 1888 has seen the stock market drop around .5% in the first week the new president takes office. This can affect the global economy in a domino effect and indeed, it has in years past. As the global economy rises and falls, so do gold prices.

Gold prices are sensitive to politics because politics greatly influence economics. When national debt is a concern because of excessive spending, employment figures fall, and when inflation is high gold prices go up because the dollar is weak. Gold prices tend to be higher (and the dollar lower) during the 2nd term of any president.

A president with sound fiscal policies will usually encourage economic growth and stability, making the dollar stronger and gold prices more stable. Likewise, a president who spends most of the nation’s wealth on expanding social programs may see a weakened dollar, at least at first, as money is invested in social progress rather than tangible products. How the economy reacts to government policies affects the dollar and thus the price of gold.

It’s no wonder that gold fluctuates so much near the end of an election cycle and in the beginning term of a new officeholder.

With all these political and economic factors, any one of which can change in an instant, it can be hard to gauge when it would be the most advantageous to buy gold. A wise investor watches current events but makes regular investments in gold, setting aside money buying at regular intervals regardless of the price. Diversifying your investments and making gold an important part of your retirement portfolio will insure that your wealth grows steadily and securely.

Some Fun Facts About Gold

by Rebecca in Gold with Comments Off on Some Fun Facts About Gold

We all know that gold is a great investment that holds its value no matter what the economy is doing. But even the most serious matters have an interesting or humorous side. Gold can certainly help you in achieving a comfortable retirement, build your wealth, and be an excellent investment. But who know there were so many interesting and amusing aspects to this beautiful precious metal?

How is Gold Measured?

Gold and other precious metals are usually referred to in ounces. Because they are worth so much, hardly anyone owns pounds of precious metals or if they do, they’re certainly not advertising it! Therefore, precious metals are measured in ounces.

Even the ounces measurement, though, is special. Precious metals are measured in Troy ounces, which are slightly heavier than an ordinary ounce. A Troy ounce is 31.1034768 grams as opposed to an ordinary ounce that weighs 28.3495231 grams. There are 32.1507466 Troy ounces in a kilogram and 32,150.6466 Troy ounces in a metric ton.

How Much Gold is There in the World?

There have been an astonishing 165,000 metric tons of gold mined since the dawn of human history. That equals 363,762,732 pounds or a whopping 5,820,203.717 (ordinary) ounces.

This can be pretty difficult for most people to visualize so lets try to put it in more familiar terms. An Olympic pool measures 82 feet wide and 164 feet long and holds 660,000 gallons of water. In metric terms that’s 50×25 meters and 2500 cubic meters of water; each cubic meter of water equals one metric ton of weight. Therefore, an Olympic pool could hold 48,250 metric tons of gold. It would take just shy of 3 ½ Olympic swimming pools to hold all the gold that’s ever been brought above ground by miners throughout history.

What if all that gold was shared by every single person on the planet? Assuming the most recent census of about 7 billion people is correct, every person would have .83 ordinary ounces of gold. If you wanted to wear it instead of having an ingot, dust, or nuggets it would make about 5 gold rings per person.

Gold is still being mined, of course, every day of the year. Each year all the gold that is brought above ground could be crammed into a room that is 20’ long, 30’ wide, and 8’ deep. That’s a lot of gold!

Is There any Gold Left?

According to National Geographic more than half of all the gold mined throughout history has been brought above ground in the last fifty years. The most profitable deposits are being quickly depleted and it’s rare that any new discoveries are reported. The huge nuggets of the California Gold Rush are unheard of now and the fantastic gold reefs of South Africa are no more. It’s unlikely that we’ll ever again hear of a huge, rich vein of gold being discovered unless its buried in a corner of the world that has remained undiscovered.

Most of gold is mined in China with the U.S. producing the second most tonnage.

Gold Has Caused a Lot of Trouble!

When Spain sent their soldiers to conquer the New World in the 16th century they thought that they would be sailing home with ships full of gold. Those ambitions were not fulfilled since the Incas and Mayans had more silver than gold. They got a mere 154 metric tons of gold but 7,440 metric tons of silver. To any normal person that would be an unbelievable fortune but for a country hoping to finance the conquest of the world it was very disappointing. Thousands of lives were lost in the looting.

