Many a times you have heard about the up and downs in the capital markets where currencies play a crucial role. A good number of finance experts support the argument that precious metals are the best objects that could make a solid investment portfolio in the tough times of financial uncertainties.

Gold and silver therefore finds the top place in crating momentum against the paper currency in the times of devaluation of paper based money.

What about metals’ focused ETFs?

But the proverb is not suitable for other metals as well or in simple words you can’t add cerium, manganese, titanium and tungsten in your investment portfolio in any manner. The finance domain and the capital market have invented a new regime of investment called metals-based exchange traded funds (ETFs) and exchange traded notes (ETNs). In its infancy of the execution, both the measures got big time pace in such shortest time frame. Authorities have also launched more portfolios with exotic precious metals like the ETFS Physical Platinum Shares or the ETFS Physical Palladium Shares. Both have an amazing set of equity value and a specialized fund valuation scheme.

What can you include in metals portfolio?

If metal portfolio appeals you, you may give a try to industrial metals and attempt to create a portfolio in aluminum, copper, lead and tin based power shares. Only gold offers you shiny investment options with great amount of yield and positive investment results.  To infuse more power in the metal shares the Rare Earth/Strategic Metals fund invests in the stock of companies that deals in the minerals like dysprosium and europium etc. Interestingly, China provides 95% of the world’s rare-earth elements that create the metal investment portfolio.

Story is not such shiny as various reasons are stated against the use of new metal funds as your investment portfolio. Desperation effect is most likely the primary factor that creates all the changes and impacts great in the floating bull markets. As soon investors have started looking in the emerging markets India with up rise in the stock index by up to 29.3% this year, they create portfolios by putting their hard earned money in cheaper and lesser-known miniature index stores like Estonia (+50.2% ) and Argentina (+60%).

Will the metal space keep shining in future?

The investment yield in the metals likes platinum, palladium and dysprosium similar and due to the monetary fluctuations, the investment trend in the Gold has risen 21.2% and experts believe that the trend of relying on metal shares will get more weightage in times to come. In the portfolio market, other metals have also been doing well due to varied range of factors. Among all these visible metals, people have started believing on Nickel, palladium and white palladium.

The tendency of markets in elaborating the metal trade always comes on several variants thus long term financial debts issued by banks can affect the trading ratio of your metal share portfolio in a worst manner.

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Long term investments in Gold have given high returns over the years. Its price has steadily risen over the past decade and the returns have been excellent, averaging a 17% annually. But a big cloud is looming over the mind of these long term investors, is Gold the ultimate bubble as christened by the famous hedge fund investor George Soros.

George Soros recently sold of a major share of his Gold holdings recently causing a scare in the market. His reason, he doesn’t see any threat of deflation on the horizon any more. Gold surges when the economy takes a hit, every time the deflation scare hits, gold sees a surge. And with the federal help given to the economy being wrapped up, now that the economy is stable, threat of deflation is at an all time low.

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Most investors worried about the gold being the ultimate bullion may chose to follow in Soros’ footsteps, betting against him can sure be expensive as the Bank of England once discovered much to their loss.

Since the starting of 2011 many investors have started to lose faith in gold, with nearly 2.5 million ounces of gold worth a staggering $3.8 billion having been sold. This massive sellout has brought down the price of gold by about 8%.

Signs That Gold Has Peaked

Rollback of QE2

Quantitative easing, part 2 is the market name for the second round of the Federal Reserve’s massive cash infusions to support the economy. It will soon see a rollback because the Federal agencies believe the economy is healthy now and the infusions are no longer necessary. This is widely believed to be a vital hint supporting the Gold Bubble theory that George Soros is supporting. Gold Prices have always seen an upsurge when the economy is unreliable and they fall when the economy stabilizes.

Inflation is under control

Federal authorities are expecting the inflation to stay low for the next few years. Sure inflation saw a rise in 2011 but it’s still low at 3%. Investors start buying gold when they sense inflation is about to rise which pushes the price of gold up. This seems highly unlikely right now.

