A BEGINNERS GUIDE TO BUYING GOLD

Posted on by Lee
Why gold and why now?
Throughout 2020/2021 an unprecedented amount of paper money has been created and therefore every pound dollar, euro, yen etc. is subsequently worth lessthan the one before it. Now more than ever before it is imperative to protect and secure your finances from the devastating effects of inflation. Put simply, inflation is the devaluation of paper money regardless of the currency. Gold is a safe haven and is seen as a hedge against inflation and has been used as real money for thousands of years.  Over time gold has never lost its value and long term has proven to perform very well compared to paper money. As we have seen, paper money can be printed indefinitely whereas gold has a finite supply, with some mining experts predicting there is only 20yrs of mineable gold left.  The gap between the value of paper money and the value of gold has grown over time showing gold increasing in value whereas paper money is decreasing.

Start with the end in mind
In our experience the most overlooked and least considered part of buying metals is what you will do at the other end. When investing in anything it is wise to consider your end goal so that the decisions you make now pay off in the future. Once you have worked out your end goal you can assess if your investment has the means to reach your preferred outcome.

It is very important to consider the following questions;
a. How long do you want to hold your metals for?
b. Will you sell them at a predetermined price/level?
c. Will you hold the metals indefinitely and pass them on to the next generation?
d. Are you wanting to exit over a period of time or all at once?
e. Who will you sell your gold to and at what price?

All of these questions play an important role in deciding what your strategy for buying is and must be considered to ensure you make an informed and effective investment that will achieve your goal.

Universally/Globally recognised 
We suggest that you only buy LBMA certified metals, this is the London Bullion Market Association and is the top standard around the world. LBMA metals are recognised in every corner of the globe which gives you more options when you want to sell your metals. It is not advisable to buy metals that are only recognised by a limited audience even if you get a better price as this can limit who you sell to and the value of the metal.

Although there may be some legitimate sellers on well-known selling sites (e.g. eBay) we would suggest that you don’t use these sites for purchasing precious metals as it is difficult to verify legitimate sellers and this adds an unnecessary level of uncertainty to the buying process.

Control/Ownership
There are numerous different ways to invest in gold, it is important to note that many of these ways do not give you legal ownership of the physical metal itself. These are simply ways to bet on the price going up.

To safeguard your investment, you should ensure that you legally own the physical metals and that they are fully allocated to you with no counterparty risk. Therefore, if the company you bought from were to get into financial difficulty, it would not affect your metals as they are 100% legally owned by you and not the company.  Storing your metals in a vault outside of the banking system can be a great option but it’s vital you ensure that your metals are not held on the company balance sheet as this guarantees that you have full ownership and control of your precious metals.

Consider all the costs
Most people just look at the buy price, this is very important but certainly not the only thing to consider. Other costs that can be involved in your investment are storage fees including insurance and auditing as well as other management and handling fees. You should be informed and aware of these fees before you make the decision to invest.
It is extremely important to consider the buyback price that you will receive when it comes to selling your metals and to be aware that you do not need to sell metals back to the same company that you bought them from. The buyback price is most often overlooked however it can make the greatest difference to the overall profitability of your investment.

It is important to consider all of the above when purchasing precious metals to ensure that the actions you take today lead to a more profitable and financially secure future.

To ask the experts Adam & James about gold and silver head over to GoldBusters.co.uk complete the contact form and they will be in touch within the week.

Will Basel III Regulations Shake up the Gold Market?

Posted on by Lee

European banks are undergoing a big change in how they deal with gold under new regulations that have come into effect in Europe.  A new international Accord known as Basel III has the potential to change the landscape for gold and other precious metals.

Under the new rules, physical gold will be essentially reclassified as a zero-risk asset, moving from a tier 3 asset to a tier 1.

The bank’s usual method for underwriting, paper gold, will not be reclassified, however.  This has the potential to force banks to either take on more paper gold as a reserve or switch to physical gold.

