Investing in Gold
Today, perhaps more than any time in history, investors are turning to gold. Economic and geopolitical uncertainty is at unparalleled levels and the state of the world's fiat currencies is tenuous at best. Even the most respected sovereign currency, the US dollar, has had its supply (as measured in M1 Money Supply) inflated by as much as 80% in just seven years, which according to classic economic principals, will usher in accompanying price inflation and wealth erosion. How do investors protect against inflation, or even profit from it? The world's renowned inflation hedge investment is gold. And what asset can benefit from geopolitical turmoil? Gold – it is the world's financial safe haven.
So then . . . Why did gold and prices suffer late in the 2016 election year?
According to the widely-respected financial analysts at the CPM Group, weakness in gold prices in late 2016 resulted from equity market optimism regarding economic prospects in the US and expectations of Fed rate increases. However, the incoming Trump Administration and the Fed are not likely to deliver all of what the markets have priced in.
This mismatch in expectations versus reality, coupled with the numerous political and economic problems that the world faces, should combine with price-supporting, long-term supply/demand fundamentals to push gold prices higher in 2017, and on a long-term basis. This combination makes building and maintaining a long-term position in gold more compelling for reasons above and beyond purely portfolio diversification.
Monex is uniquely positioned in the precious metals investment industry to assist astute investors in establishing both long-term core investment positions and shorter-term trading positions in physical gold bullion and gold bullion coins. For 50 years, Monex has been America's trusted name in precious metals, as well as one of the largest precious metals merchants in the U.S., because we offer the finest investment-quality gold products coupled with an attractive two-way, buy/sell market, and offering the utmost in service to our valued customers.
Gold bullion is real, honest money . . . and many say, the best form of money the world has ever known. It is a store of value and a safe haven in times of crisis. A small amount, easily carried, can purchase a significant amount of goods and services. It is universally accepted, and can be easily bought and sold around the world.
Monex offers pure gold bullion for investment of at least .995 fine purity only. What are the best sizes of gold bullion ingots? For home delivery, customers generally choose our 10-ounce gold bullion bar of .9999 fine purity, produced and hallmarked by either Heraeus, which is one of the largest and most respected refineries in the world, or the Royal Canadian Mint, likely the most respected producer across the globe. Also available from Monex is the 32.15 troy ounce gold "kilobar" – a one kilogram bar of fine gold bullion of .9999 purity. These "four-nines" fine gold bullion ingots are among the purest gold bullion bars available to investors today. Not for everyone, but certainly also available, are 100-oz gold bars. All gold bars are hallmarked by a leading refinery to certify weight and purity.More Information
Gold bullion coins are just that: they contain pure gold bullion and are produced by a government mint (non-government-minted ''coins'' must legally be named ''rounds,'' ''medals,'' etc.). Gold bullion coins are one of the more popular ways today for investors to hold gold in that they are very easy to buy, easy and convenient to hold, easy to divide, widely recognized and thus are easy to sell or trade.
The most popular gold bullion coins, the only gold coins Monex offers to its customers, are minted by government mints in the United States, at the US Mint . . . in Canada, at the Royal Canadian Mint . . . in Vienna, Austria, at the 800-year-old Austrian Mint . . . and in South Africa, at the South African Mint.
The pure, 24-carat gold bullion coins available from Monex are the one-ounce American Buffalo . . . the one-ounce, quarter-ounce and tenth-ounce Vienna Philharmonic . . . and the one-ounce, quarter-ounce and tenth-ounce Canadian Maple Leaf. Monex also offers 22-carat gold bullion coins (which generally contain copper as a hardener) and these include the American Eagle gold coins which contain exactly one-ounce, quarter-ounce or tenth-ounce of pure gold . . . and the South African Krugerrand which contains exactly one ounce of pure gold.
When buying gold bullion coins it is important to remember that as the size of the coin gets smaller, the minting premium percentage increases. So, if you are looking for the lowest possible premium when purchasing gold bullion coins, the best way to purchase them is in one-ounce form.More Information
Gold Investing FAQ's
Why should I invest in gold?
