Silver and Oil, Shiny and Rare
Our two main topics today are silver and oil. Silver is a precious metal, but much more. It is in almost every electronic piece of equipment produced in the world. Oil is in everything produced in the world, period. Energy, without it, you would need a horse walking in a circle. I have called crude oil the trade of the year. We may be facing a soft period ahead for a week or two, who cares. Quite watching your screen like a mother hen hatching eggs!
Silver has been jumping like a thoroughbred at the starting gate for the last two months. Would you rather own silver and oil, or some biotech company that is one FDA letter away from oblivion? Nobody said investing was easy. Like I used to say in the construction business, “If you want a friend, get a dog.”
George Kengott sent a note with a few important points to keep in mind (I have added a few of my own):
* Silver is a by-product of mining in many copper and other industrial ore mines. Industrial metals are under pricing pressure, reducing the amount mined, which means less silver.
* Silver mining has not met demand for the last 16 years.
* Silver is an industrial metal and a precious metal.
* Silver is consumed, almost all the gold ever mined is still in existence.
* Silver is cheap compared to gold. 900/13=69 ratio
* Historically this ratio should be between 16 and 30
* Silver increased in price almost three times as fast as Gold from 4/17 thru 6/2. Gold = 13% vs. Silver 34.8%
* California is going bankrupt in July!
Buy Silver to own, or trade. Capitalize when the price reflects the money being printed in Washington.
Exxon was the high bidder for one of Iraq’s oil fields offering to increase production tenfold to over two million barrels per day. Exxon bid a concession of $4 per barrel, Iraq offered $1.90 and gave them 45 minutes to co (more…)
Buy Royalties
Ask a serious investor how they make big gains in the market and they will reply to buy royalties. This is the most aggressive form of investing for many reasons. The most important things to remember is that in any market that promises big returns will also have appropriately proportioned risk. Don’t let this deter you from the prospect of buying royalties. A solid game plan will allow you to make smart buys while minimizing your risk.
The most important thing to keep in perspective is who the major players are when you choose to buy royalties. Most people will be drawn to use brokers to make their buys for them, this strategy make a lot of sense. You want to be able to get the most out of your negotiations and brokers are experts in this area. Use their expertise to help you land the numbers that you want to see. The beauty of using a broker is that you will have a dedicated person working on your behalf.
If you choose a more hands on approach to buy royalties you must find where the opportunities exist. This can be accomplished with a visit to your real estate agent. An agent will be able to steer you toward properties that have oil and gas royalties available. A real estate agent will assist you in the entire buying process and make you aware of any pertinent information that may affect your decision.
You may feel adventurous when are you are looking to buy royalties. There are many resources on the web to assist you in locating where the resource-laden properties are. In fact the Internet can be your first source of information in your quest to buy royalties. If you choose to work on your own then you must educate yourself on all the liabilities that can effect your financially.
A visit to your accountant would also be advisable. There are tax incentives that will be of particular interest to you when you buy royalties. H (more…)
Is Gold Really a Good Investment?
Smart investors have held gold as an inflation hedge over the years, and as a way to add counterbalance to their total investment portfolio. Speculators jump in and out of gold commodities contracts to make a quick buck. Some folks buy and hold this precious metal as a stand-alone investment hoping to profit in the long term as the price rises.
Is buying and holding the physical stuff a good investment for average folks? Let’s take a brief look at the past and see how those who owned it over the years made out.
Those who bought an ounce (troy ounce) of gold at its low in 1976 got in at $104. With perfect timing they could have sold at its high of $850 four years later in 1980. That was a good investment, if you sold at $850.
It took many years to see $850 again, as the price fluctuated and this precious metal traded at a few hundred bucks an ounce for years. As a long-term investment, it was a poor performer. It did top $1000 not long ago, but sat at less than $950 in the early summer of 2009. Had you owned or bought an ounce in 1980 for $850, 29 years later you had about $950.
Gold pays no dividends. But stocks as an asset class do. Let’s compare stocks to the world’s most popular precious metal over the same time period of about 29 years, 1980-2009.
The Dow Jones Industrial Average (DJIA) is the most popular stock market indicator or index, and sold at a high of 1000 in 1980. In the early summer of 2009 it stood at 8500. Stock investors who simply held onto stocks could easily have made more than 8 times their money vs. very little gain for those investing in gold.
Plus, stock investors who held the Dow stocks averaged about 2% a year in dividends.
Historically, investing in gold has not resulted in growth. As a long term investment it has a lousy record. I suggest if you are considering buying it now, that (more…)
People Are Starting to Buy Gold Coins and Bars
A good number of people have lost sizable amounts of money in the stock market the last several years that leads one to look for more conservative investing options. Gold has always been thought of as a good investment choice when things get uncertain in the world and one is looking for safety. Anyone who has had money in gold has done better than the stock market but perhaps not as well as one would have thought.
Anyone who doesn’t have gold in their portfolio might take a look at it to see if it might be an option. The stock market has made a slight rebound and yet one has the feeling that stocks could start to head back down again anytime. The world economy has not made a recovery and more bad news could be around the corner causing stocks to plummet again.
A thing to note about gold is that its value has never gone to zero. For thousands of years, all civilizations have valued gold and the ancient Egyptians are one society that readily comes to mind. Since gold has always had value, many people take comfort in having part of their portfolio in it. While nothing is guaranteed, there have been times when it has easily outperformed the stock market and gold investors now hope that that will happen again soon.
It might be asked why the price of gold has not gone up more than it has in this time of extreme economic uncertainty. Those who have held gold for the last several years have been able to avoid the perils of the stock market but one would have though gold might have actually gone up significantly rather than pretty much treading water at the same price. It might be due to many investors having to cash in their gold positions in order to pay off other debts.
Usually it is fine to invest in gold stocks or ETF’s that are easier than actually collecting the physical gold. However, there has recently been a rise in interest (more…)