The World Gold Council is reading the signs 

The World Gold Council is an organization supported and propped up by the gold mining industry. And the WGC has shown concern that Gold price might fall. They are concerned that with the withdrawal of the QE2 interest rates might see a hike. Such an environment affects all investments including Gold. And if the WGC is worried, it is one big sign of concern for gold.

The Dollar is climbing back 

“We have gold because we cannot trust governments”, President Herbert Hoover’s famous statement to Franklin D Roosevelt in 1933. 75 years later it sadly still holds true. Gold saw a great rise in demand when the recession loomed large on the minds of investors, and with the decline of dollar gold saw a rise in demand. It is seen as a substitute currency to the dollar. And now dollar is making a comeback, mostly pushed by other currencies in Europe suffering as a result of the economic crisis in Europe.  This doesn’t seem to be a good sign for gold.

Widespread Interest Controlling the Bubble 

40% of the demand for gold comes directly from the investors as compared to a feeble 16% in 2005. The demand for gold from the industry is falling as compared to investor’s demands. And investor’s interest is controlled by widespread speculation and discussion which could cause them to panic and start selling their stocks. It could be a repeat of the bursting of the tech bubble.

These are some sure signs that gold may have peaked and may be heading down. It is all speculation because you never know what the future might hold. A strong financial advice at the moment would be to not invest in gold until you see some signs of its recovery.

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Who should Invest in Precious Commodities?

When we mull over commodities sector for investment purpose, these precious metals top the list above all other available options. Throughout the world, long-term investing in commodity sector, particularly platinum, gold and silver has turned out highly rewarding till date.

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Even, investors with high risk tolerance have shown profound interest in precious metals as the equities selloff amid recent recession was deeper than anyone’s tolerance and money flowed towards secure assets. Investing in commodity becomes more accessible due to less capital requirement for trading in contracts of precious metals. This is one of the reasons behind increasing participation from the retail masses.

What you should not ignore About Precious Metals?

However, at the moment these commodities have already seen a fair bit of rally, so it becomes riskier to enter these for a short term gains.

The commodity sector is divided in three major categories- metals, agricultural, and energy sector, which are then further divided into several sub-categories. However, before investing in these commodity sectors adequate research and professional assistance is a must. Gold, silver and platinum investments pan out to generate best returns at a time when a recession is prevailing in the market and for the same reason they are known as crash-proof investments.

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Why should you Buy Platinum?

Although Platinum is quite famous amongst women for its ornamental purpose and is also used in creating auto-catalysts, a cleaning agent of diesel engines, investing in physical platinum might turn out to be little risky, however, platinum exchange trade funds are reasonably sensible investment option.

Reasons behind Ever Escalating Silver Demand

• Silver is considered as a conductor for heat and electricity and it is popularly used in industrial processes. One of the best features of silver is its flexibility and ductility which makes it a good candidate for industrial usage.
• Ravishing and stylishly garlanded ornaments are also available in silver which makes its demand highly fickle.

These two reasons encourage the demand for silver irrespective of the market condition.

Why does Gold Prices always Glitter?

Gold is always close to a woman’s heart as this yellow metal enhances her beauty with its glitter and this is the strongest reason for consistent rise in its demand. Its prices always glisten because of its demand as ornament and rising interest of investors. Basically investors consider gold as the best option to expand their trading portfolio as its prices doesn’t drops when an economy faces financial setback. This feature makes gold a sailing boat in financial inundation.

But gold trading is not safe for raw and fresh investors as huge investment is required for desired profit. Even long term investors require expert’s guidance and adequate research of market condition before investing in gold.

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Conclusion

Above mentioned statements shows that commodity sector is not for small investors rather it is a playing court for long term players. However small investors can buy them in shape of exchange traded funds which are comparatively less detrimental or physical gold.

Boot-up for the Financial Storm

Well, looking at economic data, may it be employment scenario, housing prices or consumer spending, your fears seem warranted. Unless, you are a compulsive stock investor, there are some safe investment bets that you can hold till the crisis scenario completely plays out. Gold has been on the rise since the stocks entered their downtrend, and many would argue if it’s another asset bubble in the making.

