Real physical gold.

This is gold that you store yourself or at a trusted vaulting company. This is gold that you can actually hold in your hands. This is the gold that is demanded at record levels by central banks around the globe.

Do You have pretend gold.

This is the domain of the bullion banks. They offer futures contracts, unallocated accounts, and ETFs…all as an alternative to the real thing and as a way of increasing the total supply of “gold” in what amounts to modern-day alchemy.

The investment world allows a physical price to be determined through the trading of the pretend alternative.

There's a demand for the real thing: physical gold.

One great story in 2019 was how the Polish central bank purchased—and then demanded immediate delivery of—about 100 metric tonnes of physical gold. The Poles are no dummies, and they apparently wanted no part of the unallocated promises from the London Bullion Market.

 

The Central bank demand for gold will exceed 670 metric tonnes in 2019. This follows what was a 50-year record demand of 641 metric tonnes in 2018. This from the World Gold Council at the end of 3rd Quarter 2019:

 

Price rose by 18% in 2019, a logical conclusion would be that this was due to strong physical demand. And that conclusion would be mostly correct.

Surging demand often leads to higher prices, price is not determined through the exchange of fiat currency for physical metal.

Price is determined through the trading of gold derivatives and futures contracts—pretend gold,

 

last year saw the global central banks demand delivery of 670 metric tonnes of physical gold, while at the same time, the global bullion banks oversaw an increase in the supply of 1024 metric tonnes of pretend gold.

  • Central Bank physical demand:21,500,000 ounces
  • Global physical mine supply:90,000,000 ounces
  • Bullion Bank pretend gold supply:78,616,600 ounces

With the price of gold rallying from $1280 to $1520 in 2019, a move of 18%, which factor had the largest impact?

Demand for physical gold or the supply of pretend gold?

all of these trends will continue in 2020, and as such, the price trends will continue, too.

  1. Central bank demand for physical gold will continue unabated as foreign currency reserves are gradually shifted from fiat currency to sound money.
  2. Institutional demand for physical gold will increase as fiat currencies are devalued and global interest rates trend lower.
  3. Personal demand for physical gold will increase as investors increase the asset allocation to our under-utilized sector.
  4. Bullion bank supply of pretends gold will increase as these banks defend their established and underwater short positions. (Keep in mind that these Bank shorts positions are not constrained by the same factors that face Spec longs. These Banks are deemed “too big to fail” and thus will always have access to enough cash to meet perceived margin requirements. Additionally, these Banks are rarely forced to actually deliver physical gold against their short positions, as the Spec longs rarely demand physical delivery.)

Expect gold (and silver) prices to continue rising. How far? The first levels to watch are $1650 for gold and $20 for silver. However, $1750 and $22 are not out of the question. This would place 2020's gains on par with 2019, and that seems about right.

The bullion bank control over the pricing scheme grows more tenuous by the month. Each ounce of physical gold that is demanded globally removes it from the over-leveraged hands of the Banks. So keep the pressure on in 2020. Buy gold and demand immediate delivery. And then let's see if we can finally begin to see prices reflect true physical gold demand and not fabricated pretend gold supply.

Please leave a comment or  question and I will do my best to answer.

 

How the Rich keep their Cash

Every day I learn something new about the financial world. And Robert Kiyosaki has been helping me understand money in a way that no one ever has before.

Many people wonder how the rich keep getting richer while everyone else is financially stagnant…

Today, Robert teaches us how they’re keeping it up by using tax codes in their favor.

Let’s get started…

A report published in The New York Times last month detailed how Trump’s core businesses of casinos, hotels and apartment buildings had lost $1.17 billion over a decade, allowing him to avoid paying income taxes for eight of those 10 years.

In short, the many credits and breaks that are found in the tax code are there precisely because the government wants you to take advantage of them. For instance, the government wants cheap housing.

Because of this, there are many tax credits for affordable housing that developers and investors can take advantage of that minimize their tax liability, put more money in their pocket and in turn create affordable housing.

Everyone wins.

There are many scenarios like this in the tax code that incentivize investors and entrepreneurs to do activities the government is looking for while rewarding those who take those actions with lower or zero-tax burden.

Because of this, limiting your tax liability actually means you’re doing what the government wants you to do through the tax code. And that is the most patriotic thing you can do.

