In the last ten years we have seen a lot of gold dealers coming online. Why are there so many? Is it just a fad, or is it because gold is a sound investment? Why would one want to invest in precious metals? An obvious reason would be to protect oneself from the depreciation of all the fiat currencies. Over the centuries, gold and silver (the monetary metals) have been used as real money and have always kept their purchasing power. There is an old saying, ‘an ounce of gold will buy you a fine suit’. In other words, even though a « fine suit » costs over $1,000 today, it just means that the fiat money needed to buy one has lost most of its value. For example, when gold was $200 an ounce, that was about the cost of a « fine suit ». Gold has always reflected the health of fiat currencies. When these currencies fall in value, the price of gold goes up, thus reflecting the loss of value of the fiat currencies.
So is gold a good investment?
Of course it is, if you want to preserve your purchasing power. And even though some people are saying that « gold is in a bubble », it has to be acknowledged that the central banks are trying to keep the gold price down in order to keep their fiat money system afloat. By artificially keeping the gold price down they are making the fiat currencies, and especially the US dollar, look stronger. But the many experiments with fiat money have always ended with the currencies ending with zero value, because of endless printing that causes inflation, and our current experiment will be no different. Contrary to paper currencies, gold cannot be printed. It will always retain its value, with whatever currency it’s priced in.
How to buy gold ?
There are several ways to get exposure to gold/precious metals. There are precious metals shops, online dealers, banks and individual sellers. There exists also exchange-traded funds (ETFs) that pool gold and sell shares of it, much like shares of common stock. However, there might be difficulties in converting your shares to actual physical gold, because many shareholders have multiple claims on the same gold. If a large portion of shareholders were to redeem their shares at once, there would not be enough gold for everyone and some would be settled in cash.
So, if you want to start investing in gold/precious metals, where can you turn to? If storing your precious metals at home is not a problem for you, and if you happen to live close to a precious metals dealer, this would be best. If not, a reputable online dealer is what you’ll need. A reputable online dealer will either provide secure shipment of your stock or will be associated with a major insurance company for storage and will provide the client direct access to his/her precious metals at all times.
Also, there is another reason to buy gold through reputable online dealers that are associated with a major storage company. When comes the time to sell your precious metals, the buyer will be confident that the metals have not been either tampered with or altered in any way, whereas if your precious metals are kept outside the official circuit, questions could arise pertaining to their real value.
And another thing… if, for any reason, your government were to try to confiscate its citizens’ gold, it would have a much harder time getting hold of it if it were stored offshore.
Our advise to invest
In conclusion, we would advise to stay away from « paper » gold, since one is not guaranteed to have one’s shares redeemed in actual physical gold. We advise to buy physical precious metals online, since there are several reputable dealers to choose from. However, most dealers do not offer offshore storage solutions, and we believe this is one of the most important aspects of investing in precious metals, especially for larger investments. By storing your precious metals offshore, you are fully protected. As long as you are issued an ownership certificate in your own name along with the bars’ serial numbers and that you are guaranteed access to your stock at all times, whether to inspect it or retrieve it without any exit penalty, this is clearly the best solution.