How the US Elections may impact the price of Gold

Elections always tend to influence financial markets in either a positive or negative way, mainly depending on the general perception as to whether the incumbent in the White House is going to be a change for good, or not as the case may be.

There are some interesting historical precedents when it comes to stock market reactions immediately after a presidential election, which in turn, has a definite influence on other financial instruments and markets, such as the price of gold.

You might be surprised to discover that every US election staged since 1888, has resulted in average stock market decline of about 0.5% in the first three days of the first new presidential week. The longer term outlook if you are looking at statistics, is that stocks have historically fared better over the full four-year term, when a Democratic administration has taken up residence in the White House.

The trouble with historical statistics and precedents, is that there may well be a point where markets don’t react in the way you expect them to, next time around.

That could certainly be the case when you have two front-runner candidates for the White House, who polarize opinion. If Mr Trump swept to power, all previous bets could be off.

So the question is, if there is uncertainty or optimism when the U.S election result is known, what will be the impact on the price of gold?

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This graph (courtesy of The Real Asset Co) asked the question, which President was worst for the dollar, measured by percentage rise in gold prices?

You can see that Obama had a positive influence on the price of gold, especially when he was granted a second term. In fact, the history is that Democratic presidents send gold prices up and the dollar down, although if you want an even more positive buy signal, 2nd term Presidents in general, tend to send gold prices higher and push the dollar down lower.

Election cycles

There is no question that election cycles do have an impact on where the price of gold is headed.

The price can often be considered as a response to a situation such as when the economy is seen as artificially strong, in an attempt to influence the intentions of the voting electorate. Whether you take a cynical view or not about the idea that the economy is sometimes stimulated for the purpose of trying to sway an election, there is no question when you look at past results, that when the economic news is favorable, the price of the dollar will often rise and gold prices will stand still or maybe even fall slightly.

If you are a believer in history repeating itself, you can find plenty of examples of election year price volatility for gold. If you take the last three elections in 2004, 2008 and 2012 for example, the 12-month period leading up to each election have all resulted in a drop in gold prices just prior to the election.

Gold has traditionally been regarded as a safe haven in challenging economic times and therefore if there is a positive outlook just prior to an election, it is a predictable consequence that the gold price would come under pressure.

Politics creates price sensitivity

Political maneuvering can be responsible for gold price volatility, just as much as economic conditions influenced by other factors.

Gold prices are no different to stock market indexes, in as much as they are both sensitive to political and economic indicators and events. When the national debt figure is considered to be high enough for concern, when inflation is running high, or when unemployment figures make uncomfortable reading, these are just some of the factors that could push gold prices up.

Some speculators even go as far as to consider gold pricing to be strongly linked to the fortunes of a political party, and there is some statistical evidence to support this line of thinking.

Taking everything into consideration, the bottom line would appear to be that whoever wins the keys to the White House, the price of gold is likely to go up. By how much, would probably be dependent on a number of crucial factors, such as who gets in and how markets react to their appointment.

History shows us that the price of gold will often rise in the days following a US election, by how much, will mainly depend on who wins the vote to govern.

Is There an Opportunity to Invest in Marijuana?

This really isn’t your father’s investment market anymore.

Not even close, as alternative investors veer off the well-worn path to pour billions into hazy hallucinogenics, otherwise know as the legal marijuana market.

By and large, the U.S. cannabis market is defined as “markets composed of individuals who legally consume marijuana as allowed by state laws, together with the businesses that constitute the supply chain to serve those consumers,” according to ArcView Group, an investors network firm located in San Francisco.

ArcView releases a regular report on the U.S. legal marijuana market, entitled “State of Legal Marijuana Markets”. In its most recent version (the fourth in the series), ArcView details the burgeoning, yet potentially explosive growth of the nationwide cannabis market, a trend that deserves to be on the radar screen of all alternative market investors.