Basel III is a direct response to the global financial crisis of 2007 to 2009 and is a multi-year regime change with the aim of preventing another banking crisis from occurring.

The Basel Committee on Banking Supervision, which sets the standards for banks, believes that their measures for requiring banks to hold more stable assets, like gold bullion, will help maintain stability within the banking system during turbulent times.

Central European banks have already made a conscious move toward physical gold over the last few years, and these new rules could continue that move in earnest.

Physical gold, such as bars and coins, has the advantage of being owned by the investors outright and kept physically in their position.  This advantage is why Basel III has changed its asset classification to zero-risk.

Liquidity Requirements

The Basel III reforms also bring with them new liquidity requirements for European banks known as the Net Stable Funding Ratio (NSFR).  The new requirements state that the amount of available stable funding relative to the amount of required stable funding must be equal to at least 100% on an ongoing basis.

These changes came into place for European banks on June 28th, in the U.S. on July 1st, and will come into place from January 1st, 2022 in the UK.

According to the London Bullion Market Association (LBMA) the aim of the NSFR, in particular, is to “oblige banks to finance long term assets with long term money”, and that “assets are properly funded”.

While these new rules may mean that banks purchasing of gold will increase, some don’t see this move as being bullish for gold.

Unallocated Gold

The new NSFR rules make it much more expensive for banks to hold unallocated gold as they will now have to be included on the bank’s balance sheets.

This could be a significant blow as unallocated gold was the preferred method for banks to trade as it is a much quicker, cheaper, and more effective way to trade rather than having to transport physical bars back and forth.

There are some that worry this will make the dealing of gold far more expensive and actually reduce the amount it is traded and thus less of an investable asset.

Gold Market Impact

The majority of the gold trading takes place in the London bullion market, and as the rules don’t come into force until January 2022 the actual impact on the gold market remains to be seen.

That hasn’t stop speculative thought ranging from it will have no effect to it will cause absolute mayhem among various experts.

The underlying belief is that it is unlikely the bullion market or the banks will allow these regulations to have too much of an impact on the market, and the price of gold will continue on a steady course, though the cost of dealing will likely rise.

Disclaimer: This is not financial advice.

Small Investors and First-Time Investors

Posted on by Lee

Small investors and first-time investors

Smaller and first-time investors wanting to buy gold bullion should consider both bars and coins.

100g gold bars and 1-ounce gold bars are a very popular starting point for new investors, with a price tag of around £2,500 and £750 respectively.

Gold coins seem like the obvious choice when it comes to lower value investment, though depending on how much you want to invest, you may want to consider the lower premiums on bars.

That being said, the South African Krugerrand coins tend to attract a lower premium than other coins and are a very popular choice for new investors at a cost of around £800.

Gold British coins are also a great way to start investing in gold bullion and offer a much cheaper barrier for entry at £200 for a gold sovereign and £100 for a half-sovereign.

Investing in silver is also an excellent start for smaller and newer investors looking to get into commodities, and there are a whole host of 1-ounce silver coins to choose from.

We recommend buying the lower unit cost coins like the silver Maples and the Philharmonic coins as when you come to sell them you only get the intrinsic value of the metal.  So, the cheaper you bought them the better return you’ll make.

A Brief History of Gold

Posted on by Lee

A Brief History of Gold

3600 BC: Egyptians smelt the first gold.

2600 BC: The first gold jewelry is seen in Egypt, as well as the earliest know maps showing the plan of a gold mine.  Hieroglyphs describe gold as being “more plentiful than dirt”.

1223 BC: The famous Tutankhamun’s funeral mask is made from gold.

600 BC: A crude mix of gold and silver is used to forge the first gold coins in Lydia, Asia Minor.

560 BC: The Lydians perfect the art of refining these metals to create the world’s first bi-metallic coinage with gold and silver. They are called Croesids after their King, Croesus. Croesids begin to be used as a form of currency as the gold content was so standard.

