Bank Of America Merrill Lynch Says The Worst For Gold May Be Over
Gold may have lost 2.1% last week, but Bank of America Merrill Lynch is assuring investors that the worst may be over for the yellow metal.
Metals strategist Michael Widmer noted to his clients on Monday that gold prices have stabilized this year due to steady demand from emerging international markets such as China and India. Remember that in late May we wrote that Indias gold demand may double this year, and in April we gave seven reasons China is becoming the number one producer and consumer of gold. Widmer says right now this demand is helping compensate for investor sell-offs, but eventually it will send gold higher. We believe that physical demand from emerging markets will gain further clout in the medium term as countries get more affluent, suggesting the worst may be behind the gold market, he said.
Gold and silver forecaster Julian Phillips wrote in his Gold and Silver Market Morning column that Asian gold investors are more trusting of gold and silver as long-term investments and less focused on short-term profits. They only buy when they feel the price has dropped too much and they rarely sell for profit alone. These investing habits keep Asian buying consistent and ongoing according to Phillips.
Factors To Consider When Buying Physical Gold
If you decide to buy physical gold, youll want to keep a few things in mind:
- Storage: Physical gold requires a secure storage location. While you can certainly keep your gold at home, many investors prefer a custodian. Make sure you research secure options for storing your gold before you buy it, and keep in mind that safe storage adds costs to your gold investment.
- Insurance: If you decide to store your gold at home, you should insure your gold to protect yourself against theft or natural disaster. This can add to the cost of your homeowners or renters insurance. And even if you dont keep your gold at home, youll want to check in on your storage providers insurance policy to determine how its protecting your investment.
- Manufacturer: Because youre making an investment, youll want to make sure youre buying from reputable sources that will help your purchases value grow over time. When buying gold, look for respected producers like Credit Suisse, the Perth Mint and the Royal Canadian Mint.
- Purity: The gold content in the coin, bar or piece of jewelry has a big impact on its value and worth as an investment tool. Ensure any gold you purchase as an investment has the purity level to help it stand the test of time. That means youre probably targeting gold items that are at least 91%, if not 99%, pure.
Can I Buy Gold Bars At My Bank
Particularly since the financial crisis of 2007-08, gold has appealed to investors looking for an investment that will hold its value and preserve their wealth. Many investors see gold as insurance against global uncertainty. Unlike currency, gold has an inherent value because of its high demand and exceedingly limited supply.
Although some banks do offer gold bars to customers, this is exceedingly rare. Banks who do trade in gold will often offer coins to customers rather than bars.
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Industry Overview About The Gold Industry
Gold price per ounce has seen massive growth over the past few years. At nearly $1400 per ounce, the average investor is not in the market for a bar that size, and even those who might afford would find it difficult to unload a bar that size to their local dealer.
This is why an average customer buys gold in one ounce form, and the cost to acquire gold in smaller quantities is higher. A lot of factors help to dictate the price disparity, not the least of which is the relative cost of minting a large bar of refined gold into one ounce coins.
These coins ship from large mints like the United States Mint and the Royal Canadian Mint of Canada to select authorized dealers, who in turn ship them to over 4,000 coin dealers in the United States alone before they find their way into the hands of a gold investor.
Have it in mind that there are shipping and insurance charges through each stage of the process, and before an investor receives his gold shipment, he may have paid brokerage fees, , or other ancillary charges.
Research has shown that a lot of dealers will not ship below a certain volume, while some will not ship above a certain volume. Certain dealers have different price breaks at different quantities. For example, one dealer may offer a discount for buying more than fifty coins, while another may offer a break at sixty.
Wells Fargo: Silver Could Be The Star Of The Next Bull Run In Precious Metals
While the latest social-media driven bid to push silver prices higher through a short squeeze had a negligible impact, Wells Fargos head of real asset strategy John LaForge believes silver is still firmly on course to outperform. As LaForge notes, the sudden surge of interest in silver was just one of many reasons to expect higher prices down the line.
Silver didnt suffer from the squeeze attempt and based on that, LaForge says, with prices holding above $27, investors should start to look at the highly optimistic long-term picture. Among the strong fundamentals, he singled out supply and demand dynamics, noting that silver prices havent warranted the opening of new mines for quite some time.
Although LaForge thinks silver will be the top performer , he believes all precious metals are in a super bull cycle. He expects the entire sector to do well. In support, he points to rising platinum prices as well as golds expected return to higher prices.
More than other metals, LaForge noted that gold stands to be the primary beneficiary of the situation that central banks have created. While the economy may have some breathing room, LaForge said that any recessionary warning signs over the next year or two will force central banks into stimulus and worsen the problem of loose government money. When this happens, investors wont waste any time rebalancing their portfolios in favor of gold.