This from the study:

2015 was another watershed year for the legal cannabis market. National legal sales grew to $5.4 billion up from $4.6 billion in 2014, fueled by explosive growth in adult use market sales, which grew from $351 million in 2014 to $998 million, an increase of 184%. Demand is expected to remain strong in 2016 with legal markets projected to grow to $6.7 billion, a 24% increase over 2015.

And this:

By 2020, legal market sales will grow to $21.8 billion, with adult use sales comprising nearly two-thirds of the total market.

Widespread usage of marijuana is imminent, and in a big way. In 2016, 86% of Americans live in a state that allows some degree of legal cannabis use, including CBD-only, medical and full adult use, ArcView says. “The wide exposure of the majority of Americans to evolving cannabis laws has been instrumental in shaping the public’s increasing acceptance of cannabis.”

If all U.S. states were to okay legal pot usage, certainly an uphill climb, even as marijuana laws grow more amenable at a skyrocketing pace, growth would be accelerated. According to ArcView, the nationwide cannabis market would be valued at over $36 billion, if the herbal drug were legal across the country.

New Cannabis Trading Platforms

Some Wall Street veterans are already climbing aboard the cannabis bandwagon.

Two experienced Wall Street hands are rolling out Amercanex Corp., an electronic cannabis-trading platform that handles sales of about 100 to 150 pounds of weed a week. Richard Schaeffer, former chairman of the New York Mercantile Exchange, and by Steve Janic, a long-time Wall Street veteran, are at the helm, and business is already brisk. According to industry figures, Amercanex’s 20,000 seats are going for $20,000 apiece, up from $2,500 when the exchange opened.

The exchange currently has 20,000 seats, which originally sold for $2,500 apiece, but now go for $10,000.

Additionally, in early 2016, Sohum Shah, a 26-year-old University of Arizona college graduate, saw his fledgling Cannabis Commodities Exchange hit the investment market pipeline. While that trading platform operates only in one U.S. state (Colorado one of two U.S. states along with Washington where general marijuana sales are legal), Shah sees it expanding into other U.S. regions.

Recent Performance Tepid – But Upside In ’16?

Of course, with any potential alternative investment, caveats abound, and marijuana stocks, funds, and other vehicles took their lumps in 2015.

According to New Frontier’s Marijuana Stock Index, cannabis stocks lost half their value, as measured in the exchange. Weighed against conventional stocks, pot stocks performed significantly more poorly, down 44% against both the NASDAQ and Standard & Poor’s 500.

But 2016 has proven to be a different story.

As of March 21, 2016, Mentor Capital’s Mentor’s Cannabis Index for Value Investors has gained 22% so far this year 2016.

Analysts credit the U.S. Federal Drug Administration’s recent green-light on GW Pharmaceuticals’ (NASDAQ:GWPH) cannabidiol drug for childhood epilepsy, although indoor cultivation system experts Surna, Inc., (OTCQB:SRNA) has seen huge share price growth and rising sales, too, according to Mentor Capital.

But there is another issue in play, and it’s a political one. Mentor says the political environment is one that favors both pot users and marijuana as a valid and profitable investment vehicle.

“Because legal marijuana sales growth is largely a political reclassification from illegal to legal it is not surprising that there is great interest in the political changes this election cycle will bring within the cannabis operating and investment community,” says Mentor CEO, Chet Billingsley. “Speculations abound from Donald Trump co-opting the youth vote and weeks of air time by backing legalization once he is past the primaries, to President Obama declassifying marijuana off of Schedule 1 as a swansong during his last days. Regardless, the political mode is for greater legalization. That momentum seems to support the observed growth in the legal cannabis market, and the index, at about 400% of the growth of NASDAQ,” Billingsley adds.

Legalizing marijuana has some addition ancillary impact that can help fuel cannabis’ growth – mainly, by taking pot out of the black market and propping it in financial markets.

