DID YOU GAIN INVESTING IN GOLD LAST 3 MONTHS (OR LESS)?

Since today's gold price has broke the all time high gold price, I am eager to write about the return of investment for physical gold bar / dinar.

Say that on last 2nd June, 2011, you have a savings of RM700. You buy 1Dinar PG at RM698. Your intention is to keep 1 Dinar a month as to plan for your Umrah visit. However, due to unstable US economy and the FEDEX action to increase the debt level (and many other reasons), the gold price shoots up.

Today, 22nd August, 2011, to buy 1 Dinar PG you need RM818. Will you be losing if you are religiously saving 1 Dinar per month? Well, do you have to pay more to save 1 Dinar?. Actually, your 1st 1 Dinar, cost RM698. However, due to the increase in gold price, it is now valued at RM818. You are actually RM120 richer than before.

So, if you pay RM818 for your 2nd purchase of 1Dinar, your wealth is equalised (Gain from keeping 1 Dinar - the extra amount of money you are paying for 2nd purchase of 1Dinar).

Can you calculate the return?

If you are selling your 1 Dinar, you sell at 'We buy' price. You actually received R769 for your 1 Dinar. How much is the excess? Correct!! RM71.

What is the rate of return on the investment?

The rate of return is RM71/RM698 = 10%. Not much, you said. Did you notice that your gain of 10% is in a period of 81 days ~ 3months. What is your rate of return per annum? You have to annualise the 81 days return to one year.

So, rate of return is RM71/RM698 *(12 months/3 months) = 40% per annum.

How does that sound? Better?

40% return is indeed a superb return.

Imagine that you bought 100g gold bar instead of 1 Dinar. Your profit is RM2,045 over a period of 81 days. How do I calculate it? Selling price on 22nd August, 2011 is RM18,784. You bought your 100g PG gold bar on 2nd June at RM16,739. Try minus the two figures. Did you get it?

Your rate of return of 100g PG gold bar is 12% for 81 days = RM48% per annum.

Isn't that good or isn't that good?

Why hesitate to start investing now? Just bear in mind that it is better if you keep the gold bar medium to long term, at least for 1 year. That is should be your investment strategy.

However, if you are in gold business, you are playing a different game altogether. You sell high, you buy low. It depends on how fast you roll you capital into transactions.

I hope you benefit from this post and share the knowledge with others. Who knows, a busy person may want you to look after his/her investment. Then the knowledge should be useful for both of you.

Have fun browsing other articles.

INDEX

SILVER INVESTMENT

GOLD WILL RUN TO $1950?

The prediction from Wealth Daily is $1950/oz. Is it still worth to buy?

What is the price now?

At the point of typing this article, this is the price. (Most updated prices is shown on the right hand side of this blog.)

Can New Investor still gain?

Should the prediction is right and you will be buying gold at around USD1657.60/oz (if you buy now, that is), you will gain USD292.40/oz. How much gain is that?

The gain is 17.6% within 5 months.

How much is the gain per annum? Can you annualised it?

The gain / return is 17.6% / 5 months * 12 months = 42% per annum. That will be very very good indeed. Don't you agree?

An except from Wealth Daily article :

Appetite for Diversification

It's really no surprise banks are buying gold like it's going out of style.

After South Korea bought 25 tons of the metal for the first time in 13 years, just to diversify from the dollar, it's likely other central banks in that region will follow.

Buying gold not only helps countries protect their wealth; it's the best way for them to prepare for a gold mania that could make the 1970s look like “child's play,” says Franco-Nevada Chairman Pierre Lassonde.

“In 1980, the only players, or the dominant players, were the Americans. Today the dominant players are China and India; 58% of all the gold sold this year will be sold in these two countries. When we reach that mania phase… it will truly make your head spin.”

How to buy gold bar?

More Articles

GOLD PRICE CLIMBS TOWARDS $1600/OZ

As you have probably heard, the gold price has reached the highest price today. It has touched the resistance level of USD1600/oz and mark a new high of USD1601.20/oz at the point of updating this blog.

Just to let you see the evidence of the increase in gold price in real example.

We bought 2 gold bracelets in 2007 at RM75/g. The initial purpose of purchase is for investment. Just keep it until we need money for other important thing.

Let's see what is the price of jewellery today, 18th July, 2011. Source http://www.fgjam.org.my/

In almost 4-and-a-half years, the 916 gold has increase from RM75/g to RM173/gm. This is already more than double the gold price. To be exact, the increase in 916 gold is 231% during this period.

Now, I am calculating the rate of return per year of the jewellery should I sell it today.

916 gold price today : RM173

916 gold price in 2007 : RM75

Rate of return per year from the example

= 173/75 divide by 4.5 years

= 51.3% per year.

This is good or this is good? :D

This is a very real life experience to me. To double your money (in this case, in gold jewellery) in just 4 years is definitely awesome. See Rule of 72 in previous article. We should always be looking out for the highest return to double your money. And best, if you do not hold cash much, but to keep in physical gold bar or silver bar to reduce the impact of inflation in your daily life.

Upon seeing the returns, my better half was asking me during lunch today why I did not buy the necklaces as well during that time!! If only, he have persuaded me then (well, I did not want to look greedy buying everything! ;-) ), we will be smiling a bigger smile from ear to ear looking at the hike in gold prices.

See the gold price climbs for the past 2 years :

In July 2010, the lowest price was USD1158/oz. Today, it has reached 1598/oz.

The rate of return is 38% for the past one year.