LaForge had some input for savers holding precious metals during a super bull cycle:
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What Is An Online Gold Dealer
The top online gold dealers are trusted vendors offering everything from investment-grade bullion, coins, collectible gold pieces, and more. Customers can easily compare prices across multiple sellers and make a buying decision based on price and shipping speed. The top dealers offer options to take physical delivery of the gold or store it in a secured vault. Customers also have the option of selling their gold back to the dealer.
Where Else Can I Buy Gold
Buying gold from a bank isnt for everyone. Online retailers often offer the same quality gold products at comparable or better prices. Gold dealers are experienced in what they sell and are often licensed to sell these gold assets to you. Combine competitive online rates with direct low-cost shipping to your door, and there is a good incentive to purchase online.
Gold coins are usually available at pawn shops and the like, but we typically dont recommend buying gold at establishments like that since they are usually not experts, and youll find a high markup.
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Other Options For Buying Gold
If youre having trouble finding a bank that will sell you gold, you might decide to pursue other options. And there are many.
Suppose youre looking for special, current-year collectible gold coinage. In that case, you could turn to the United States Mint, which offers collectors a rich array of beautiful proof and other special-finish gold coins, gold commemorative coins, and gold medals.
But what if youre looking for gold bulliongold coins, gold rounds, or gold bars that come with lower premiums and are better suited for investors? In that case, the United States Mint wont be of much help to you. They dont sell gold bullion products directly to the public. Instead, they distribute these and other precious metals items to a small, select group of authorized buyers, who in turn sell these pieces to the public.
Why You Can Trust Bankrate
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. Weve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that were putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our investing reporters and editors focus on the points consumers care about most how to get started, the best brokers, types of investment accounts, how to choose investments and more so you can feel confident when investing your money.
The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice. Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice. Investment decisions should be based on an evaluation of your own personal financial situation, needs, risk tolerance and investment objectives. Investing involves risk including the potential loss of principal.
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Why Investors Like Gold
Gold has a proven track record for returns, liquidity, and low correlations, making it a highly effective diversifier, says Juan Carlos Artigas, director of investment research at the World Gold Council.
These qualities are especially important for investors:
- Returns: Gold has outperformed stocks and bonds over certain stretches, though it doesnt always beat them.
- Liquidity: If youre buying certain kinds of gold-based assets, you can readily convert them to cash.
- Low correlations: Gold often performs differently from stocks and bonds, meaning when they go up, gold may go down or vice versa.
In addition, gold offers other potential advantages:
- Diversification: Because gold is generally not highly correlated to other assets, it can help diversify portfolios, meaning the overall portfolio is less volatile.
- Defensive store of value: Investors often retreat to gold when they perceive threats to the economy, making it a defensive investment.
Those are a few of the major benefits of gold, but the investment like all investments is not without risks and drawbacks.
While gold performs well sometimes, its not always clear when to purchase it. Since gold by itself doesnt produce cash flow, its difficult to determine when its cheap. Thats not the case with stocks, where there are clearer signals based on the companys earnings.
Scotiabank Shutters Gold Business Makes A Good Case For Owning Physical Gold
As the price of gold continued its run at all-time highs, fueled by overheated printing presses at central banks and the collective metabolism of a gold bug community dangerously close to paying off an I-told-you-so! 40 years in the making, Canadas only charter bank with a precious metals business is shutting it down in the midst of a class action lawsuit and a newly launched apparent criminal investigation that they assure us are completely unrelated.
The Financial Postreported April 28th that The Bank of Nova Scotia told employees it would be shuttering its precious metals business. It seemed sudden and odd at the time, but started to make more sense last Friday when reports emerged that US regulators were pursuing active investigations into the Scotiabanks metals trading division. The probes are being continued by the Commodities and Futures Trading Commission, and the US Department of Justice, which suggests criminal activity is being looked into, and that sounds more like the Scotiabank we know.
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Etfs That Own Mining Stocks
Dont want to dig much into individual gold companies? Then buying an ETF could make a lot of sense. Gold miner ETFs will give you exposure to the biggest gold miners in the market. Since these funds are diversified across the sector, you wont be hurt much from the underperformance of any single miner.
The larger funds in this sector include VanEck Vectors Gold Miners ETF , VanEck Vectors Junior Gold Miners ETF and iShares MSCI Global Gold Miners ETF . The expense ratios on those funds are 0.51 percent, 0.52 percent and 0.39 percent, respectively, as of July 2021. These funds offer the advantages of owning individual miners with the safety of diversification.
