Your Questions About Invest In Gold Mines

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Ken asks…

What are some hot stocks to buy right now?

New to investing in stocks, wanting to invest some extra money in the stock market locally or globally.

Justin answers:

Anything that invests in gold and silver mining companies. Gold Corp. And Silver Wheaton come to mind.

Mining stocks are priced relatively low to gold right now and gold is primed for a bounce. I expect mining stocks to do extremely well through the rest of the year.

William asks…

What is the future of raising Gold Price?

Gold price is going above $900. Is there any change of going it down?

Justin answers:

Financial markets like “magic numbers” and the number to watch for gold is $1000. Given that $900 has already been breached it is only a matter of time before we reach this number if the current fundamentals continue.

These include: continuing dollar weakness and uncertainty in the financial markets as the truth behind the sub prime debacle comes to light. The longer this uncertainty continues and concern about paper assets (ie T bills and the like) escalates then more and more investors will look to gold as a “safe haven”.

Investing in gold is relatively straightforward, either directly via one of the large bullion providers (never buy gold jewellery) or via specialist exchange traded funds and, of course, mining stocks.

To try and determine when the price of gold is likely to fall a good place to look would be the COT report (Commitment of Traders) issued every Friday by the CFTC – Commodities Futures Trading Commission.

Hope the above helps.

Daniel asks…

where are commodities that are traded on markets actually stored?

I understand that when one buys gold futures, one does not actually take possession of the gold, but is the gold (or the platinum or the pork bellies) actually held somewhere? If so, where? Banks? Dedicated storage facilities? Also, are the trading firms required to have them on hand?

Justin answers:

For example, Gold

http://www.essortment.com/career/goldcommodities_sfse.htm

Investors who are interested in investing in gold as a commodity have a wide range of options. Those with deep pockets can buy 400-ounce bars of gold just like the ones held in Fort Knox or the basement of the Federal Reserve Bank to settle accounts between nations. They can take physical delivery or, for a small fee, have it securely stored.

Some investors prefer numismatic gold coins but the level of knowledge required for numismatic investing is quite high and probably not appropriate for most investors. Many investors opt for bullion coins, a liquid investment available in many forms. One-ounce gold bullion coins are available in many versions from the mints of the United States, Canada, China, Australia and other countries. Smaller coins are also common in one-half, one-quarter, one-tenth, and one-twentieth of an ounce but the smaller denominations all tend to have rather high markups compared to their value as bullion.

Investors who don’t want to deal with the storage and security considerations for a significant amount of bullion can use investment instruments such as the Perth Mint Certificate Program, the Central Fund of Canada (50-50 gold/silver, trades on the American Stock Exchange) or the streetTRACKS Gold Exchange Traded Fund (New York Stock Exchange). The Central Fund of Canada and Perth Mint programs take physical possession of the precious metals that they buy but the streetTRACKS fund is designed to track the price of gold via derivatives.

Gold as a commodity is also traded in the options and futures markets but the amount of leverage possible (often with only 10 or 20 percent margin) makes it a high-risk venture suitable for only the savviest of investors and those able to withstand large losses.

A compromise between investing in gold bullion as a commodity and the high-risk world of the options and futures markets is to invest in the shares of gold-producing companies or smaller exploration- and development-stage companies that own or have options of gold-bearing properties but have not yet brought mines into operation. Investors can buy shares in individual companies or put their money into gold-oriented mutual funds.

Steven asks…

Why is gold still so valuable if it is avalaible around every street corner?

A study shows that using all the gold that has ever been mined and by melting all this there would be enough to make four Gold wedding rings for each person living on the planet. So why is gold still that expensive?

Justin answers:

There is only enough gold in the world to fill one average sized football stadium to the very brim.

You could fit all the gold in the American economy for example, in one averaged size town house. Fort Knox just hides a modest sized hole in the ground.

Gold is expensive because it is what all currency is based on. When the economy has a down turn, people tend to invest in gold stocks. Same goes for Silver, Platinum and Palladium.

Mark asks…

What metal is the best to invest into right now?

Gold, Silver, Platinum, Palladium or other and why?

