Where’s Your Gold?

When I was in London in December, I got the chance to speak with an expert in scarce and ancient coins. He showed me a scarce Roman coin, with the confront of a long-dead emperor nevertheless clearly stamped in the metal. He also spread Viking coins and others from an range of different periods in Europe across the table between us.

After years of staring at computer screens, watching stock prices inch their way up or down a chart, it was almost a surreal moment to keep up those coins in the palm of my hand, to feel their weight.

There was no mistaking, in a world of fleeting paper profits, what I was holding in my hand was true wealth.

And I’m not the only one who believes it’s time to get a little more physical with our wealth…

Gold in Your Pocket

need for physical gold is on the rise. The World Gold Council revealed that while overall gold need for the first quarter dropped 18% from the same period a year ago (where the 2016 first quarter was the strongest first quarter ever for gold need), gold bar and coin need increased by a healthy 9% at 290 tons.

What’s more, Bloomberg recently reported that two firms have plans to open new vaults in Europe capable of holding more than $112 million in gold.

BullionVault revealed that it additional three tons in gold in the past 12 months, lifting its total holdings up to nearly 38 tons.

The Bank of England – which stores gold for the U.K. Treasury, other central edges and private firms – has additional 6% to its holdings since the beginning of 2016, bringing its total holdings to 5,067 tons in February.

As you can see, more investors are adding physical gold to their portfolios – gold exchange-traded funds (ETFs) just aren’t going to cut it when you consider the fees associated with the ETFs.

And which would you prefer in times of turmoil: paper gains or the weight of a gold coin in your hand?

Many investors around the globe are adding physical gold to their assets for three big reasons:

  1. Rising inflation. We are starting to see signs of inflation in the U.S. and across Europe. In the past, we’ve seen the price of gold climb in tandem with inflation, allowing investors to stay ahead of its bite.
  2. Negative interest rates. While not a problem in the U.S., part of the world is nevertheless struggling with negative interest rates. And instead of giving over more of their wealth to edges, investors are opting to invest their cash in physical gold. (And considering that U.S. interest rates are nevertheless low, gold potentially offers a better return.)
  3. Geopolitical uncertainty. Questions about the health of the economy, the length of the bull market’s run, fighting in Washington, terrorist attacks, elections and more have left investors on edge, waiting for the next black swan event to swoop in and send the market crashing. In moments of chaos and destruction, gold is the safety net you want to have in place. Stocks plummet and bonds implode. Gold holds its value and already climbs.

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