+49 30 6521 24928 (GER / ENG) support@bar9.com

When And How To Invest In Gold

Waldemar Meyer
March 25, 2020

Dear Bar9 customers,

unfortunately, we all live in extremely uncertain times. And the so-called “markets” in particular are also showing signs of nervousness: the price of gold, for example, goes up sharply one day, only to go down again the next. At the same time, almost all major gold traders have closed, which means: if you want to buy gold at the moment, you will not get anything even with high premiums. The same applies if you want to sell. The good news: On Bar9 you still can buy or sell gold as of today the 24 March. But should you buy gold now in the crisis? Or should you rather take advantage of the high prices to reduce your gold holdings and make cash?

1. general

Gold has been the last lifeline for savings for 3,000 years. In the modern world, gold is considered a “lender of last resort” because, when you own gold, you are not dependent on anyone: no bank, no insurance company, no counterpart who has guaranteed that for a piece of paper which you hold in your hands you will later get something real. Professionals say that gold is one of the few investments that has no “counterparty risk”. This is what makes gold so attractive in times when, for good reasons, one must be sceptical about individual banks, but also about the financial system as a whole. There are currently dozens of arguments for owning gold and quite a few, particularly experienced market participants assume that the price of gold and also silver will rise significantly in the long term.

2. special features

Many believe that in such a crisis, where people queued up in front of the branches of gold dealers (until they closed), the price of gold should move forward in only one direction: upwards. But that is not true in a general sense. Because the physical demand for gold is one thing. The world gold price, as determined every few seconds on the exchanges, is the other: On the commodity exchanges, almost no physical goods are traded, but so-called “futures”, i.e. virtual derivatives, financial bets on gold. And this is where two factors come into play, which from time to time ensure that the gold price collapses apparently “surprisingly” in the middle of the most severe crises:

  • Central banks intervene (unofficially) in the markets to keep the gold price, which is a typical “panic indicator”, calm and weaken it. These interventions usually occur during trading hours in New York trading and push the price down, sometimes by a few percentage points, within a few minutes.
  • In severe crises, major investors at some point also run into liquidity shortages and start selling off everything they have left. These are days in which, for example, on one and the same day the stock market crashes and gold falls like a stone.

Such phases, which make gold investors very insecure, usually don’t last too long. Whoever experiences something like this for the first time will be very frightened. Below you see what happened during the financial crisis 2008: First, the gold price got hit by a market liquidity shock, after that it started to heavily recover:

3. decision support

Do you want to buy gold or not? If you are a normal investor and saver, the daily gold price is not important for answering this question. Instead, you should add up all your savings and investments and see how much physical gold you already have in your total savings portfolio. Gold serves as a stabilizing factor in your savings, as an “insurance” when all other financial investments with counterparty risk start to wobble. Therefore, it is generally said that the proportion of physical gold in your savings should be around 15% to 25%. – You should determine the amount mainly according to how optimistic or pessimistic you are about our financial and banking system.15% to 25% – this good old rule will help you decide whether you should buy gold now or reduce your gold holdings. By the way, unfortunately, most savers in the world have not structured their savings in such a way that they can ́t be hit too severely by a financial crisis!

4. settlement

So if you have set an amount x you want to own in gold, should you buy today because the price of gold will be higher tomorrow? Well, really none of us can see into the future and no one knows where the gold price will be in the coming weeks – even though some analysts and market criers are happy to give you the impression of perfect wisdom. That is why the classic “rule of thirds” is recommended: Take the amount you want to invest and divide it by 3. Invest the first third today, the second third in a few weeks and the third again a little later.

This will give you an average price for your gold holdings through all the price fluctuations. It is important that you remain consistent and stubbornly follow through with your plan. Stay as unemotional as possible and do not let yourself be guided by daily headlines. By the way, the “rule of thirds” also applies analogously in the opposite case, if you want to reduce the gold share of your savings.

You will see: People who own physical gold react much less panicky than those who have invested their savings exclusively in bank-dependent products. Gold helps you sleep better and increases your personal sovereignty. Act similarly confident and planned when building up or reducing your gold holdings! We hope this article has helped you in this respect.

Waldemar Meyer
Head of Trading Bar9 GmbH

Easily open your Swiss tax free gold vault in under 6 minutes

It’s Free to open a Swiss vaulting account, you can buy and sell gold directly to it instantly.