“Legalizing and regulating marijuana will bring the nation’s largest cash crop under the rule of law, creating jobs and economic opportunities in the formal economy instead of the illicit market,” says DrugPolicy.org, an industry advocacy group that supports legalized marijuana use across the U.S.. “Scarce law enforcement resources that could be better used to protect public safety would be preserved while reducing corrections and court costs. State and local governments would acquire significant new sources of tax revenue from regulating marijuana sales.”

Wall Street insiders agree.

Cannabis can be a “good investment opportunity”, as long as marijuana stocks and funds are mixed into a diverse investment portfolio, and is earmarked for “no more than 10%  of the entire portfolio”, explains Jim Fitzpatrick, a board member at Kodiak Capital Group, LLC in Newport Beach, Ca.

“Green Gold” In Nascent Growth Stages

As an alternative investment vehicle, marijuana is just getting started, and that incubation period is worth noting.

Given that the vast majority of marijuana companies trade in the over-the-counter markets – which, expert say, are historically under-regulated and overly-risk sensitive – early investors would do well to stick to the handful of publicly-traded firms to break into “green gold” investing. (MarijuanaStocks.com offers a handy list of cannabis investments here.)

Plus, opportunities to invest in cannabis-related funds and ETFs are scant, although expect some to sprout up as marijuana continues to be legalized in more U.S. states.

Past all that, the key for long-term growth is clear – have enough states legalize the drug and force federal legalization soon after, which would bust the pot market wide open. Some analysts think that could happen sooner than you think.

A new study by Ackrell Capital predicts Uncle Sam will legalize cannabis by 2020, thus ushering in a huge new era of growth where the domestic marijuana market would be valued at $100 billion by 2029.

“We believe that it is a question of when – not if – the federal prohibition on cannabis will end,” Ackrell noted in its study.

Until then, do your research and proceed cautiously into what Ackrell calls the “Green Gold Rush.” No doubt, opportunity is abundant in the cannabis market, but it’s a market that’s going to need some seasoning first.

Understanding and investing in the Blockchain

In the past couple of years the term “Blockchain”, has been thrown around. As of late it’s becoming much more mainstream and something that’s of interest to both private investors and lay people alike. There’s been a lot financial professionals touting this as the next big invention, a paradigm shift similar to what the Internet did to the world.

Let’s get down to what a blockchain actually is. Simply put it is a certain kind of digital database (or ledger) that is able to store transactions. But there is a multitude of ways it differs from the traditional type of ledger.

  • From a financial standpoint what it does is stores transactions in the form of a digital block, each subsequent and preceding block references the prior one.
  • Each block that represents a transaction is only added to the entire chain if it’s been verified through cryptographic algorithms done through using a significant amount of computing power. This verification process is integral to the uniqueness of the system and crucial in eliminating any possibility of fraud.  Basically, it means that a block cannot be altered. Here’s why this is important.
  • This entire database is distributed which means that all users know when there has been additions to the blockchain. The public distribution of the ledger makes it both transparent and decentralized.

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A real world example of the blockchain technology at work is bitcoin. In the most pure form the blockchain records bitcoins that have been owned and each individual transaction of the cryptocurrency through a vast range of computers, as opposed to it being centrally located in one ledger. This technology has caught the attention of many large banks.

Wall Street Getting in on the Action

A great selling point for the blockchain is that it does away with the middleman in a transaction. It makes transactions faster and less expensive compared to the current systems being used.

Banks Like Goldman Sachs want to adopt this system to use with regular currency as opposed to just bitcoin. The blockchain can be instrumental in issuing shares and tracking banking and payments across the board. There is even more potential beyond regular currency as a lot of analysts see the blockchain being utilized in other areas aside from finance.

The blockchain has the potential to redefine a myriad of varying industries. There’s the possibility to be able to track voting systems, automobile registrations, and even securing academic records.

At its core, blockchain is a chance to bypass a lot of the bureaucratic mess in multiple industries. There comes a point when more resources are dedicated to the process itself than the actual transaction. It goes back to cutting out the middleman and allowing for more transparency and efficiency.