Justin answers:

The answer to your question depends on your one greatest goal for the investment. The platinum market is extremely volatile because it is such a small market by comparison. Silver tends to be slightly more volatile then gold. Gold has a special place here. When we hear about the price of gold going up, what we are actually seeing is inflation driving the dollar down. Gold is very stable in value and its buying power is not affected by inflation. In 1900 an ounce of gold bought you a very nice set of clothes. In 2008 and ounce of gold buys you a very nice set of clothes. Golds buying power has been stable for very long periods of time. That is why so many cultures chose gold as their money. Many other things were tried, but even silver fell away to gold’s superior stability. The downside of that stability is that gold investments don’t explode up or fall down in real value (buying power). I personally believe that now is a great time to hold gold and silver bullion as america will very likely suffer from hyper inflation in the coming years as the fed prints money to pay off government debts. Gold and silver would hold their buying power in this environment. Silver even has some upside to it as industrial demand goes up or down. When you look at the market you most likely should not invest in Gold. Given the large fluctuation in value. You would be buying it on the high end if you bought it now. People may remember the late 70s and early 80s when Gold was in this same range. Almost all of the 90s and early 00s it was stable and at about half the value it is now. Now Gold Coins that a whole other beast. One that can be a better investment if you find a dealer that is willing to work with you and the amount of time you wish to hold the investment. Plat on the other hand is more stable as such would be a so so investment. Copper and silver are two that continue to climb the charts. With more and more uses and less and less being mined the value will continue to climb.

Robert asks…

What single event will cause the dollar to free fall? What can be done to avoid a devalued dollar?

There has been a lot of talk about the falling dollar these days. I have researched and found very little info on the sinking dollar. Has the dollar already lost its world status? Many countries have increased the amount of euros in their portfolios . Will a sinking dollar have an effect on the Euro? Was Richard Nixon wrong to change the backing of the dollar from gold standard to Federal Reserve. Why is Ron Paul the only presidential candidate talking about changing the dollar back to being backed by gold ? What can the average person do about this?

Justin answers:

The dollar is falling for a combination of 3 reasons, all else equal:

1. RELATIVE interest rates are falling
2. RELATIVE productivity is slower
3. RELATIVE attractivness of US investments is declining.

The dollar will increase for 3 reasons all else equal:

1. Raise RELATIVE interest rates
2. Increase RELATIVE productivity
3. Increase the RELATIVE attractivness of US investments.

Each of these things increase demand for dollars, which in turn increases the value.

Your question implies that the decreased value of the dollar is a bad thing. Nothing could be further from the truth. There are huge imbalances in the US economy (i.e., trade balance, savings rate, consumption) that have to be corrected eventually and a devalued dollar encourages these corrections. In addition, the worsening credit crunch and real estate woes are costing jobs and decreasing economic output. These declines are being offest- at least in part- by greater exports and foreign capital investment that would not occur if the dollar hadn’t sunk to its current level.

As for the gold standard, it is beyond the stupidest idea ever conceived.

1. If we agree that we want maximize the real value of the economy, then we need fiat money. The quantity of fiat money can be changed so that inflation can be combated and economic growth stoked when it is sluggish. If the dollar is backed by gold and a huge deposit is mined, then we will experience inflation and have no simple way to combat it. Similarly, if the demand for money increase faster than mining operations, then we will have a credit crunch, which will slow economic growth. And again there are no quick fixes if the dollar is backed by gold.

2. There is no way to ensure that control of the money supply can be coopted by private interests. We have seen this repeatedly over the last 50 years or so. Alcoa had an almost monopoly over aluminum in the 70s, the hunt brothers cornered the market for silver in the 80s, DeBeers was the diamond trade for decades, etc.

3. Elected officials would again control the money supply and would have an incentive to inefficiently invest tax payer dollars in gold production to feed their pork barrell projects.

George asks…

What’s the best way to invest in gold?

What’s the best way to invest in gold? Would you recommend literally buying gold coins, or buying a precious metals mutual fund, or what?

Justin answers:

ETF’s are the best way. An ETF is very liquid, so easy to buy and sell, they have low fees compared to mutual funds and they react on the price of gold only.
Alternatives:
– Gold Mine Stock: better in principle, but the best ones are South African and Canadian, so you’d expose yourself to the exchange rate and local problems as well.
– Mutual Funds: these are nothing more than Gold Mine Stock, with added fees…
– Coins and Bullion: not very liquid and comes with problems like storage and taxes and extra fees
– Gold Options: the most reactive and risky. But for the short term only.