First and foremost, gold is the premier alternative investment for stock/bond portfolio diversification. As both a wealth preservation asset and catastrophic insurance, gold bullion is the tangible asset that is most inversely correlated to the classic stocks and bonds asset classes, which when coupled with stocks and bonds, produces less overall portfolio risk/volatility. Furthermore, as a portfolio diversifier, gold offers significant financial and monetary liquidity, making it possible to buy and sell at opportune times to generate capital gains or to raise cash for rebalancing or to take advantage of an opportunity in a temporarily depressed investment market sector. If the stock and bond markets are overvalued and potentially at risk for a significant correction, as many now believe, gold could provide the haven in today's extraordinarily uncertain times.
How can investors protect against, or profit from, inflation?
As well as being a strategic diversifier within an equities portfolio, gold is also the world's renowned stand-alone inflation hedge investment. The prospects of rapid inflation are greatest in times of rapid fiat currency growth. This is no secret. What is telling is that the M1 U.S. Dollar Money Supply was $1.37 trillion at the end of 2007 . . . and in Q1 of 2017, was $3.44 trillion, an astounding 150% increase. Just as with a steam locomotive, where there is no immediate impact on velocity when the furnace is stoked, so it is with currency growth. Over the last seven to ten years, there has been an astonishing amount of U.S. Dollar inflation fuel added to the economic engine. And as the inflation train’s engine starts to pick up speed, it may very well be a good time to get in front of the train.
What investments benefit most in geopolitical turmoil?
Gold is the world's financial safe-haven. Although it can be argued that certain stocks might do well with isolated geopolitical issues, such as an arms manufacturer in times of increased war hostility, geopolitical turmoil is generally bad for economic growth and financial markets. Gold has been widely appreciated as the world’s safe haven in times of turmoil for centuries, or more accurately, for millennia. This historical reality shows that gold can perform quite well during times when increased geopolitical turmoil makes classic asset groups like stocks and bonds vulnerable.
Why should I invest in gold with Monex?
Monex has been America’s trusted name in gold and other precious metals investments for 50 years. With customer transactions now exceeding $55 Billion, Monex makes a two-way, buy and sell market during its 11-hour trading day, and has never failed to deliver every ounce of metal customers purchase. Monex offers extremely competitive prices on its gold products, and posts both ask and bid prices in real-time, both online and through our Monex Bullion Investor smartphone app available for both Apple and Android smartphones. Customers and prospective customers have access to personalized service from friendly and knowledgeable account representatives, and may inquire about their particular questions quickly and efficiently, along with discussing current trends and market information. Meaningful investments in gold bullion are valuable, and Monex can arrange storage of an investor’s metal at a bank or depository. Customers have the ability to borrow funds from Monex Credit Company using their gold as collateral. Monex offers the ability to place limit-orders and stop-orders to purchase or sell if and when a selected target price is reached.
What gold products does Monex offer to investors?
Monex offers the most popular gold bullion bars and government-minted bullion coins. Customers may purchase pure gold bullion bars, which are .999 fine or better. They are generally purchased in the most efficient investment sizes of 10, 32.15 or 100-ounce ingots. You may select the Monex and Heraeus co-branded 10-ounce .9999 (“four-nines”) fine bars or 32.15-ounce .9999 fine gold “kilobars.” All gold bars are stamped with the refiner’s hallmark, exact weight and fineness, and serial number. Monex also offers legal tender, pure gold bullion coins produced by the U.S. Mint, Royal Canadian Mint and the Austrian Mint. Also available from Monex are 22-karat Gold American Eagles and South African Krugerrands, each containing exactly one troy ounce of pure gold.
What percentage of my investment portfolio should be invested in gold?
Many financial professionals believe that investors should diversify their holdings, having between 5% and 20% of their net worth in gold and other precious metals. Since 1968, when gold was freed to float by central banks, stocks and bonds have had their ups and downs. In a recent study by the CPM Group, analysts found that for purposes of risk versus reward, optimally constructed investment portfolios – between the years of 1968 and 2016 – would have contained a 60-63% allocation to stocks and bonds and a 27-30% allocation to gold. Monex offers a special report that speaks to this subject, and it is available to all Monex customers and prospective customers. Deciding how much of your wealth to invest in precious metals is a purely personal choice, and you should discuss your unique financial situation with your wealth, legal and tax advisors, as well as with a Monex Account Representative, to help determine the amount and types of precious metals that could fit your particular needs.