Demand for gold has always been there and even its supply has been on a consistent rise till date. But the recent spurt in demand for gold has led the prices rocketing higher, concerning value investors, at a time when there are a very few safe investment options available. So, the question is if there is another storm in the financial markets, does it makes sense to invest in gold at such high levels?

Gold Rush- Are glitters here to stay?

Well to answer that I’ll ask you another question. Where do you think the money will flow if economic growth flattens out and stocks take a wild hit? No doubt, the Fed is ready to go to any extent, but all it can do is print more money, which is not a durable fix to the situation. Gold along with other precious metals will surely continue the up move, whether the prices are justified or not, till the economy remains submerged.

Ideally considered as a perfect hedge against inflation, this time around it’s even bigger as gold is gaining popularity on concerns of hyperinflation. Such alarms are being pressed as Fed is desperately pumping cash into the system to avoid deflation. The economy has shown a slight rebound in the first and second quarter on the back of renewed consumer confidence, but concerns prevail due to systemic risks, which can lead to a much worse economic times than what we witnessed in this recession. So, we can expect gold to glitter, no matter if the prices may seem over stretched to investors chasing value.

Is there too much Hype?

Smitten by the gold rush, analysts believe that there is still more to come, as when compared to hyper inflationary pricing that gold enjoyed in 1980’s there is still room for another 30% upside. On the face of all this, deflation worries that are looming investors, if come out to be true, then fasten your seatbelts for an unknown territory, as then no price barrier will stop gold.

We can conclude by saying that gold with its resilience is a crises commodity and limited supply is another factor that keeps the price trending higher. But all this does not make gold a holy commodity as it may seem to many in current conditions. It can fall back on you, if there is unprecedented change in the economic conditions, so plan your investment effectively and don’t let the charm of gold take you blindfolded.  Making direct investments though commodity exchanges is not advisable given the nature of contracts, but you can opt for Gold ETFs and physical purchases in bar and coin form.

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Gold has always been considered a safe investment. However looking at the recent drop in the gold prices, It almost appears that the luster of the gold may be dulling just a bit as the price of gold fell closer to the $1,100 per ounce mark. Is this the beginning of a downturn in the price of gold? Is gold still a very safe investment?

Gold is falling despite overall stock market growth

Jobless claims fell by another 6,000 last week, and that seems to have had an effect on the price of gold, pushing it down near the $1,100 per ounce price range. The two dollar drop towards $1,100 is the lowest the price of gold has been for the past two weeks. This drop is unexpected considering that last week, gold grew in price by $20 per ounce. This week, that $20 gain has already been lost as gold has fallen $27 in price. In the past few weeks, there has been a great deal of liquidity in the gold market with over one million ounces being sold during this time frame.

• Spot gold fell to a low of $1,102.85, which is its lowest level since February 25.
• U.S. gold futures for April were down 1.3 percent to $14.20 this week, with $1,108.10 an ounce in heavy trading.

Platinum Prices Rises

While gold prices have fallen slightly, platinum prices have actually gone up by more than one percent to reach their strongest price level in the past seven weeks. The reason for this is due to Japanese buying heavily in platinum on the Asian markets. As well, South Africa, the world’s largest platinum exporter, has announced that the country will not experience the same delays in mine production as was seen last year. Last year, there was not enough power to run the mines and the exports of platinum fell drastically. South Africa has also stated that they do not expect any blackouts during the World Cup of Soccer this year, which should keep the platinum mines running and that is good news for the market.

Crude Oil Prices Fall

Just as with gold, crude oil prices for April has fallen by 34 cents down to $81.75 per barrel. The reason for this drop was because of the strengthening of the dollar against the Euro, which made commodities much more attractive to investors. The U.S. dollar traded at $1.3621 against the Euro, which was an improvement over the $1.3657 that it traded at the day before.

Gold prices have fallen slightly but they are still a great investment that should keep going up for some time now. Gold prices are higher than they have ever been before and it is going to take a lot to hurt that market sector. Platinum prices are also going to be better this year thanks to the higher production coming out of South Africa. As for crude oil, it should go up in price as summer gets here, but expect the crude oil prices to stay between $80 and $95 throughout the next few months.

