In part one of this article-blog, I discussed some findings of Myra P. Saefong’s article, which was published by the Wall Street Journal. Myra compared the growth of gold in 2014, against several other investments. Gold bullion and gold coins most closely track the gold futures price, so if you bought modern gold coins or gold bullion products on January 1, 2014, congratulations your gold purchase has done quite well very quickly. Here are some more of her comparisons and findings.
ICE U.S. Dollar Index Vs. Gold Coins And Gold Bullion
Myra compares gold futures to the U.S. dollar and find that while gold is up over 11%, the U.S. dollar is down 1%. Here is an important little fact: the dollar is not stable, it loses it’s value continuously over time, and will continue to. If you have ever heard someone say that the dollar doesn’t buy what it used to, they are right. In fact, being that the dollar has lost 1% of its value so far this year, and that you will have to leave a dollar in a CD for well over a year to gain 1% in interest after taxes, means that you actually lose purchasing power leaving your money in an insured banking account. When this truth rings home, you will understand the need to have a portion of your wealth in gold coins and gold bullion. For several decades now, the dollar has been a losing proposition.
SPDR Gold Trust ETF Vs. Gold Coins and Gold Bullion
An investment adviser may lead you to believe that holding shares of a gold ETF such as SPDR is the same as owning gold coins or gold bullion, but it is not. Myra’s article displays a great graph that shows several variances between what the ETF values gold at, and what the gold futures are truly trading for. She also quotes Jeffrey Wright of H.C. Wainwright, who had this to say regarding ETF’s, “They have a good correlation, but it’s not perfect, GLD also has retail forces and interest behind it as well, so inflows and outflows can be impactful.” In one of the prior article-blogs I wrote, available here, I discussed some reasons to not own gold ETF’s, and Jim Cramer of Mad Money threw in some reasons that he did not like gold ETF’s. In fact, Jim advocates owning gold coins, and therefore gold bullion products.
The End Of The Article Compares Gold To Other Commodities
First, let me say that traders always love to call gold a commodity, which it can be, but gold coins also function as a currency, and they have for over 6000 years. Just because a Wall Street Trader call gold a commodity, that does not change 6000 years of history. In the last part of the article, Myra compares gold to Coffee (up 68%), Lean Hogs (up 55%), Milk (up 23%), and corn (up 15%). What this tells me is that food inflation is out of control, but that is another discussion entirely. In as far as holding physical assets goes, however, putting gold coins and gold bullion in a safe is a lot more feasible than stuffing even lean hogs into your portfolio. To buying gold coins or gold bullion, call us at ITM Trading, 1.888.OWN.GOLD, we are here to be of service.