James asks…

How to make runescape money with free trade or skills?

Current advice on how to make money would be very appreciate, f2p or memby tips pleasee, also I have a kingdom of miscellania and tips on what to invest into to make it the most money efficient would be nice. I can also slay things I’m high level with several million gp. Please give me some more ideas or techniques!!! (:

Justin answers:

There are a lot of ways to make money fast. The easiest way to do it if you are just starting to play is to finish the Rune Mysteries Quest and then start mining rune essence. If you are a low level miner, this can take up to three minutes to get a full inventory, so you can go make coffee or go to the bathroom while your doing this, so you can multitask. If you keep doing this, sell when you have 200-2k rune essence. Each sells from 20-30 gp, and always try to offer 30gp. At 2k rune ess, that gives you an immediate 60k.

If you’re mining level is 30 and up, you should consider mining coal to make money. Prices for coal are immensely higher than rune essence, but are harder to mine. Each piece of coal sells for 100-300 gp. I would reccomend storing coal until you get 10-100, as people often buy in bulk for higher prices.

If you have a fishing level of 40 and up, and a cooking level of 40 and up, you will be able to fish for and cook lobsters. The best place to go for non-members (and the only place to go) is the karamja island dock. There is no competition here unlike mining, so you can easily get a full inventory of lobsters in 10 minutes. Lobster fishing is slow once you start however, and at level 40 fishing you catch one every 30 seconds. Once again, store up, as players buy in bulk often. Lobsters are in even more demand as coal and can sell for 350 to 200 gp each.

Those are the main ways I make money. There are a lot of different ways, but those are pretty good to get you started, and I don’t want to use up the entire page. =)

As for the Adamant and black gold, those are gold trimmed armors. They are worth a lot ( 100-300k per plate) and you really shouldn’t concern yourself on getting one, they have the same defense values as regular black and addy armor. They are only for the rich classy people who want to show off rewards from treasure clues (mini-quests)

Paul asks…

Whats the best advice to start investing and buying gold?

Whats the best way to start? Is it better to buy bullion bars or coins? Does it matter what kind of coins? For example, Gold American Eagles over American Buffalos?

Why does the face value of an American Eagle 1oz. is $50 when gold is worth almost $900, and the same thing with the rest of the American Eagle coins?

Justin answers:

As with any other investment, you’ll need to look at this around your current and expected life circumstances: do you already have money in the bank, 3-6 months worth? Do you have high interest debt that you should pay back before making investments? Are you saving for any near term large purchases, like a car or house? Are you well insured against most common hazards, with car insurance, homeowners or renters insurance, health insurance, disability insurance, and life insurance (if you have dependents)? All of these core considerations may take precedence over gold – or any other – investments.

Most investment advisors suggest that one’s investments in precious metals – in all forms, including the stocks of the companies that mine them, be kept to 5-10% of one’s investable assets, and that’s not a bad guide for most individuals.

Given that, in part as noted in the wisdom of some of the other answer-ers to this question:

* Coins have some advantages over bars, primarily because coin buyers usually don’t require that their gold content be re-evaluated (assayed) when they are bought and sold.

* You might consider any of the following in your mix of gold investments:

1. A small amount of physical gold, usually in the form of coins purchased from bullion dealers (monex.com, kitco.com, blanchardonline.com, etc.), coin dealers, or from trusted sellers on eBay.

Some foreign buyers only want .999 fine gold coins, and only some American coins, like the Buffalo coins, offer that fineness. Other US gold coins – with the same amount of total gold content – may be only .916 or .900 fine (91.6% or 90% gold, with the rest of its metal content consisting of an alloy metal like copper or silver) for instance, and for that reason might be in somewhat less demand from outside of the US, although a large fraction of US buyers may not care one whit about this. But for the most part, any well-recognized gold coin, from a US Eagle or Buffalo to a Canadian Maple Leaf, Austrian Philharmonic, or South African Krugerrand, to name just a few of the main options, is a reasonable choice.

2. Certificates for overseas storage of gold, from companies like GoldMoney.com or the Perth Mint.

3. Shares in Exchange Traded Funds (ETFs), like Street Tracks Gold Shares (ticker symbol “GLD”), that represent a part ownership of a big pile of securely-stored gold and track the gold price. These trade just like stocks.

