How to buy and hold Gold Bullion - Bullionvault update
Commodities / Gold & Silver Mar 25, 2007 - 07:38 PMBy: Nadeem_Walayat
This article is an update to the article
Buying gold - The easy and safe way for personal investors to Buy, Sell and hold gold at market price , which covered the technical aspects of buying and holding gold with Bullionvault.com, and now we look at what to expect from holding your own gold investments in terms of real returns after charges.
Firstly the reasons of why part of ones portfolio should be in gold bullion are briefly because the governments of the world are busy issuing ever more paper money by as much as 15% per annum (money supply), which is devaluing all currencies and some more than others. This means inflation, you may not be seeing inflation in the CPI and other inflation measures but it is occurring in the form of asset price inflation. As long as it continues, physical commodities such as gold, which governments cannot print ever more of, will gain in price, couple that with the new thirst for gold from the emerging chinease and indian middle classes, then that reinforces the view that the gold bull market has much further to go .
So you have opened your account with bullionvault.com and are ready to invest money into gold ? If not then take advantage of a special FREE BONUS offer from Bullionvault, of 1 gram of free gold, which at current price of gold is worth some $25.
Exactly how much gold do you need to hold with bullion vault for the investment to prove profitable. The price expectations are for gold to move to $900 over the next 12months, on the current price of gold that implies a gain of 38.4%
Examples of how much real return you will see from holding gold for 12 months, based on a target price of $900 which on $650 represents a gain of 38.4%. Examples for a 10% gain to $715 and 20% to $780 are also given.
| $ Amount of Gold purchased | Transaction costs to Buy AND Sell & Withdraw funds ($) | Total Fees charged for storage for 12months ($) | $ Value of investment should Gold price rise by 38.4% | Actual real % return of original investment net of costs | ||
| 38.40% | 38.40% | 10% gold | 20% gold | |||
100 |
31.6 | 48 | 47 | -53% | -73% | -66% |
250 |
34 | 48 | 251 | 0% | -24% | -16% |
500 |
38 | 48 | 591 | 18% | -8% | 1% |
750 |
42 | 48 | 932 | 24% | -3% | 7% |
1000 |
46 | 48 | 1272 | 27% | 0% | 10% |
1500 |
54 | 48 | 1953 | 30% | 3% | 12% |
2000 |
62 | 48 | 2634 | 32% | 4% | 14% |
3000 |
78 | 48 | 3996 | 33% | 6% | 15% |
4000 |
94 | 48 | 5358 | 34% | 6% | 16% |
5000 |
110 | 48 | 6720 | 34% | 7% | 16% |
7500 |
150 | 48 | 10124 | 35% | 7% | 17% |
10000 |
190 | 48 | 13529 | 35% | 7% | 17% |
15000 |
270 | 48 | 20338 | 36% | 8% | 18% |
20000 |
350 | 48 | 27148 | 36% | 8% | 18% |
50000 |
670 | 60 | 68213 | 36% | 8% | 18% |
(Charges included - 0.1% per month, minimum $4; $30 to withdraw funds,
The analysis shows that investing in the region of $750 or less, is likely to attract high charges, if the price of gold failed to rally by 10% or more. The effective minimum would need to be $1500 to make the investment viable, which would enable the investment to reap a solid return from any strong rise in the price of gold.
How much to invest in gold ? Any investment in one particular asset class must be on the basis of your risk profile and portfolio considerations. Baring that in mind, a typical minimum % to commit to one asset class would be 5% of ones total net asset value. So if your total net assets are valued at $500,000. Then you could view a long-term gold investment in the order of $25,000 as a starting point.
Note : The 1 gram of FREE BONUS gold is not subject to the storage fees*
* As per rules at time of publication of this article.
By Nadeem Walayat
(c) MarketOracle.co.uk 2007
The Market Oracle is a FREE Daily Financial Markets Forecasting & Analysis online publication. We aim to cut through the noise cluttering traditional sources of market analysis and get to the key points of where the markets are at and where they are expected to move to next ! http://www.marketoracle.co.uk
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