546 BC: Persians capture the King of Lydia and adopt gold as their main metal for coins.

500 AD: The ancient Chinese state of Chu begins circulating a gold square coin.  The Ying Yuan.

1300: Goldsmith’s Hall in London establishes hallmarking.

1370-1420: The Great Bullion Famine sees gold mines in Europe become overly prevalent and nearly emptied.

1489: Under the reign of King Henry VII the first gold Sovereign is struck.

1717: The gold standard is set in the UK. Meaning currency was now linked to gold at a fixed rate.

1816: During the industrial revolution the way we produce money and the financial landscape, in general, is forever changed.  Matthew Boulton and James Watt invent steam-powered coining presses that make the money-making process far more efficient. The Royal Mint also moves from The Tower of London to Tower Hill.

1848: James W Marshall finds gold at Sutter’s Mill in Coloma sparking the California Gold Rush.

1870-1900: The entire world, except China, adopts the gold standard.

1914: The First World War caused many countries to move to fractional gold standards which inflated their currencies. The gold standard doesn’t return to these countries until 1925.

1944: The Bretton Woods Agreement changes the financial system after the Second World War replacing the gold standard with a system of nominally convertible currencies related by fixed exchange rates.

Gold initially served as the base reserve currency but the US dollar slowly becomes the reserve currency, which, in turn, is linked to the price of gold. Banks continue to keep a portion of their liquidity in gold reserves.

The World Bank and International Monetary Fund are both established.

1971-73: The Bretton Woods Agreement US President Richard Nixon abandons effectively meaning they can print money at will.

1999: The first Central Bank Gold Agreement (CBGA) is agreed upon. European banks secure gold as a continued part of their monetary reserves. A cap on gold sales of 400 tonnes per year is also added over the next five years.

2010: The president of the World Bank advocates a return to the gold standard in a bid to help combat floating exchange rates.

2014: A new bullion trading platform is launched by The Royal Mint allowing investors to purchase gold bullion coins directly from The Royal Mint.

2015: Royal Mint Refinery branded gold bars return for the first time in over half a century.

The Royal Mint also launches Digital Gold allowing the purchase of percentages of physical gold by investors from as little as £20.

2020: The Royal Mint’s first financially listed product is released, the RMAU, and is the first Sovereign Mint in Europe to launch a physically-backed gold exchange-traded on the London Stock Exchange.

Disclaimer: This is not financial advice.

Is Gold a Good Investment?

Posted on by Lee

Is Gold a Good Investment?

 

Previous investment options that were considered safe such as ISAs and rental property have been providing lower and lower rates of return in recent years.  Because of this, coupled with the risk of the ever turbulent stock markets, more and more investors have begun searching for safer alternatives for their investments.

This has led many to gold bullion.  The question remains, however, is gold a good investment?

For centuries gold has been an asset that savvy investors have turned to to protect and grow their wealth.

Gold is both a great way to safeguard against inflation and to diversify your portfolio against stocks, property, and currency.

Buying gold has always been, and continues to be, a simple and safe way to protect your money and grow your wealth.

Disclaimer: This is not financial advice.

To Protect Your Wealth

Posted on by Lee

To protect your wealth

The financial crisis of 2008 was a wakeup call to most people that they should be paying closer attention to their finances and finding better ways to protect their money and themselves.

Gold is the perfect safe haven for those investors looking for long term protection and preservation of their wealth.  Gold, after all, will always have a significant value.

Investing in gold should be seen as a low-risk security asset.  An insurance policy, if you will, protecting your wealth for you and your family’s future.

The price of gold has historically grown and prospered in times of crisis and economic uncertainty.  The current UK economic climate and that of Europe due to Brexit and the ongoing pandemic has further supported this fact as the price of gold continues to stay strong and indeed soar.

As we have said, however, investing in gold for profit should not be the primary reason for adding it to your portfolio.

