In this article, we will be touching on the following points, which are
- on the overall picture of GOLD’s past till now,
- discuss on the future of GOLD
- Type of GOLD Investment
- and plus the role of GOLD in your Financial Portfolio.
GOLD’s Ghosty Past
They say that GOLD is a geopolitical metal and i will say GOLD have no boundary where almost all human being in this world will fight and safeguard this geopolitical metal as some sacred metal.
Alan Greenspan, spoken to the US Congress in 1999 on GOLD. And he said: “Gold still represents the ultimate form of payment in the world. Fiat money, in extremis, is accepted by nobody. Gold is always accepted.” That can be largely understood of why gold is part of most central banks’ reserves. It is the only reserve that is not of any debt nature. And most importantly, it cannot be devalued by inflation, as compare with fiat currencies.
GOLD has always occupy the center stage in geopolitics. From History we could tells that GOLD is the war fund of any strong country. The Roman Empire invaded Dacia (Romania today) during 2nd century B.C. just to seize control of its’ rich gold mines. During the Second World War, GOLD was an important weapon in Hitler’s economic arsenal (GOLD stolen from occupied countries’ central banks between 1939 and 1942) for Nazi Germany to continue its hugh war machine.
In 1944, the United States imposed a monetary system based on the dollar, with GOLD as backing, at the Bretton Woods Conference. But in 1971 GOLD backing of the dollar was abandoned, and US dollar has become the international monetary standard, without any GOLD backing(fiat currencies).
With the end of the Cold War in the 90’s, it started an era of peace and prosperity. And during this optimistic period, GOLD fell from $850 to $250 an ounce. But the optimistic period was a short lived with the September 11 terrorist attack, the war in Afghanistan, the invasion of Iraq, the 2008 financial crisis.
During the 2008 crisis, the entire international monetary system was almost falling apart , and GOLD made a impressive comeback. As GOLD became the only accepted guarantee in order to get liquidity and it demonstrated clearly of role of gold in supporting the commercial banks.
So what’s next for GOLD
Since 2008 till now, there are major confidence crisis being ignited between countries, especially between emerging countries and the United States. No doubt of it that we are now in a transition period in geopolitics, economic shift and transfer of wealth (especially GOLD) from West to East. The new wealth owners in the West with their strong economic and GOLD backing are fighting for their accrued internationally political power.
In order to protect the actual monetary system based on the US dollar(with no GOLD backing) and it international monetary standard, the United States with its hidden agenda, may try to manipulates the gold price, the possible alternative if the dollar were to be replaced and at same time, to buy in more GOLD. The only effective method that The United States has been printing more fiat money to resuscitate it economy but it will only inflate the massive debt. Let us not forget that 40% to 60% of the US dollars circulate outside the United States. For the same reason, emerging countries are worried, and rightly so, that their reserves, mainly in dollars, may or likely to be confiscated by way of devaluation of the dollar. When dollar being heavy devalued, there is a possibility that their gold reserves stored in the U.S. will be confiscated for so-called “force majeure” political reasons, in the interest of the “nation”.
The United States has been a nation of strong innovation and technology and their latest breakthrough with shale oil and other new finding could been their life saver over the next years. But the speed and depth of their debt may prove a bit too much for their breakthrough and new finding to catch up on. The musical chair just have to end somewhere. what do you think?
What about the chart? Based on the 10 year GOLD chart, it look like GOLD is flirting around the support resistance price of 1191.82. If that is to break, we will be looking 1076 and 990 as the next line of support. And if you are looking into GOLD investment, it will be good to break your entry into 3, respectively 1191, 1076 and 990.
Type of GOLD Investment
There are mainly 3 types of GOLD investments that available for us to look into.
- The physical GOLD
I favor the physical GOLD the most among 3 type of investments. Reason being nothing is safer than that owning the GOLD physically. But it do have it disadvantage that it may not be liquidity enough for you to convert into money, as compared with the other 2 types in normal day, except for another financial crisis similar to 2008.
(Note : You could purchase the Physical GOLD locally in Singapore from UOB, and check out the UOB gold price.)
- Gold Index or ETF
This form of investment or the Paper GOLD, is purely exist in the electronic form, where investment is just based on the GOLD Index instead of owning the physical GOLD. Some ETF may stated that your ETF ownership can be converted into physical GOLD, but it will be subjected to availability of the GOLD. There is limited physical GOLD, but there unlimited shares/contract that you could created for GOLD index/ETF.
- Or invest in the shares of the company that is related to GOLD, for example a GOLD mining company
Another form will be investing into the company that is related to GOLD, where you need to perform additional research into the company financial report and strength.
Physical GOLD as Insurance for your Financial Portfolio
It is common for people to get their self covered by getting an Insurance which act as an equitable transfer of the risk of a loss, from one entity to another in exchange for payment. (As defined by http://en.wikipedia.org/wiki/Insurance). With Markets becoming so dangerous due to manipulation by the World Banker that gold can be considered as insurance against systemic risk instead of a punt. And you can think GOLD as an Insurance class of asset to preserve your Financial Portfolio. A important Wealth Preservation Asset to be included in your Portfolio.
Even thought it is a a Wealth Preservation Asset, but you should not have your Portfolio based on GOLD entirely. Holding of 10-20% GOLD in your portfolio will be sufficient. Hope this article has provided you with sufficient information to let you make a judgement call on GOLD and get you started!
All analysis are based on my own personal point of view and experience and it should not be used as a decision to solicit buy/sell activity.
And purpose of this article is written in mind for main purpose of knowledge sharing & discussion, never to induce or promote any insider trading or manipulation activities.
The owner will not be liable for any errors or omissions in this information nor for the availability of this information.
The owner will not be liable for any losses, injuries, or damages from the display or use of this information.