The current macroeconomic environment is a disaster for savers. Interest rates are at an all-time low, banks have paid essentially no interest on deposits the past seven years, and even negative interest rates are a possible scenario in the US in the near future. A bit further west, the European Central Bank (ECB) has started a huge asset-purchase program that will most likely drive rates even more negative and drive up inflation.
While savers don't yield an attractive return on their savings anymore, the money which they already accumulated is most likely going to be devalued over time. In other words: The prospects for savers look less than rosy.
That's why experts advice to allocate at least some funds to real assets such as real estate or commodities. Historically, especially precious metals such as gold or silver were used to hedge against uncertainty, which is the case now on a global scale.
Gold price has fallen against the US dollar to a level where mining is no longer attractive; long term investors should consider buying now or in the near future
Currently, the price of gold is close to its five-year low in US dollars. However, against many other currencies gold has already resumed its multi-decade uptrend, and it may only be a matter of time before gold rises against the US dollar as well.
Although the general consensus is that the gold price can continue to fall when the Fed raises interest, there are also experts predicting that the next major uptrend is about to start. If the US economy and asset markets cannot afford the burden of a minimal interest rate hike, the next likely move is to resume the multi-decade cut in rates and more gold price appreciation. The CEO of the German bullion dealer Degussa Goldhandel said in an interview: "If you ask me where [the gold price is going] from here in the next year, I think $1,500 is more likely than a $1,000 in the next 12 months."
Investors who want to hedge against monetary policy risks should therefore take a look at gold.
Investors can buy gold in many different ways, but some are more attractive than others
There are many different ways to invest in gold. Exchange traded funds or gold derivatives are ways to benefit from rising or falling gold prices via a stock exchange. However, those investors who want to hedge against a potential bond market top and a shift from public to private assets typically choose to invest in physical gold.
While it is possible to buy gold from banks and physical dealers, that is quite challenging. You will have to accept the prices of those dealers that are within physical distance of your home or pay the fee for a safe delivery from other locations.
Also, if you want to store it in a bank safe, you'll not get that service for free. In this case, you should also know that new legislation and regulations have ensured, that legal bank deposits are not possible anymore. In fact, if you deposit your gold in a bank safe, it will no longer belong to you. That might not be a big deal right now, but once the next financial crisis will hit the markets, your deposits will be in great danger.
Furthermore, if you want to store it at home and want it to be covered by your home insurance, you're premium will go up significantly.
Therefore, buying physical gold can be quite tricky. Fortunately, the internet has invented new ways to buy gold and some of them offer quite interesting opportunities.
Buying gold online has become cheap and easy; investors should choose their dealer carefully
Meanwhile, it has become quite easy to buy physical gold online. Services like BitGold, BullionVault or GoldMoney offer clients to buy gold via the Internet and store it in safe locations all around the world.
Although these dealers offer a similar service, their conditions can vary significantly. GoldMoney, for example charges a fee between 1.39% and 5.27% for purchases of gold. BitGold, on the other hand, charges only 1% in transaction fees. Storage costs also vary by dealer, with only BitGold offering free storage and no monthly fees.
Also, customers should watch out for scams and avoid buying from small and unknown sites. Conduct your due diligence and go with trusted names subject to regulatory standards such as GoldMoney and BitGold. Online review pages are a good way to find out whether or not a dealer can be trusted.
BitGold enables users to return to the gold standard; if you don't trust the central banks, this will be your chance to maintain a store of value in savings
BitGold is a relatively new service that is worth looking at. It's not only a gold dealer. On the contrary to traditional dealerships, it also allows users to transfer money worldwide. This policy has enabled BitGold to build a global ecosystem of families, friends and business partners.
Moreover, users can also get a BitGold PrepaidCard, which allows users to pay expenses with gold, without any additional costs but the 1% conversion back to currency. It's like bringing your gold coins to the shopping mall, but safe and without carrying a heavy wallet.
In a way, BitGold brings its users back to the gold standard, which has secured the monetary system for decades. It offers an alternative to the fiat currency, which is backed by confidence in governments that run deficits year over year.