ETFs may be an investor’s avenue into the gold market but fears circulate around their integrity and security. Many investors were burnt while investing in asset backed AAA graded securities which turned into junk overnight with the linked subprime mortgages problem. It revealed a sad fact: many so called investment experts did not understand the links of their assets to protect their investments.
Press reports are speculating that actual gold is backing only 10% traded ETF as there is insufficient gold. You may not be able to access your ETFs if a lot of investors withdraw simultaneously.
Counterparty risk was not important to bank deposits ten years ago; savings in an established bank was safe then. But now, such establishments are near collapse level. Bankruptcies have come upon major corporations like General Motors and Lehman Brothers whose share value fell hard on those planning for retirement. Now is the counterparty risk phase with Sovereign debt. Government bonds were thought to be secure for a full pay out but history proved otherwise. Many nations in desperate financial woes need financial bail out from IMF and EU which implies a low return for bond holders.
Counterparty risk does not exist with physical gold; you can manipulate it anyhow you want. When you invest in gold mining stock, gold fund or ETF, there are some counterparty risks and threats on your asset value. Paper gold is not the real thing as it is just a promise to pay.
Physical gold and mining stocks are different classes of asset with different risk profiles. Mining stocks investments are linked to a company’s performance. If the company performs poorly, your paper asset will be worthless. But gold bars and coins with their intrinsic content of gold never touch zero value.
Global economic turmoil affects the performance of mining stocks and bullion coins negatively. Hence, more people are investing into gold coins and bars for financial safety. Mining stocks may give potential impressive returns but they cannot outperform physical gold in crises. Mining stocks are impacted by the broad equity markets instead of bullion gold price.
Gold can be a portfolio insurance that provides security against political and economic unrest; it is considered the ideal safe haven asset today. This wealth protector is unlike paper gold which has counterparty risks.
UK provides the opportunity to own physical gold coins that are tax free and VAT exempt such as the UK Britannia and Sovereign coins which are legal tender in UK. Mining stocks require taxes on all dividends as well as capital gains tax after selling your investment with profit which can account to one third of your sales profit!
Gold is invested as a crisis hedge. If the current world financial system collapses, your gold ETF, gold fund or mining shares would be inaccessible. But physical gold in globally recognized coins will provide you instant liquidity.
Press reports are speculating that actual gold is backing only 10% traded ETF as there is insufficient gold. You may not be able to access your ETFs if a lot of investors withdraw simultaneously.
Counterparty risk was not important to bank deposits ten years ago; savings in an established bank was safe then. But now, such establishments are near collapse level. Bankruptcies have come upon major corporations like General Motors and Lehman Brothers whose share value fell hard on those planning for retirement. Now is the counterparty risk phase with Sovereign debt. Government bonds were thought to be secure for a full pay out but history proved otherwise. Many nations in desperate financial woes need financial bail out from IMF and EU which implies a low return for bond holders.
Counterparty risk does not exist with physical gold; you can manipulate it anyhow you want. When you invest in gold mining stock, gold fund or ETF, there are some counterparty risks and threats on your asset value. Paper gold is not the real thing as it is just a promise to pay.
Physical gold and mining stocks are different classes of asset with different risk profiles. Mining stocks investments are linked to a company’s performance. If the company performs poorly, your paper asset will be worthless. But gold bars and coins with their intrinsic content of gold never touch zero value.
Global economic turmoil affects the performance of mining stocks and bullion coins negatively. Hence, more people are investing into gold coins and bars for financial safety. Mining stocks may give potential impressive returns but they cannot outperform physical gold in crises. Mining stocks are impacted by the broad equity markets instead of bullion gold price.
Gold can be a portfolio insurance that provides security against political and economic unrest; it is considered the ideal safe haven asset today. This wealth protector is unlike paper gold which has counterparty risks.
UK provides the opportunity to own physical gold coins that are tax free and VAT exempt such as the UK Britannia and Sovereign coins which are legal tender in UK. Mining stocks require taxes on all dividends as well as capital gains tax after selling your investment with profit which can account to one third of your sales profit!
Gold is invested as a crisis hedge. If the current world financial system collapses, your gold ETF, gold fund or mining shares would be inaccessible. But physical gold in globally recognized coins will provide you instant liquidity.
Are you looking to Buy Sovereigns? Welcome to Physical Gold to secure your wealth and future. We specialise in buying & selling Sovereign coins and explain how Sovereign coins can be combined with other gold coins to form a balanced tax free investment.
No comments:
Post a Comment