Should I invest in gold bars or gold coins?
Choose the form of gold that suits you personally. The first choice for gold is generally coins, as long as they are of the highest quality and minted by one of the world's few premier mints. However convenient, coins usually trade at a slight premium to gold bullion bars, so investors looking to maximize the amount of gold that their investment dollars will buy typically choose bar form. While coin investment results are nearly the same as bars, the advantage with coins in one’s personal possession is the ability to sell coins without the cost and delay of an assay. When selling bullion bars that you have had in your personal possession back to a dealer, an assay is required to verify its weight and fineness. However, when your bullion bars have been purchased from Monex and stored at Brinks, there are no assay fees required or delivery charges. It is certainly helpful to contact a Monex Account Representative to discuss the types of gold products that would best fit your particular needs.
Does the face value of a gold coin affect its worth?
Face values of the most popular gold bullion coins are insignificant in relation to their intrinsic melt value. In this case, a coin’s face currency value does not affect its worth at all. On the other hand, if a reputable mint were to issue coins having currency of significant proportion to its commodity melt value, and it could be taken in exchange to purchase goods, it would have some additional premium value, especially if its currency value were greater than its melt value.
Why do some coins sell for well above the spot gold price?
Gold coins that have genuine numismatic or collector value can sell at prices many times the spot price of gold. However, it remains to be seen if bullion coins that are sold at levels far in excess of their bullion value will maintain that premium over time. Monex only offers gold coins that fluctuate in price based almost exclusively on their gold content value and not on their rarity. Monex does have an affiliate company, Monaco Rare Coins, specializing in rare coins and other numismatic products for those interested in collecting and investing in rare coins and bars.
What is the minimum amount of gold I can buy from Monex?
The minimum purchase amount for pure gold bullion is 10-ounces. However, a customer may purchase just one .9999 fine 1-1/2-ounce Gold Canadian Maple Leaf, now widely known as the MegaLeafTM. For particular gold coin products, the minimum is 10 coins for the one-ounce Gold American Eagle, Gold American Buffalo, Gold Canadian Maple Leaf, Gold Vienna Philharmonic or South African Krugerrand. For 1/10, 1/4 or 1/2-ounce gold bullion coins, the minimum purchase is one unit of 20 coins.
What is the process of investing in gold with Monex?
Once you have decided on the type and quantity of gold to purchase, your Monex Account Representative will assist you in executing your order over the phone, and your purchase and price will be confirmed on a tape recorded line after your acknowledgment. A written confirmation will be sent to you with the details of your order. Payment may be made after you order, but must be initiated on the day of purchase, which means you must mail or wire funds on the day of your purchase. You can have your metal (a) shipped to your home; (b) made available for pick-up at over 30 facilities across the U.S. and Canada; or (c) have your metal delivered to a bank/depository for storage.
What forms of payment does Monex accept?
For bank wires from domestic banks, the funds are good (reliable) upon receipt. For bank wires of U.S. funds from foreign banks, the funds are good upon bank verification. Cashier’s checks and personal checks are also accepted; however, a hold-funds period of from five to ten days and bank verification are required. Cash, credit cards, convenience checks, payment in foreign currency or checks drawn on foreign banks are not acceptable.
Is physical gold taxed?
In regards to sales tax on gold purchases, Monex only collects sales tax on purchases for home delivery which are under $1,500 for California residents and under $1,000 for New York residents. As a general rule for investment gains, profits are only taxable when you sell gold, no matter how long you own it. However, you should rely on your tax advisor for such advice. For general information on applicable federal tax you may want to explore Investopedia.com.
Will Monex report my gold purchase to the government?
Monex is not required to report customer gold purchases to the IRS. However, the IRS does require Monex to report gold sales by customers to Monex if the sale is gold bullion bars of 32.15 total ounces or more or if the sale to Monex is 25 or more one-ounce standard Gold Canadian Maple Leaf or South African Krugerrand coins.
How do I know the gold products I get from Monex are authentic.
Monex guarantees the authenticity and fineness of all of its bullion bars and coins. All gold bullion bars are imprinted with the refiner’s name, exact weight and fineness. Monex only sells gold bars produced by refineries approved by the COMEX. All gold coins are produced by government mints. The Royal Canadian Mint has authorized Monex as one of its Bullion DNA dealers to verify the authenticity of gold and silver Maple Leaf coins in just seconds using a laser-marking and precision radial line technology verification system.