Owning gold bullion is a long term, non-speculative investment, that is designed to diversify your portfolio and safeguard your wealth against turbulence in other markets such as stock, property, and currencies.

Gold has notoriously soared when these other markets have floundered.

Disclaimer: This is not financial advice.

How to Invest in Gold Bullion?

Posted on by Lee

How to Invest in Gold Bullion? 

 

Gold has always been a renowned safe haven for an investor’s wealth, and an important part of any portfolio.  It is the ultimate protection against floundering economies and is the perfect insurance to diversify your investments.

 

Time has shown that gold is an asset that is not only excellent at preserving and protecting wealth but growing it too.  The continued high demand for gold ensures the price stays high and continues to rise, outperforming most other forms of investment in the long term.

 

Gold has always been particularly popular in times of financial crisis, like the crash of 2008, and continues to be to this day during the Covid-19 pandemic.  It is the rock bed that investors can rely on when confidence in banks and financial institutions waver.

 

With low-interest rates and inflation fears the central bank’s response to the recent crisis has been to print more money, and raising public debt to peacetime all-time highs.

 

Gold, throughout this, has remained steady.  In fact, it has soared with August 2020 seeing the price of gold reached a new all-time high.

 

With the demand for gold growing and its status as the ideal insurance and hedge against turbulent economies, prices could soar further in the coming years to new all-time highs.

 

In the UK in particular, investors are turning more and more to gold.  The changes brought on by Brexit and the continued cost of the pandemic are hindering the UK’s economic recovery after one of the worst recessions in history.

 

With the continued devaluation of our money sitting in banks, it is no wonder that more investors are looking to gold as a means of securing their wealth for the future.

Disclaimer: This is not financial advice.

Demand for Gold – Worldwide Demand Hits new Heights

Posted on by Lee

Demand for gold – Worldwide demand hits new heights

Demand is another important factor to consider.  The world’s central banks are all increasing their gold reserves, and the demand, in general, is increasing around the world.  It is believed that the value of gold will remain high, and continue to grow for many more years.

The World Gold Council released figures showing that demand for gold and silver has increased year on year.  This increased demand is from investors and for industrial uses.

For individuals, in many instances, it is about preserving and protecting wealth while diversifying their portfolios.

In industry, gold and silver are being used more and more in electric cars, solar panels, and smartphones.

This demand growth is particularly prevalent in China and India, as well as across Europe in Germany, France, Switzerland, and Turkey.

Conclusion

The commonly believed myth in the UK that you need to be wealthy to buy gold needs to be dispelled.  In countries all around the world individual investors, no matter their socio-economic demographic, are investing in gold.

This, coupled with the increased demand from central banks and industry, means that the value of gold will remain strong, and will continue to be a good investment.

Our advice is always to have between 5% and 10% of your portfolio be gold bullion, whether you’re a multi-millionaire or the average investor.  Gold continues to be the ultimate safeguard against turbulent economies.

Disclaimer: This is not financial advice.

Why buy Gold?

Posted on by Lee

Why buy gold?

 

In a world where economic uncertainty seems to be an ever-increasing occurrence, investors are looking for low-risk investments that protect their money as much as grow it.  Their research often leads them to gold as the solution to that very problem.

They’re right!  But, new investors still can’t help but ask, “Why buy gold?”

Since the 2008 crash, the banking systems have seen irreparable damage to their reputation and, understandably, people have become more and more cautious about trusting their money with banking institutions.  If they lost it once, maybe they could lose it again.

The global economy had only just managed to feel a sense of recovery from this crash before suffering a shock once again with the outbreak of the Covid-19 pandemic.

Governments were forced to print unprecedented amounts of money in order to save stock markets and keep their economies afloat.

We are seeing interest rates at record lows, inflation is set to rise, living costs continue to rise while wage growth has slowed and unemployment has increased.  This all serves to fuel instability and cause people to lose faith in the places they keep their money.