0 Comments

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Gold, Silver, and Crypto Markets Seem Poised for a Massive Bounce

For companies that are publicly traded – and often work over the weekend – having 24/7 exposure across the markets would be ideal.

Bank of England Interest Rate cut Highlights the Need for an Active Investment Portfolio

Now is a great time to begin investing in assets that can withstand major financial uncertainty, such as gold and other metals.

Gold Bug Profile: Porter Stansberry

Porter Stansberry has a very rich history. He too got involved in the financial industry at one point, and seemingly never looked back.

Recent Actions by the Federal Reserve may Spark Demand for Gold and Silver

Such extreme measures often come at a long-term cost, however. While the measures taken allow for stock markets to rebound, it also devalues the US Dollar.

South Africa may Shut Down its Gold Mines due to the Coronavirus Crisis

This news coming out of Mongolia is rather surprising. Unlike other countries, it would appear that this region is still providing ample access to gold deposits.

Gold Bug Profile: Adrian Ash

Ash is convinced that owning both gold and silver – either as part of an active portfolio or just in terms of hard assets generally – makes a lot of sense

Gold and Silver Bounce Back as Stock Markets Continue to Struggle

Although the markets aren’t out of the woods yet, things are looking better. There is some positive momentum all around, for a change.

Gold Bug Profile: Crispin Odey

Over the years, the name Crispin Odey was often named in association with gold and other precious metals. Particularly during the coronavirus crisis, Odey expected the value of gold to move up again.

Gold Bug Profile: Peter Schiff

Despite paying very close attention to investment options such as gold and silver, Peter Schiff isn’t optimistic about Bitcoin and other cryptocurrencies.

When And How To Invest In Gold

Dear Bar9 customers, unfortunately, we all live in extremely uncertain times. And the so-called "markets" in particular are also showing signs of nervousness: the price of gold, for example, goes up sharply one day, only to go down again the next. At the same time,...

Where is the Best Place to Buy Gold Online?

As far back as Ancient Rome, prospectors would sit aside streams swilling water in pans with the hope of glimpsing the yellow metal. Even today, you can still get your hands on gold in this way, but buying online through a broker is your best bet for a secure, cheap...

Can The Wim Hof Method Beat the Corona Virus?

I have been following the Corona Virus or Covid-19 since the start of January when just a few reports started to come out of China. For the last two months, I have watched it escape the Chinese control grid to the point where it has now caused more reported cases...

How to Immunize Your Investment Portfolio Against Coronavirus

A butterfly flapping its wings in Brazil can cause a tornado on the plains of West Texas, says the butterfly effect. And in today's global economy, a man eating a bat in China can end up eroding the retirement savings of millions of people around the world. A...

Silver Bug Profile: Nathan Eric Fier

Many individuals have shown their love for gold, silver, and other precious metals over the years. Nathan Eric Fier is certainly a silver bug, although he pays close attention to gold as well. Who is Nathan Eric Fier? People with a link to the financial industry will...

Gold or Silver: Which is Best in a Pandemic-Induced Recession?

Countless civilizations—from ancient Egypt to Mesopotamaia—have built their economies on the solid foundations of gold and silver bullion. The exchange rate between the two metals dates back as far as 3000 BC. But while both metals are often lumped together by...

Wealth Diversification is Crucial, Especially During the Novel Coronavirus Outbreak

Putting all of one’s eggs in the same basket during a time like this is virtually the same as throwing money out the window.

Physical Gold Demand and Price Premiums Spike in Singapore

While the physical demand for bullion rises, the modern age warrants looking at digital solutions. Opening a portfolio for digital gold and silver on Bar9 is a great way to be exposed to different markets.

Gold Bug Profile: Thomas Kaplan

The first link with precious metals became apparent in 1993. At that time, Kaplan founded Apex Silver Mines, taking up the role of chairman and chief executive officer.

Gold Bug Profile: Mike Maloney

More importantly, his expertise led him to gold and silver. Back in 2002, both of these assets were severely undervalued in his personal opinion.

Indian Officials Confiscate 9.3kg of Gold From Smugglers

What is rather interesting is how all of these bars have forged foreign markings. The objective of the individuals was to sell it in Mangaluru and districts of North Karnataka

Translate Blog Post

Article Categories

Blog Stats

  • 58,919 hits

Follow the CEO on Twitter

%d bloggers like this: