Wealth protection is often at the forefront of many investors’ minds. When you buy gold in Hong Kong, you buy an asset that offers wealth protection and provides genuine value. Gold also offers an opportunity to generate returns that are on par, if not better, than those delivered by other assets, especially when considering gold’s low risk.
Investors should look to invest in gold exclusively in is physical form. Investment in ETFs and similar products is not secure and should not be confused with ownership of allocated gold bullion bars and coins. Only physical gold has the advantage of being a value-carrying liquid asset that can be traded around the world. Physical gold is easily passed to future generations and continually appreciates in value.
Gold passed from generation to generation
For millennia, people have seen gold as a secure means for passing wealth down to younger generations. An example that reputable trader J. Rotbart & Co., recalled was a client who had recently inherited six kilograms of gold coins from his parents.
The gold had been purchased initially back in the 1960s and was kept in a secure bullion storage facility in Switzerland. The parents had wisely decided to include physical bullion in their investment portfolio as it was both a tangible and a historically secure asset.
What are gold’s returns over long periods?
The gold that had been stored in Switzerland had been bought for approximately $35 an ounce in the late 1960s, which converted into today’s dollars, are about $270. The actual selling price negotiated for these bars was $1,287/ozt. The parents’ investment provided a return of 3,600% over the original value for their son.
It’ important to know that while gold has a known spot price, the actual returns on any investment in gold depends on many factors, not the least of which is where the bullion is sourced from.
The LBMA Chain of Trust
To maximize your gold’s appreciation and valuation it’s important your purchase gold only from within the London Bullion Market Association’s (LBMA) chain of trust. This accreditation ensures the credibility and quality of the suppliers and service providers involved in the purchase, and guarantees the quality of the bullion and coins purchased.
Gold is a safe haven and long-term investment
Gold products and investments in precious metals are a popular investment vehicle in times of economic and political uncertainty. Although drops in value will inevitably occur from time to time, the falls are usually not as significant as those experienced by the stock markets and similar intangible investments.
Since 1971, gold has experienced an average year-on-year growth of 10%, far superior to holding cash reserves. Gold provides a textbook example of a way to achieve long term wealth management. Gold’s limited and finite supply, as well as its unique place in human culture, ensure this trend will continue into the future.
The 1960s Fortune 500 companies
Stock markets have historically been viewed as a means for creating wealth and generating superb gains. However, the reality is stocks held in individual companies are just as likely to drop in value as they are to rise. Long-term investing in the stock has continually proved to be fraught with risk with only 15% of the Fortune 500 from the 1960s still in existence today.
History proves most companies will either be taken over, or go bankrupt. Even companies viewed as safe, stable and well-established aren’t immune from failure. Recently UK travel giant Thomas Cook, a company with over a century of history, collapsed after annual multi-million-pound losses. Shareholders will be lucky to see a small percentage of their investment back.
Continued market uncertainty
In spite of stock markets performing reasonably well in recent years, there is still a considerable lack of confidence in the market’s long-term and even short-term future. Tensions in the Middle East, the US-China trade war and the ongoing Brexit have resulted in investors seeking safe havens and tangible assets.
Many Investors and commentators have ceased to view stock markets, bonds and shares, as a smart long-term investment – quite the opposite in fact. Yale Professor Dr. Richard Foster, has identified that S&P 500 companies, often thought of as safe investments, only survive for around 20 years.
Gold bullion and other precious metals
Wealth protection, rather than growth, should be a cornerstone of anyone’s investment portfolio. In contrast to the fickleness and inherent uncertainties of intangible assets, Gold, silver and other precious metals have continually been a long-term investment vessel proven to provide both growth and protection during financial crises. Gold and other precious metals are the safest means to protect your family’s financial future, and give you confidence and peace of mind.
Central banks and gold
Up until the financial crash of 2008, central banks were more likely to sell gold, rather than buy it. However, since the crash the trend has reversed, and now central banks around the world, and especially in developing economies are buying gold at rates unprecedented for the last 50 years. There are many reasons driving this change, including a growing preference of central banks for gold’s “neutrality” over the political baggage associated with reliance on American dollars.Bullion trading between central banks is increasing as well, and both trends are likely to continue as long as the global political instability does.
About the author:
Joshua Rotbart (LLM, MBA) is a Founding Partner at J. Rotbart & Co., a world-renowned expert in providing solutions for clients wishing to ship, store and purchase physical precious metals. Joshua works with family offices, independent financial advisors and high net worth individuals to discreetly and sensitively provide tailored solutions for their needs.