4. Shares in mutual funds that own stock in companies that mine gold.

Here’s one reputable mutual fund complex with two gold-oriented mutual funds that allows you to do so with just $100 up front and $50 a month:

http://www.usfunds.com/docs/html/abc_pla…

That way, you won’t try to “time” the market: if gold mining companies’ shares drop, you’ll buy more shares, and if they rise, you’ll buy less, until you’ve allocated whatever amount you wish. As well, they can do the work of picking stocks which, if you haven’t studied the sector, might take you some time to learn to the point of comfortably making your own investment decisions.

Here’s a comprehensive list of other gold-oriented mutual funds available to US investors:

http://www.eaglewing.com/fundlist.html

5. A diversified portfolio of individual companies that explore for, build reserves of, or mine gold. To do this, you’ll need to do a considerable amount of homework, or find a trusted investment adviser who knows this sector well.

Before buying *any* gold, figure out why you want to own it. What makes the gold price go up? What factors (like increases in the amount of central bank sales of gold, or increases in the value of the dollar against other currencies) are often – at least recently – associated with it going down?

If you’re buying physical gold as disaster insurance, for instance, against the possibility of widespread bank failures or hyperinflation, you’ll need to figure out a) whether you can stand holding it if its price should decline, even sharply, in the next couple of years and b) where you can safely store it.

If you’re buying gold as an investment, you’ll want to have some idea about why you’re buying it now, what prices you’ll sell at, why and when you expect those prices to be realized, under what specific circumstances you’ll consider selling, and how much you’ll sell. Note that when you buy and sell anything – gold or stocks – you’ll take a haircut when both buying and selling, in the way of commissions and buy/sell spreads, so you might need to make 5-15% on various forms of gold-related investments just to break even.

Some background: we do know that gold went from $35 per Troy ounce in 1973 – when its price stopped being fixed by the US Government – to (briefly) $850 in 1980, down to around $250 at a couple of points around 2001-03, up to $1050 recently, and is around $880 today, as of this writing.

These aren’t inflation-adjusted prices; roughly speaking, the $850 peak in 1980 corresponded to about $2,200 per Troy ounce in today’s dollars, which means that the gold price today is less than half the 1980 peak.

We also know that, over extremely long periods of time, gold has roughly retained its purchasing power in goods, but that there are periods, sometimes long ones, where it is a very good investment and periods where it has been a very poor one. Those experiences even vary by country, as in cases where a nation’s currency rapidly loses value due to capital flight, high inflation, or even hyperinflation.

Finally, we know that the gold price is volatile: even during its run-up from $35 to $850 over a 7-year period in the late 1970s, there was one case where it fell from $200 to $100 within about a one-year period from 1973-74, if memory serves.

As for the best time to invest, you might read what investment “experts” think about what will happen to the gold price and the prices of individual, or indexes of, gold-oriented stocks by continuing to read articles at these websites:

http://www.kitco.com
(see the links in the “Contributed Commentaries” section, about mid-way down the home page)

http://www.321gold.com
(see the links at top, under “Gold Silver $$$”)

But be advised: there are as many opinions as experts, and they are often contradictory :-). For that reason, you might consider making your purchases of physical gold or gold stocks gradually, spaced apart by a month or two over a longer-term period. Once again, setting up automatic monthly dollar-cost investing into a gold-oriented mutual fund is a terrific automatic way to do this. That way, you aren’t tempted to buy more when prices are rising and stop buying, or sell out of panic, when prices are falling.

Finally, as someone else astutely observed, the face value of a coin is pretty much irrelevant to its gold content or the metal value of that content.

There is one exception: some coins are legal tender at their face value, and this gives buyers some rather far-fetched downside protection. For instance there are some Canadian $100 legal tender gold coins, with about 50-60% gold content, that are worth about $200 in gold melt value today. If the price of gold were to plummet more than 50% from present levels (i.e. Below about $400-$450 per Troy ounce), those coins would still be legal tender at $100 Canadian dollars, so you would have protection against these coins falling further in value, if gold were to then fall even further below that level. But that’s a somewhat improbable scenario, and is mentioned here mostly for completeness.

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