P/s : Kena dapat komisyen drp kedai Kembang Jaya ni. ;-)

In GoldAlert.com, the article below is written on 17th July, 2011

Gold Price Climbs Toward $1,600

The gold price climbed toward $1,600 per ounce Sunday night as worries over the surge in borrowing costs for Italy drove investors to add to long positions in the yellow metal. Gold prices, which have risen for ten consecutive days, advanced amid a flare-up of the European sovereign debt crisis. Italian ten-year bond yields crossed 6% last week and traded to record spreads against similar duration German bunds. The lack of deal over the weekend to raise the debt ceiling also helped bolster gold prices late Sunday.

HSBC gold analyst James Steele provided a bullish forecast for the gold price in a note to clients, stating:

“The climate driving gold higher is similar to that of Q2 2010 when gold also jumped to then record highs, buoyed by the emergence of the Greek sovereign crisis and U.S. quantitative easing. Gold is reacting to a similarly bullish cocktail of factors, except that as policy makers appear to have more limited options now, conditions are more gold-bullish now than in 2010.”

GOLD PRICE MAY HIT $1800 BY YEAR-END

Muzaffar Rizvi

5 June 2011

Gold prices will continue to rise in the foreseeable future and may hit $1,800 an ounce by the end of this year due to its strong demand in India, China and other emerging markets, a top official of Pure Gold Jewellers said. Pure Gold Jewellers chairman and founder Firoz G. Merchant said investors’ appetite for the yellow metal is on the rise due to its better rate of investment returns in the past couple of years. He said high oil prices, economic instability in major global economies and a fear of a double-dip recession in Europe and the United States also played a key role in attracting investment in gold that keep its outlook bright in the near future. ‘Asia will be engine of growth in days to come and Middle East countries will lead the recovery in global economies as the higher crude prices will help the regional governments to spend the surplus funds on development and infrastructure projects,’ Merchant told Khaleej Times in an interview. Pure Gold Jewellers, established in 1989, is one of the fastest-growing jewellery houses in the UAE and GCC countries. The group, which counts a jewellery and accessories line in its portfolio, operates 52 outlets in the UAE and has massive expansion plans in GCC and India. ‘Major European countries are facing difficulties to overcome inflation and debt crisis, Japan is hit by a natural disaster and the United States is also not yet come out of the recession,’ he said, adding that tougher days are still ahead for the US and other Western countries. He said oil prices maintained an upward trend but its volatile trade has shaken investors’ trust in black gold, leaving no other option for them to invest in the yellow metal. ‘I believe oil prices are going to be out of control and will be stable at $200 a barrel during the next couple of years.’ By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in July rose to $115.12 a barrel from $114.67 the previous week. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for July eased to $99.75 a barrel from $100.35. ‘Amid considering all these situations, investors consider investment in gold a safe bet with a confidence of getting higher profit returns,’ Merchant said. He said gold prices would continue to maintain an upward trend due to higher demand in India, China and emerging markets. ‘Gold prices will be ranging between $1,700 to $1,800 an ounce by the end of this year,’ he said, adding that the prices may be touching the $3,000 mark in three to five years due to strong demand and investors’ faith in the yellow metal. Gold rose to $1,540 an ounce by late Friday on the London Bullion Market Gold. The metal enjoyed solid gains in recent times garnering support from its status as a safe haven in uncertain economic outlook in major economies of the world. Original article in full RELATED ARTICLE • IS IT STILL A GOOD TIME TO BUY GOLD? • WHEN IS THE RIGHT TIME TO BUY GOLD BAR & DINAR? • DISCUSSING GOLD PRICE MOVEMENT • WHY INVEST IN GOLD? (1) • WHY I PREFER PHYSICAL GOLD INVESTMENT COMPARED TO PROPERTY INVESTMENT (OR ANY OTHER INVESTMENT)

GOLD & SILVER PRICE MOVEMENT MAY 2011

Source : kitco.com

From the two charts above we can see that the prices are at a lower price from the peak. They have dropped last week and it will pick up soon. Those who have been waiting for the high prices of gold & silver to reduce to buy, this will be a good time to buy.

GOLD PRICES

At the point of writing, the gold price is at USD 1522.80/oz. For PG gold prices the price are as follows :

PG has introduced 10g gold bar last week, available for purchase. See the price movement every 20 minutes at the left hand side of this blog.

Do note that the peak of gold price is at USD1565.70/oz on 29th April, 2011

BUY GOLD BAR NOW

SILVER PRICES

Also, at the point of writing, the silver price is at USD 38.50/oz. Ratio of 39.55:1 to gold. For PG silver bars, the prices are as follows :-

The silver price peaks at around USD48.70/oz. The price now is 20% cheaper than the peak price. Why wait to buy? The silver price may not be any cheaper than today's price.

BUY SILVER BARS NOW

WHY YOU WANT TO BUY SILVER INSTEAD OF GOLD?

1. higher rate of return
2. easier to keep due to non-recognition of the silver bar
3. good for long term investment
4. usage of silver is higher
5. high ratio between gold & silver

WHY YOU WANT TO BUY GOLD INSTEAD OF SILVER?

1. easier to keep due to smaller in size
2. easier to get cash
3. lower spread

EQUAL BENEFITS OF BUYING BOTH GOLD AND SILVER BARS

1. easy to buy
2. easy to sell
3. higher rate of return compared to any other investment
4. minimum maintenance cost
5. you own them

Do not hesitate to buy gold bars & silver bars. The bars comes with Authentification & Certificate from Independent Assayer. BUY ONE NOW.