Further Reading:

Is Gold a safe investment?

Should I keep investing in Dollars

Is Gold A Safe Haven Even At $1,000 Per Ounce?

Is Investing in Dollar a smart decision? There is a lot of speculation that the dominant currency of the 20th century, the American Dollar, is doomed. As its value falls when compared with stronger currencies like the Yuan and Euro, many investors are looking for a safer investment than the dollar. One such investment seems to be gold. Even at $1,000 an ounce, it seems gold is the investment of choice for investors who want to play it safe.

The Declining View of the American Dollar

In the heyday of the dollar in the 20th century, you could take American money anywhere in the world and gladly meet someone who would change currencies. For investors, the dollar was a safe bet as an investment because it always seemed to gain value over the other currencies of the world. The dollar in short, was the currency of choice for the world‘s investment markets. However, things have changed recently.

For the past 60 years, governments of the world measured how strong their economies were based on how many dollars were in their central-bank. Everything from oil to coffee beans was denominated in dollars. The dollar was the medium of exchange around the world because it was backed by the largest economy on the planet; The United States of America.

Things have changed though. In 2008, early in the year, the dollar‘s weakening value was the main factor in the rising cost of energy, commodities and food. Investing in the dollar has also gone down. Many prominent economists also feel that there is a good chance of an abrupt fall in the dollar. In 2009, a comment by the U.S. Treasury Secretary Tim Geithnr, where he stated he was open to changing the international currency from the dollar, sent the dollar falling 1.3 percent in value in only ten minutes.

While a change in the top currency for the planet, from the dollar is not likely, that doesn‘t mean the dollar isn‘t losing money. From 2005 to 2008, the number of global currency reserves held in dollars fell from 67 to 64 percent.

World leaders and economists all agree that the dollar is going to continue to deteriorate in value as other nations like China and India begin to gain more wealth and more economic influence around the world. The U.S. will see its once strong economy losing preeminence and the dollar will lose its position as the world currency. Some economists believe that the dollar will fall from the top within the next 15 years, while the Euro is the most likely to take its place. The dollar is no longer a safe haven for investing, so what is?

Gold: The Way to Go?

On Sept. 8, 2009, the dollar hit its low for the year, while something else passed $1,000 an ounce in value. That something was gold, and gold has become a barometer for the strength of the dollar. On that day, the dollar fell in value to 77.10, when compared with a compilation of the six major world currencies that were the Yen, Euro, Franc, Krona, Canadian Dollar and the British Pound. Gold on the other hand shot past $1,000. The reason for this is that gold is used as a hedge against inflation and a weak dollar. Put simply, the lower the dollar goes, the higher gold goes.

In 1980, gold was valued at $850 per ounce. During the 1980s, inflation was a major concern for the world�s markets, but since many investors saw inflation as something that never go away; they did not hedge in gold. As a result, gold fell in value from 1980 to 2001. In 1999, it reached bottom but after 2001, something amazing happened. Gold began to rebound as the worlds markets suffered due to the collapse of the tech stock bubble. While many gold investors thought that gold would stop rising, it didn‘t. The dollar continued to fall and gold continued to, and continues to rise. This shows gold investors two things. The first is that there is a fear of a rise in inflation as investors see the value of the dollar fall, and two, there is a great fear over the devaluing of the American dollar. The American dollar is falling in value, the markets are in turmoil and the one safe haven you can count on seems to be gold.

The dollar has been falling in value for years, and as the UN pushes to replace it as the world‘s currency, it is expected the dollar will continue to fall, along with Americas economic influence. With China, the European Union and India becoming the economic powers of the 21st century, there seems nowhere for the dollar to go but down. While the dollar goes down, its counterpart in all things it seems, gold, goes up. It can be expected that gold will continue to rise above $1,000 an ounce and serve as a safe haven for investors who want to get out of currency investing in the dollar, and choose gold investing instead.

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