For more information on keeping your money you cannot go wrong but to research what Robert Kiyosaki has to say on the matter

 

Please leave a comment below:

How to invest in physical gold

 

Gold bullion should be viewed as an essential part of everybody’s investment portfolio.

For myself, one of my mentors and investment guru's, Robert Kiyosaki Editor, Rich Dad Poor Dad advises gold, real estate and oil.

I choose a network of investment professionals to guide me in my investment decisions.

There are many ways to invest in gold:

You can buy gold directly in the form of bullion or coins.

You may also purchase stock in a company that produces gold.

You could buy gold futures or gold options

You may decide to invest in a gold ETF

However, for this post I am going to discuss ‘how to invest in physical gold' and so you would buy gold directly in the form of bullion or coins.

 

Your next question should be when is the best times to buy gold? and historically this has been the beginning of January, early April or early July.

Where to buy physical gold

It is possible to buy physical gold from a coin shop located close to your main town which can be convenient. You must do your research as to the purity of the gold before making a transaction but that’s also where you will pay the highest premiums. You should also consider the safety of walking around with gold on your person.

Do you wish to buy your gold over the phone or would you prefer to buy online with a company specialising in buying and selling gold bullion and gold coins who has built a strong track record of honesty and reliability.

 

Questions you need answering is

How to fund your account?

This will depend on the company you choose to deal with. More often than not you would fund your account by a check, bank wire or ACH transfer.

What is the minimum investment?

Again this depends on the company you deal with. Some companies state no minmum purchase required or offer $100 to open your account and regular monthly subscriptions to purchase 1oz gold bars

Will you be charged Sales Tax?

If you are a United States citizen, depending on your state of residence, it is your obligation to report and pay sales tax on any metal you purchase for delivery. You may also be responsible for taxes on any realized gains made in your positions, depending on the type of account you’ve chosen.

Will you pay VAT?

VAT is not applicable for metal going into storage or delivered to a US address. However, if you have your metals delivered to an overseas address, VAT may apply, depending on local laws and the storage location your order was sent from. Be sure to consult local tax laws before taking delivery.

Storing your precious gold

  1. Keeping it at home
  2. Bank safety deposit box
  3. Third party storage firm

Keeping it at home

If you keep your gold at home where is it going to be safe?, if you hide it too well from possible intruders, will you remember where you have hidden it. A home safe is another option. One that’s built into your house and concealed is best. If you buy a safe, you should buy it with cash, and install it yourself as best you can, the fewer people know you are buying gold and storing it on your property, the better. Also you need to ensure you have the gold insured for loss.

Another problem with storing gold at home is the liquidity factor. If you choose to sell your coins or gold bars you may need to get them to a dealer to sell them and also you may need to have them refined so that the dealer can verify the gold content and all this takes time and incurs costs. You could keep a few coins at home for an emergency, but more than that and your next step is going offsite for storage.

Bank safety deposit box

Bank safety deposit box's are relatively inexpensive and come in different sizes. The bank doesn’t insure the contents of a safety deposit box, you have to buy separate insurance, which can be expensive, and it’s hard to get for precious metals in safe deposit boxes. You also have the security risk going to and from the bank.

bank-safety-deposit-boxes

Bank hours are limited, as is your opportunity to get to it. However, again it is a question of liquidity and whether you can get access to the box for a quick resale. American Eagles, gold bullion coins are guaranteed by the federal government, have inherent liquidity because they are bought and sold by coin dealers, banks and commercial dealers without question.

 

Third party storage firm

Once your gold holding outgrows your safety deposit box or the amount you hold, signals it’s time to diversify, the next step is to consider the most secure storage of all: a private, precious metals vaulting facility, known as a depository.

In addition to benefiting from secure, specialised bullion vaults that are insured, you obtain good geographic and political diversification for your gold and have exceptional liquidity because you can sell your metal 24/7 and have the proceeds wired the same day to your bank account anywhere in the world.

Most Important

Investors should always ask if their investment is being held on or off of the holding company's balance sheet. If held off the company's balance sheet, investor assets are held separate and apart from those of the company, and thus, they will not get tied up in bankruptcy proceedings should the company fail.

I will be reviewing different physical gold trading companies in future posts so please bookmark this site for more in-depth information on how to buy physical gold.

If you have any comments or questions please leave them below.

 

 

 

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