Why Buy Gold in 2019?
- Gold is the Best Safe Haven
Will 2019 bring the long-anticipated bear market or will we see even more records broken? Is this the year recession hits? Will the Fed carry through with up to three more interest rate increases? We cannot give you the answers to these questions but we can say this: no matter how rosy your view, there are risks and they are growing.
And we ask this question: how much risk can you afford to carry? Our answer is that gold is an essential hedge element to your portfolio that will give you room to breathe and avoid panic-driven decisions when the inevitable, cyclical financial downturn comes. In the past 50 years, when the S&P 500 traded at a loss, the price of gold rose 98% of the time, at an average of 11 times the loss in US equity prices. That’s performance. And it’s perfectly in line with those who advise that 10%-15% of your investments should be in gold, held outside the banking system, for simple wealth preservation.
Gold is indestructible. It is impervious to fire, water, and time. Nor can it be hacked.
- The Expert Opinions Are In
2019 is seen, at best, as a year of financial uncertainty. Goldman Sachs, citing soft macroeconomic data and renewed growth concerns early in the new year, forecast gold prices to rise progressively over these 12 months, finishing the year at $1,425. That’s a $100/oz. higher than their previous quote. The bank predicted rising geopolitical tensions would incentivize more and more central banks to adopt defensive postures and re-enter the gold market. Overall, Goldman’s predicting the price of gold will end up almost 11% higher at the end of the year. Other banks, such as Canada’s TD and ABN AMRO of the Netherlands, also envision a peak of $1,400, while Commerzbank of Germany sees an ounce of the yellow metal stretching to $1,500.
- The Long-Term Signs are There
The USA and governments around the world continue to print money to serve their political ends, with annual deficits that defy belief. The United States national debt has now topped $21 Trillion and, by 2020, will start increasing by a trillion dollars a year. Bank of America Merrill Lynch says “…in the long run, a huge U.S. government debt is pretty positive for gold.” But it doesn’t take a Nobel economist to know this is an unsustainable path in which printed money simply loses all its value. Exactly when that path comes to its abrupt end is hard to say. Egon von Greyerz, one of the world’s foremost authorities on wealth preservation, says that “gold will have its time” but that “most investors will be left behind as they fail to catch the early fast gains” and then “will wait for pullbacks but miss these lower entry points too.” Don’t be one of these.
- “Gold is Money”
Often stated, and for a very long time… because it’s true. Unlike the bills and coins in your pocket or the numbers on your bank and investment statements, gold holds its own value because it is unaffected by the whims of government monetary policy. As stated elsewhere on this web site, an ounce of gold bought a man a good suit 2,000 years ago. It still does today.
Gold is money, easily and quickly converted to cold hard cash. Gold is international, holding its value practically everywhere you go in the world.
Yes, you need cash to pay your bills. But you need gold to preserve your wealth.
- Down Goes the Dollar
The U.S. Dollar appears to be losing steam, its diminishing value increasing that of other currencies and commodities like gold to investors. In a year-end Reuters poll of 60 currency analysts, the greenback was forecast to be worth less against other major currencies by the end of the year. The general consensus is a loss of 5 to 6%, representing a complete reversal of its 2018 fortunes.
- Gold is Under-Valued
Goldbroker.com Board member Egon Von Greyerz has long said that gold is selling at a price well below its actual value. And he continues to warn this situation will not last. That may be the only warning we’ll get because, once financial disaster or full-on economic collapse occurs, it will be too late.
- Gold is More Precious than Ever
Unlike paper (fiat) currency, they’re not making any more gold. Some 200,000 tonnes of the precious metal have been taken out of the ground in all of history and, as it’s virtually indestructible, all of that is still around in one form or another (almost half in jewelry). Yet, if all that gold was put together in one place, it would form a mass of less than 70 cubic feet. An estimated 50,000 tonnes remain in the ground, being mined at a rate of something less than 3,000 tonnes a year. In (most of) our lifetimes, it will be mined out. We don’t think you need an explanation of what depletion of this extremely valuable resource will do to its price.
- See What the Big Boys are Doing
The world’s major powers are buying gold. In a 2018 survey by the World Gold Council, the great majority of countries held gold as part of their reserves and a modest 18% of them planned to increase their gold holdings in 2019. But none planned to decrease their gold reserves, citing its role as a safe haven asset, effect as a portfolio diversifier, and value as collateral. It’s also instructive to note that, in the past 10 years, the governments of China and India alone have acquired 26,000 tonnes of gold bullion, or over 15% of all stock in existence.