In the 19th century the British went to war with the Ashanti tribe in Africa over a gold stool that was supposed to represent the power and authority of the tribal leader. The Ashanti King was exiled in 1896 and the British governor, Sir Frederick Hodgson, claimed that since the Queen had jurisdiction over the Ashanti territory the golden stool was her majesty’s property. He demanded the stool be delivered to his residence to be added to his furnishings. The tribe was stunned that anyone would even consider applying their backside to the sacred golden stool and the two sides went to war. After months of battling and thousands of deaths the British declared victory over the Ashanti tribe. But they never did lay hands—or their backsides—on that golden stool!

Does Gold Have Any Practical Uses?

Gold is more than just a pretty metal, it’s been used in dentistry for at least 3,000 years. Two molar teeth held together by gold wire were found in the ancient burial grounds at Giza. The first textbook on dentistry, published in Germany in 1530, suggested using gold leaf to fill cavities. Gold is completely compatible with the human body; no one is allergic to it or suffers any ill effects if it is on their body or used in their dental work. About 80 tons of gold is used each year for dental crowns, fillings, orthodontic appliances and dental bridges.

Gold has not been confined to dentistry but was used in Chinese medicine as far back as 2500 B.C. to remove mercury from human skin and to treat smallpox, skin ulcers, and furuncles (abscesses under the skin). Modern medical practitioners use gold salt injections to treat arthritis but it’s a slow process. Patients typically experience relief after 4-5 months of weekly injections.

There’s about a half dollar’s worth of gold in every cell phone. Before you start collecting old cell phones, though, be aware that industrial gold is not nearly as pure as the gold used for investment purposes. About $500 million in gold is used in cell phones annually. Gold is an excellent conductor and won’t corrode so it is used in most electronic devices including ordinary desktop and laptop computers.

Gold is not only a good conductor but a great reflector. Polyester film coated with gold is used on space vehicle to reflect radiation and stabilize core temperatures. It is also used to thinly coat the visors of astronauts’ helmets to protect them from the sun’s rays.

Most of us have seen photos of buildings like St. Basil’s Cathedral in Moscow that are topped by domes covered in gold. Gold is very soft and can be made into sheets as thin as a few millionths of an inch. These sheets are called gold leaf and can be applied to buildings no matter what the climate. Gold does not corrode and is easy to work with so it makes an excellent building material. The Sripuram Golden Temple in India is the biggest golden structure on earth and a truly incredible sight. The temple builders used 1.5 tons of gold leaf in its construction.

52% of gold is used in the jewelry business, 12% for industrial use and 34% is in investments and holdings. That leaves 2% unaccounted for. I’m sure we would all like to stumble across that “small” amount!

So you see, gold is a very versatile metal with more uses than people are aware of. The next time you need to start a conversation or break the ice you can use these entertaining and interesting facts. Investing in gold, though, is the best use of gold for the average person!

How a Gold IRA helps you Diversify and Liquidate

by IRA Rollover in Gold IRA with Comments Off on How a Gold IRA helps you Diversify and Liquidate

Fiat Currency–what exactly is it? It is money that depends on government’s regulations to define its value; it is not backed by an asset that is tangible like silver or gold. Most of the world’s paper money today is considered fiat currency and is considered a liability to central reserve banks. In the US, Federal Reserve Notes currency is not backed by special commodity convertibility like silver or gold and needs to be issued against collateral.

The United States Civil War and Fiat Currency Beginnings – Back in 1862, in order to pay the growing debt that resulted from its US Civil War participation, there was $50 million issued by the Union government which is now worth over $1.13 trillion; more followed later in legal tender. In order to cash in paper money for coin, there was a suspension in specie payment. Ordinary citizen’s currency was intentionally depreciated through the so-called wartime ‘Legal Tender Acts.’; inflation wreaked havoc on the freshly printed “greenbacks” to where they became worth only around half of their putative value in gold by the end of the war.

Debt Monetization and Federal Reserve Note Todaygold ira

The Federal Reserve Banks back the Federal Reserve Notes today; these are usually government debt and US Treasury securities bought by the Fed in a debt monetization process. When debt monetization finances government deficits, the result is inflation due to growth in money supply. The US money supply is increased further by fractional-reserve banking usage where deposits are lent out and then deposited again for further loans.

