Risks to Buying Gold & Other Precious Metals
Here are some potential pitfalls or things you might want to consider when owning gold and other precious metals.
For many people who own gold the issue of confiscation is a hot talking point. Many countries have had periods where they have outlawed the private ownership of gold and have attempted to seize it from its citizens.
Most notably was in 1933 when Roosevelt ordered US citizens to turn in their gold. As the financial situation in the US deteriorates there is much debate as to whether this would happen again.
How to Avoid Gold Confiscation
• Store your gold outside of the USA. preferably in Switzerland. Companies such as GoldMoney organise the purchase and storage of bullion in Switzerland relatively inexpensively and very simply. Switzerland has no history of gold confiscation and given that Swiss banks shelter 30% of the worlds private wealth, that this ba nking and its respect of privacy and private owenership are the cornerstone of its economy and success, it is unlikely that they suddenly endorse gold confiscation. Find out more about GoldMoney.
• When gold was confiscated in 1933 it only applied to US gold and not to our "semi numismatic" coins such as British Sovereigns , Swiss Francs, Mexican Pesos etc. Investing in these coins could therefore be one viable option.
• invest in silver and platinum as well as gold. The total value of all silver in circulation is tiny - apparently there are only $350 million ounces of silver in total for investment available, making silver not a good option for backing the currency. Platinum has never been eyed for confiscation.
• Own small amounts of old or scrap jewelry (bought close to the spot value). It is unlikely that in the event of gold con fiscation the government would go around seizing everyones watches and rings although they may limit the total value you can own.
• If you do own bullion and there is confiscation remember that last time people were paid for their gold( it was just then revalued months later thereby devaluing the dollars paid). If this does happen then you need to have a plan to move that money into another store of value.
Why Gold Confiscation May Not Happen
• In 1933 only 25% of people handed over their gold and today people are less obedient.
• An attempt to confiscate gold could cause a panic in the currency market therefore making it unatttractive for governments.
• Rather than confiscate individuals gold a simpler solution would be to nationalise the gold ETFs and funds.
• There is too much smart and big money in the Gold market.
• You need to think about how to keep your metals safe. One option is to arrange storage through a company like GoldMoney.
• Having a safe in your house is a good idea - a heavy gun safe are very difficult to steal although in the event of home invasion no safe will help you.
Investing in precious metals is like any other investment. It has sometimes huge price swings and even though everyone is telling you that the price is going to the moon often it can go the other way. Always ask yourself how much volatility you can handle. What is your time scale - when do you need to cash out. How would you be affected if the price suddenly halved.