Faith in the Bailout? Or in Gold?
March 9, 2009 by Martha Rooks · Leave a Comment
With the U.S. government now struggling to steady the teetering economy, and bailout after bailout being sucked down by greedy banks and other businesses who then ask for more, where can investors look? The market is clearly struggling under the weight of unscrupulous investment deals that have now gone south. And many are looking at the gold market.
Gold prices are currently sky high. In late February, they topped $1000 per ounce; a benchmark that wasn’t anticipated until much later this year. Since then, they’ve come down somewhat again.
Sure, the glittering metal has mesmerized people from all walks of life for thousands of years. But as an investment, it’s had a slightly tarnished history. In the 1980’s and 1990’s, it actually lost value as the stock markets gained and some global central banks started selling their reserves of the precious metal. By the late 1990’s, it was below $300 per ounce and as an investment, it returned zilch.
But then came September 11, 2001. The terrorist attacks of 9/11 shook global markets and sent investors scurrying for something they could hold on to: gold. By 2006, the return was 16.25% across five years. And last year, the global equity market collapse brought a boom in the price of gold.
The attention being placed on gold right now is largely due to the uncertainty that many investors feel. In the past, they might have considered buying land as an investment, but speculation in real estate has cost already. And nobody feels sure where the drop in land values might end. Thus, as the stock market crashed last year, demand for gold rose 64% over the preceding year.
What does this mean to you? If you’re investing in gold for financial security, this is a tricky time. The price of gold has already seen huge gains. Nobody wants to get in when the price is already high. But if you are trying to get out, it might not be the right time to do that, either. Buyers are now turning away from trades because the high prices have brought out everyone with a bulky neck chain or bracelet left over from the 1990’s.
If you buy gold on a site like Apples of Gold, you are buying it as a purchase of love; either you love it or you care deeply about the person that you are buying it for. These are not financial investment pieces, but rather a down payment on a lifetime of caring that you hope will return rich rewards on a regular basis.
Invest in Platinum: 2009?
January 3, 2009 by Afshin Yaghtin · Leave a Comment
At face value, it seems that now is the right time to invest in platinum when you consider the highs and lows of the past 52 weeks. Platinum reached an all-time high of just over $2,300 per ounce in March of 2008 and today tries to hold firm around $940 an ounce–a 60% drop from its primordial heights of 1st quarter 2008.
But a New Year is upon us and things are already beginning to change. With the news of the bloody conflict in the Gaza strip, precious metals prices got a jump-start during the last few days of 2008. Platinum was actually struggling in the mid-800s before the news of increased instability and the breach of the cease-fire in the Middle East.
Still, even in the mid $900s, platinum is at an all time low. It’s hard to imagine such a historically expensive metal going much lower. But is it a good time to buy?
That depends on your time horizon and a very unexpected twist in the precious metals sector: ties to the U.S. automaking industry. In years past, automakers consumed approx. 900,000 ounces of platinum in a single year–for use in their automobile’s catalytic converters. This accounted for about half of all platinum demand worldwide, according to London-based precious metals refiner, John Mattey, Plc. With the spotlight heavily on the ailing “Big 3″ and the declining automobile industry, platinum took a serious hit in 2008.
Surprise, surprise–what to watch when considering an investment in platinum? Chevy, Ford, & Chrysler–”The Big 3″.
Our recommendation is to hold platinum for those few of you who actually own platinum coins or hold investments–now is certainly not the time to sell, with platinum prices at an all-time low.
Consider buying when you see the first signs of recovery in the auto-industry. The vast and great challenge of platinum investing: with platinum historically and unbearably volatile, timing the market in such a commodity can prove challenging–more so than gold and more familiar precious metals. By the time a recovery is underway, the rug may have already been pulled from under your feet, and platinum may have already shot up 20-30%. It is too late to invest.
Our recommendation: Hold or Buy for Long-term investment (but be prepared to wait!)
Related Posts:
Platinum Prices Related to Big 3 Automakers?
Gold Takes Lead over Platinum by Head