Inflation tax is known as the loss of buying power by people who hold fixed-rate bonds and cash. A better term for it would be a wealth transfer rather than a tax since holders and debtors of hard assets end up with a value gain of their holdings. Inflation affects people on fixed wages, incomes and pensions disproportionately.

The American Society of Actuaries conducted a study and found that inflation was considered by retirees as the main risk in retirement. People who saved long-term or who contributed to IRAs should be worried about inflation, especially since there has been a decline of 82% since 1971 in dollar-denominated assets. Through history, with an increase in inflation, the price of gold does as well. Therefore long-term investors are considering accumulating wealth through gold IRAs. Converting a currency IRA to a gold IRA is penalty and tax free. A person’s retirement is protected against the decrease of value in the Federal Reserve Note with a gold IRA.

Acceptable US IRA Gold Coins

* Gold coins with American Eagle
* Nugget gold coins or Australian Kangaroo
* Gold coins with Austrian Philharmonic
* Gold coins with Canadian Maple Leaf
* PAMP Suisse gold bars .999 or Credit Suisse gold
* United States Uncirculated Buffalo Gold coins (No Proofs)

Be advised that coins that have been certified, including the American Eagle, are not considered acceptable for retirement plans at the moment.

Investing in Gold

by IRA Rollover in Gold with Comments Off on Investing in Gold

For investors seeking a safe and secure asset for their portfolio, investing in gold is an excellent option. Historically, gold has provided most cultures with a tangible source of currency, and it will always be a valuable asset regardless of the economic or political situation existing now or in the future. Few investments can give you as much security and value for your retirement as gold.

Why Invest in Gold?invest in gold

There are several significant reasons to invest in physical gold as opposed to other investments.

Since gold is an asset that is acknowledged as a monetary unit across the world, you can effortlessly convert gold to actual money whenever you choose. This means that gold is considered a liquid asset, and liquidity is an important facet of an investment.

Furthermore, it is imperative that your portfolio possesses diversity. To ensure diversity, investors must position their funds in several different investments. By investing in gold, you can confidently guarantee both diversity in your portfolio and security in your investment, since gold is an asset that will always enjoy universal value and purchasing power protection. The purchasing power protection afforded by gold is derived from gold’s ability to increase in value in accordance with the cost of living. An ounce of gold today can still purchase the same good or service that it could buy 100 years ago even though that item is now sold at a much higher price.

A Gold IRA also offers investors tax deferred growth. Tax deferred growth simply means that you will not be taxed on an investment until a later time, usually when retirement is reached or when you convert the investment into cash. Tax deference is an important consideration when choosing an investment option. Many other types of investments are taxable, which will cost you more money every year and could ultimately diminish some of your retirement funds.

Why a Gold IRA is a Good Investment Choice

by IRA Rollover in Gold, Gold IRA with Comments Off on Why a Gold IRA is a Good Investment Choice

The price of gold has been increasing consistently for over 10 years now. According to investing specialists and experts of precious metals, investor’s assets are protected by gold against political inflation, turmoil and other events in the future that can be unpredictable. Varying up things by setting up a Gold IRA is favored by many as an efficient gold investment tool. There are a few tax benefits to rolling over your IRAs to include gold.

To include gold in your IRA, you can establish a self-directed Gold IRA or you can work with a reputable dealer. All important transactions should be handed over to high-profile government-approved custodians. One thing to note, however, is that only specific types of gold can be included in your Gold IRA, and is regulated by the United States IRS. Gold bullion coins like the American Eagle are recommended choices.

Taking a Look at Precious Metals

Precious metals are considered real money. Gold is considered to be stabilizing, and is one asset that is sought-after by many since it is a good investment choice.

Why Would You Want to Diversify?

You might be wondering why you should diversify at all. You have probably heard the term, “Don’t put all your eggs in one basket.”, and this applies to gold. When other IRA investments lose their value, gold tends to increase in value. No matter what happens, gold has always had the reputation of steady gain. You can balance your portfolio safely by including gold in your IRA.

invest in gold