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Tuesday, January 17, 2017

Since the beginning of year gold has risen in price by 25%

At the beginning of the year, the yellow metal if not get rich, you certainly have pleased investors. Now the interest in gold investments faded, for how long?

photo: pixabay.com

This year, after several years of stagnation, gold increased in price by 25%. But the question is — will continue the upward movement or investors it’s time to take profits?

This precious metal is unpredictable. Of course, not like oil, but in recent years gold has been the subject of joy and frustration for the world’s leading investors. According to us media reports, John Paulson, who earned several billion dollars during the subprime mortgage crisis and became a legend on wall street lost hundreds of millions of dollars by making the wrong bet on the movement of the noble metal.

Prolonged growth this year is clear: gold was the safe haven during the turmoil associated with problems in the Chinese economy, turmoil in the European Union and Britain. However, global markets managed to overcome the initial shock, the U.S. indices could even show historical highs. This speaks to the attractiveness of developed economies, and what investors will be wary of protective assets.

Therefore, the value of gold cannot be overstated, especially now that due to the overproduction of his sentence in the world more than demand. “In General, in the current situation, we note the desirability of currency diversification, the share of investments in US dollars in the amount of approximately 50% of the portfolio, reducing the share of the stock in favor of the bonds and the direction of the investment in gold (but not more than 15% of the portfolio),” said Sergei Dejneka of BCS Premier. He advises to consider investment in gold as a good hedge (protection. — Ed.) but in the long run sees great growth potential from the current levels.

There are five main ways to invest in precious metals: jewelry, bullion, investment, commemorative coins, depersonalized metal account plus derivative instrument — futures on gold. Those who believe that investing, buying earrings, rings and bracelets, we are forced to disappoint. Investment this is not. Such “investment” can be attributed to a pawnshop or sell on the black market, but in the Bank it can only be put in a cell. Decoration it is a decoration. “Gold bullion is a tool bigger, but they have disadvantages. First, by purchasing bullion in the Bank, the buyer automatically pays 18% VAT. Secondly, the ingots need to be stored somewhere, i.e. you need to rent a cell. During storage outside the Bank, it is sufficient to slightly scratch the ingot and its price greatly reduced the sell-back,” — said the Deputy Chairman of the Board Loko-Bank Andrey lyushin.

There is another unusual variant of investment, commemorative and jubilee coins. This is the best option for those who insist on owning physical metal and don’t want to understand banking and stock market intricacies. Advantage that there is no VAT. A significant drawback — as a rule, the negative difference between the purchase price and sale price in the Bank. Bars and coins makes sense to use only if you plan to sell them in a few years or even decades.

“On a shorter horizon might be interesting depersonalized metal account, or OMS. This is an intermediate option between physical gold and instruments of derivatives market — futures. OMS is very similar to a Bank Deposit, only the Deposit currency is gold. The disadvantages of this option are obvious: impersonal account, not backed by physical metal. Closing contribution, you can only get the cash equivalent of the gold OMS, — said acting Chairman of the Bank Ugra Dmitry Shilyaev.

Some investors may also consider a significant disadvantage, the lack of guarantees of contributions of Agency on insurance of contributions. Quite popular today among investors and derivative instrument — futures on gold. A futures contract on gold is a unique financial tool that provides all interested persons access to the gold market. Work futures provides a good opportunity, but it requires certain knowledge and the help of a reliable intermediary — a brokerage company. “All the gold makes the watch very different scores because of its investment nature of multi-component. First of all, I would have paid attention to the dynamics of the money supply, inflation, regulatory policy of Central banks, the volume of demand by segment and region, as well as production,” says Artem Deev from Amarkets.

You can invest in the yellow metal through gold stocks. Recall that quotes “the pole Gold” on the Moscow stock exchange has increased from the beginning of the year by 60%, but at the end of April, growth is over, now the company’s shares are mostly flat. If the rise in gold prices will end, then this will have an impact on the stocks of companies mining precious metals. So just fold money into paper and to wait, when they will again make a profit, comparable to the beginning of the year, is not necessary.

Gold is now worth considering as protection from the strong devaluation of the ruble and as a long-term bet on a reflection of the tremendously increased the money supply of the Euro and the dollar. “If you look at the history of the last 90 years, gold can serve as a very good, double-digit growth on average over the next 20 years. But we must remember that this growth can happen very quickly and towards the end of this period. Meanwhile, gold is protection against surprises and make it on a short horizon will, most likely, only in case of active trading,” says Dmitry Aleksandrov from IK “University”.

The growth rate of the fed historically almost always led to an increase in gold within a few blocks. Now the same thing happened. Further growth rates is open to question, but if it will happen on a favourable macroeconomic backdrop, gold will slowly go up. Analysts believe that till December, the growth rates do not need to think, especially because the world economy is experiencing one dramatic moment after another.

Now the price of gold show a neutral trend, the fuse that we saw in the first quarter, came to naught, but the fall in price either. That is, there are signs of a defensive tool. “The only tools I would recommend gold bullion coins or for the more professional investors — futures. In the current situation it is possible to create a very interesting position, bringing, in fact, the income in gold,” says Alexandrov.

You only need to bear in mind that futures trading involves the use of leverage, i.e. borrowing. And here we must be very careful because the price movement in the wrong direction can take away your capital. If you do not want to trade yourself, you can buy mutual Funds focused on precious metals, however, it is necessary to consider the Commission which you will pay for the management of their funds. In General, as always, it is impossible to relax: you need to clearly define for himself the entry points and exit points, and to understand how much you want to earn and how many are not afraid to lose.

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