Throughout all of this, gold bullion has managed to stay strong and maintain a high value.  Why?  Because it is the ultimate insurance investment in protecting your wealth and should be a key part of every investor’s portfolio.

Let’s break down some of the main reasons buying gold is a great investment.

The ultimate insurance

It is widely considered that owning gold is the best insurance for your wealth against difficult times.  It has been the safest method of investing your money for centuries, and even with the advancement in technology and the increasingly connected world we live in, gold remains the safest bet.

Gold bullion will always have value.  This fact alone means gold offers as much certainty as you can get for the protection of your wealth.

Buying gold is an effective way of hedging your portfolio against other investments as its price tends to soar when other markets, such as stock and property, are floundering.

The price of gold also tends to rise in line with inflation, making it an excellent insurance against economic factors such as interest rates, currency fluctuations, and of course inflation and deflation.

Gold is also an international commodity and a precious metal, meaning you can go anywhere in the world and it will have value.  A high value at that as every country in the world recognises it as a luxury.  And gold bars and coins are very easy to transport.

There is never really a bad time to own gold.  As a physical and timeless asset that is immune to devaluation in the way that money is by governments freely printing more.

In the unlikely event that the entire banking system failed, your gold bullion, particularly in smaller units like coins, will still have value and be tradeable for goods.

Why Invest in Gold?

Posted on by Lee

Why invest in gold?

There are so many options for what to invest your hard-earned money in, why would you choose gold?

For almost as long as records have been kept Gold has been considered precious to humans.  Throughout history, from ancient Egyptians to Roman conquerors, from Conquistadors to the modern age, we have been fascinated with gold and searched it out the world over.

The gold market often stands on its own.  When the global economy is in crisis, the gold market tends to stay steady (or even get stronger!)

For example, during the crash of 2008/2009 gold remained strong, and in the subsequent years while world economies were struggling to recover gold made significant gains.

Gold remains strong during rising inflation too, so while the money in your bank loses value many investors look to gold as a safer asset to protect and grow your wealth.

Gold is a finite resource whereas governments can decide to print extra money at any time for quantitative easing.  This, coupled with its continued use in emerging markets and the technology industry means that the price will more than likely stay strong.

Buying and owning physical gold gives you control over your investment.  There is no third-party risk like investing in stocks or even investing in gold ETFs.

Selling is also easy as there is always demand, so pulling your cash out of your gold is never a problem.  There are plenty of reputable online dealers that deal with millions of pounds of gold sales each week and can offer you immediate prices online.

Why invest in gold?

There are so many options for what to invest your hard-earned money in, why would you choose gold?

For almost as long as records have been kept Gold has been considered precious to humans.  Throughout history, from ancient Egyptians to Roman conquerors, from Conquistadors to the modern age, we have been fascinated with gold and searched it out the world over.

The gold market often stands on its own.  When the global economy is in crisis, the gold market tends to stay steady (or even get stronger!)

For example, during the crash of 2008/2009 gold remained strong, and in the subsequent years while world economies were struggling to recover gold made significant gains.

Gold remains strong during rising inflation too, so while the money in your bank loses value many investors look to gold as a safer asset to protect and grow your wealth.

Gold is a finite resource whereas governments can decide to print extra money at any time for quantitative easing.  This, coupled with its continued use in emerging markets and the technology industry means that the price will more than likely stay strong.

Buying and owning physical gold gives you control over your investment.  There is no third-party risk like investing in stocks or even investing in gold ETFs.

Selling is also easy as there is always demand, so pulling your cash out of your gold is never a problem.  There are plenty of reputable online dealers that deal with millions of pounds of gold sales each week and can offer you immediate prices online.

Is it worth investing in gold?

In order for your investment in gold to yield a profit, you rely on an increase in the value on the open market, as opposed to property and stocks that can provide a yearly yield.

To realise this profit can take time. But historically gold has been in an upward trend and has performed very well for investors since the 1970s.

While there may be dips, the overall upward trend is expected to continue making gold a very good investment.