Risks: While the diversified ETF protects you against any one company doing poorly, it wont protect you against something that affects the whole industry, such as sustained low gold prices. And be careful when youre selecting your fund: not all funds are created equal. Some funds have established miners, while others have junior miners, which are more risky.
What Weight Silver Bars Should You Buy
One of your first decisions when buying silver bars is what size to purchase. Silver bars come in different sizes and weights. The majority range from 1-ounce to 100-ounces, which is the suitable for most investors. Bars are produced as heavy as 1,000 ounces, which is what banks, exchanges, and ETFs usually buy.
As the table above shows, the bigger the bar, the smaller the premium. Thats because for the most part, it costs the refiner just as much to produce a silver kilo baras a 1-ounce bar.
But that doesnt necessarily mean you should buy the biggest bar you can afford. Here are the problems that can creep up with large silver bars. Big bars
Cant be divided up once you own them. If you buy a 1,000-ounce bar, youll someday have to sell the whole thingwhich you may not want to do. Smaller bars will be more practical to sell for the small needs you may have in the future. In fact, this is one of silvers advantages over gold, so take advantage of it!
Have fewer potential buyers. Not many investors can afford to buy a 1,000-ounce bar. If you have 10- and 100-ounce bars, you have a greater pool of customers and thus will be able to sell more quickly and easily.
Come with higher counterfeiting risk. Most of the counterfeit bars that have surfaced are with very large bars. Counterfeiters prefer them because theyre worth a lot more.
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Should You Buy Gold At A Bank
Bank vault full of gold coins
Theres no real risk with buying gold at a bank. Financial institutions, in general, take great pains to make sure any of the assets they handleinstead, they are paper checks or bars of goldare authentic. But that doesnt necessarily mean buying gold through a bank is the best way to go. It may not be the most convenient or cost-effective way to buy gold.
Banks generally dont deal with just anybody in the publicyouve got to be a member to engage in transactions with them. And this can cost you additional money through membership fees. There may also be other bank fees imposed on gold purchases, which can put your total cost above spot value at a significant premium.
You may also have to wait for a period of time for the bank to issue gold to you. This is especially true if the bank is low on inventory or depleted of gold stocks and needs to order more from its source to fulfill your order.
Coins at the bank were traditionally stored in canvas bags
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The Scotia Metals Bank That Was
At the end of the 2011 fiscal year, with gold trading at all time highs of $1,800/ounce, Scotiabanks acquisition of historic bullion merchant Mocatta Bullion in 1997 was paying off handsomely. ScotiaMocatta metals traders boasted global offices in New York, London, New Delhi, Hong Kong and Singapore. The bullion banking business provided credit, hedging, order facilitation and so on to both producers and consumers of precious metals. The 2011 gold market was full of speculators in industrial finance as well, and Scotiabank looked pretty smart having bought its way into the epicenter of gold banking.
How Do I Find A Precious Metal Dealer
Its best to do business with an established precious metal dealer who is located in the United States. Customer reviews can often help clear up concerns, offer personalized takes on a dealers reputation, and give you an idea of what the purchase experience is like. Look for a dealer with lots of reviews and above-average ratings as opposed to a dealer with just a handful of 5-star amazing reviews.
Another thing to consider is how long the dealer has been in business. Most trusted dealers in the industry have been selling gold for years. And while new dealers can certainly be trustworthy, a precious metals dealer that has been in business for many years can be more readily trusted.
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I Want To Buy Gold Coins From Bank Where To Go
In some countries, it is quite common to buy gold coins from banks however in the US it is not the case. Sure nothing beats holding fresh mint coins straight from the bank but Federal Reserve does not deal with individual customers and sells directly to banks. In very rare cases, some banks might offer commemorative series gold or silver coins but this might take place only for very limited time periods. This should not be confused with buying freshly mint rolled nickel or copper circulatory coins which is a quite common bank transaction.
If you want to buy gold coins from bank in the US, this will not be possible because most US banks will not sell gold bullion coins or bars to the general public. While most banks hold a portion of their securities in gold bullion bars, these are not for sale to the public. It may be possible to buy gold coins from bank in India and some other countries but not in the United States.
To find a list of top gold coins dealers in the US, check out our other article Top 10 Reputable US Gold Coin Dealers and learn more how to build a recession proof investment portfolio with trusted partners. Whether you choose to buy from your local gold dealer or opt to go a major online gold dealer route, knowing the spot price of gold is an important component of any successful transaction. Shop around, compare coin prices, shipping rates and dealer premiums to find the highest quality gold coins at just the right prices.