How long does it take to receive my gold?
Monex carries substantial gold inventories at several independent and highly secure shipping facilities across the country. For the most part, metals are earmarked for customers as soon as their purchase is made. Though uncommon, gold products may be acquired or on order to meet extraordinary demand or unique delivery requests. Secure packaging and release of gold bars or coins to an insured carrier is not done until satisfactory reliable good funds are confirmed. Bank wires are reliable and confirmed as good funds upon receipt. Although cashier and personal checks may clear an issuing bank account, it does not preclude the canceling of payments at some financial institutions. Absent a letter of guarantee from the issuing bank, normal cashier and personal checks are considered reliable “good funds” after five business days. Note, for example, that Wells Fargo Bank has a hold funds policy of five to seven days or more. Because of the high value packages, the shipping facilities use multiple verification means and individual monitoring and recording cameras to assure the integrity of every shipment. On average, your metal will leave the shipping facility about two to five days following confirmed reliable good funds. You will be given a tracking number by e-mail or by your Account Representative. During times when the shipping volume is extremely high, as it was in 2008, you will be notified if any delays are expected. For deliveries to a bank/depository you will receive notification directly from the facility upon delivery, which by law is required within 28 days.
Can I track my gold shipment online?
Once Monex has received payment and the funds are confirmed and considered reliable good funds, Monex will direct one of its independent shipping facilities to package and assign it to either USPS or UPS for delivery to you. Once Monex has received a tracking number for your shipment, you will be notified by email or telephone. If you prefer to pick-up your gold at one of the over 30 vault pick-up locations, you will be notified when it arrives and you can take possession at your convenience, any time within a couple of weeks without storage costs. Please call 1-800-444-8317 for current pick up locations.
Is my gold investment insured?
All shipments of gold products to you are insured against loss or damage in transit. If you decide to have your gold delivered to and stored by a bank/depository, the metal is fully insured in transit and also while in storage.
Can I store my gold investment through Monex?
Monex can arrange for the secure storage of your gold bullion or coin investments. Monex will deliver your gold with full title and ownership in your name to one of the independent bank/depository facilities that provide storage for Monex customers. These bank/depositories include Brink's in New York. When your metal is received by the bank/depository, the custodian of the facility will send you a document acknowledging the receipt and your ownership of the gold being stored in your name.
Where should investors sell their gold bullion or coins?
Since 1967, Monex companies have made it a priority to buy back gold that customers have purchased at attractive, then-current Monex bid prices. Its multi-billion dollar, two-way buy and sell market is a hallmark and tradition at Monex, and is your assurance of liquidity for your gold bullion or coin investment. Under certain circumstances, Monex may buy investment-quality gold that was purchased from other respected dealers. Be aware that some restrictions and additional verification costs may apply. Please contact a Monex Account Representative for additional details.
How does the gold sell-back process work?
Selling your gold bullion or coin investment back to Monex is a relatively easy process. When you are ready to sell, just contact your Monex Account Representative for shipping instructions. Shipments must then be sent by USPS registered and insured mail with a return receipt. Customers are responsible for fully insuring their shipments until it is received by Monex. Once the shipment is received and verified you will be notified and able to sell your gold. Proceeds of your sale will be sent to you in the form of a check or bank wire, or if you prefer, credited to your account. If your gold is in storage through Monex Credit Company at one of the bank/depositories, you can sell your metal over the phone at any time without delay. The transfer of title to the gold from you to Monex will follow your sale, and the bank/depository will notify you by mail that the transfer of title has occurred. There are no delivery charges when your gold stored through a Monex Atlas Account is delivered to or from a bank/depository storage facility.
Can I borrow cash against my gold?
With storage of gold through Monex at Brinks, you can use your metal as collateral to borrow cash against it whenever you want. Monex Credit Company, a California Finance Lender, offers cash loans of up to 75% of the value of your metal while you retain full title and ownership of the metal. Interest rates vary but have been 5.9% per annum since 2006. There are no loan set-up fees or penalties for repayment at any time. You can call your Account Representative and have the cash proceeds of the loan immediately sent to you, or you can use the loan to pay for a purchase.