- Stay Ahead of the Curve
The economic strength of the emerging markets (led by China and India) is out-pacing that of established markets. Structural economic reforms and projects such as China’s Belt and Road infrastructure initiative are leading to booming expansion in spite of geopolitical uncertainty. India’s GDP grew by 7.3% last year and could surpass that rate in 2019: the increased demand for gold jewelry alone will be a positive factor on bullion prices.
- Gold is Stable in an Unstable World
We do not wish to be doomsayers. It is, however, wise to be clear-eyed about the state of the world, not to mention our very own corner of it. The very foundations of democracy and the rule of law are being put to the test in 2019, a situation that should give us pause… and take precautions. Gold, given its historical significance, is a commodity that reacts to politics. There is no telling what lies around the corner here and around the world this year but if the dark clouds that have been gathering produce a political storm or financial crisis, your gold may have a role to play.
Why Buy Silver in 2019?
- The Price Is Right
The strongest reason for investing in precious metals (primarily the “coinage” metals – gold and silver) is as a hedge against inflation or, more seriously, wealth protection in the event of serious economic or political calamity. This is because the value of these metals is intrinsic to them, contained within them, and recognized as such from the earliest known civilizations to the present day. Gold and silver will always be valued for what they are, as opposed to paper (fiat) currency which is merely a representation of wealth that is subject to the whims of government policy. It is famously said that gold IS money, sometimes the ONLY true money. And silver is known as the “common man’s gold.”
Silver is an attractive investment option because its price is within reach. You probably have the cost of an ounce of silver in your pocket right now, whereas it’s likely you’d need to go to the bank to get enough cash to buy an ounce of gold. The point is that, if you are just starting up this diversification aspect of your investment portfolio, silver offers you flexibility from the price perspective. With a regular paycheck and a budget, an ordinary American can save enough to acquire a pound (12 troy oz.) or multiple pounds of silver bullion in a matter of weeks or months. And you are on your way to building wealth protection.
Furthermore, saving and wealth protection isn’t just about preparing for distant retirement or economic catastrophe. It should also be about setting aside now for the small unforeseen eventualities that life brings. With its smaller unit price, you can sell (liquidate) the portion of your silver stock that gives you just the amount of cash you need and replace it when possible.
There is rarely any difficulty in getting market price for true silver bullion. It’s a simple matter to move a silver bar or part of a box of coins to free up more or less than a thousand dollars.
- Multiple Predictions of a Good Year Ahead
Commodity market observers noted silver’s weakness in 2018 with some surprise, considering it the year in which it hit rock bottom. There is growing anticipation that the white metal is going to burst out of its slump in 2019 and continue an upward trend in 2020. This is supported by expectations of a weaker U.S. dollar (as silver prices historically rise when the greenback loses value) and the growing strength of the Chinese and Indian economies, where demand for silver jewelry, always high, is set to boom. As much as silver struggled in 2018, causing investors to flee, some experts predict the opposite will be true in 2019, and silver’s time to shine is about to come. “Buy low…”
- Gold-Silver Ratio Suggests Silver in Line for Rebound
It would take more than 80 troy ounces of silver to buy a single troy ounce of gold today. This, the gold to silver ratio, is more than twice what it was earlier in just this decade and its historical level overall. This tells seasoned investors that now is a good time to turn some degree of attention to adding silver to the wealth protection portfolio and keeping an eye on the price.
- Still Waiting for an Overdue Peak
Silver hit a record high price of almost $50 per ounce in 1980. It is the only commodity since that time that has not reached or exceeded its previous record. Given its history, utility, and real, hard value, one cannot help but think it is just a matter of time before the shine returns to this under-appreciated but much-needed precious metal.
- The World Needs Silver
While gold is the undisputed king of precious metals (and the model for money itself), silver is a close second, dating back to the BCE era of Greek and Persian trading and currencies. But silver departs from gold in a distinct way: we need silver for a wide variety of useful applications in industry and everyday living: from medicine to mirrors, electricity and electronics, nuclear and solar energy, photographic film, brazing and soldering, to water filters, explosives, and trophies, coins, and jewelry. The demand for silver is there. And it’s growing.