Blockchain Companies

Not only are these big banks adopting the technology, they’re also investing in companies using the blockchain as the crux behind their business. For example, the New York based Digital Asset Holdings released a statement in February, 2016 that Goldman and IBM recently raised $60 million in their latest round of funding for the company.

Digital Asset Holdings began in 2015; its purpose is to develop software that uses blockchain to trade established financial and digital assets. The purpose of their technology is to make the entire process quicker and cheaper.

The company has already announced that it will be developing the technology for the Australian Securities Exchange (ASX). This is a great first step for the technology to gain even more mainstream recognition. Not to mention it is going show an even greater proof of concept for anyone out there wondering about the validity of the tech.  Companies like these are going to be avenues for investors to get in on the action.

How to Invest

There are a couple ways for private investors to get involved with investing in the blockchain.

  1. For those who of course have the capital and know how, angel investing and funding in startups will be the best way to get in on the ground floor. Investing in these startups built on blockchain technology have some risks, but with greater risk the reward grows. Cryptocurrency has become an accepted form of payment in the past couple of years and entered many mainstream businesses. The amount of investors and entrepreneurs interested in this area has grown at an incredible rate. There is without a doubt a potential Google or Apple in the midst that will lead the blockchain revolution.
  2. Another simple way to get invested is to just buy bitcoin. There are multiple reasons behind this. One is the fact that it can be seen as a sort of digital hedge, similar to gold and can have a potential high return on investment. It’s a new type of asset class that a lot of people are still getting used to so there is of course going to be periods of high volatility. There are multiple ways to acquire bitcoin now. For those looking for their own type of virtual bank, there is Coinbase and Circle to just name a few. These act as both an exchange and a bank. There is also another option that allows the user to trade between other bitcoin owners. Local Bitcoins, is for individual traders and can allow for a slight variation of cost per bitcoin, there’s more of an inherent risk here, but another decently safe option.

The best website to utilize for the price per coin is the blockchain info website.

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3. Another roundabout way to get invested in blockchain technology is to just invest in the banks that are funding blockchain companies or utilizing it. Specifically there are some funds out there that shares can be bought in. An example of one of these funds is Bitcoin Investment Trust (GBTC), which holds bitcoins to track the price, similar to how the (GLD) gold trust works.

Barry Silbert started the trust, a member of Digital Currency Group, a group that invested over seventy-five bitcoin and blockchain based startups. They just recently bought up the blockchain news website CoinDesk.  Silbert said his main reason for starting the trust was so that a lot of casual investors could get into bitcoin without having to figure out where to buy it and store it. He considers it an easy play to get involved in the blockchain industry.  The trust is up some 20% since it began trading in May of 2015..

Accounting Aspect

Not only is there a great investing opportunity to be had, but there’s an opportunity to be able to utilize the blockchain through simplifying accounting and saving potential billions for various companies.

Accounting and auditing are large costs throughout the world of business. Utilizing blockchain accounting would be effective in cutting a business’s costs. All internal transactions would be entered internally. With this the ability to be audited by outside regulators would be simple as the entire process of transactions is recorded and available for viewing.

Additional Resources

Once the fundamentals about blockchain are understood, then it’s time to go down the rabbit hole and learn how to utilize the technology and the potential implications behind it. There’s no better way than to read books written by the professionals on the matter.

The first book of interest in Mastering Bitcoin by Andreas Antonopoulos. Antonopolous is a consultant to multiple bitcoin based start ups. He his a professor at the University of Nicosia, where he teaches courses on Digital Currencies. On the side he runs his own bitcoin podcast.

His audience he’s targeting is for programmers out there. It helps aide them in the process of the actual code behind the working mechanisms of a cryptocurrency. As well as how to use them and develop software along the blockchain. For non-programmers, there’s a lot of knowledge not pertaining to code that explains the technologies in more depth.

Another book of note is The Science of the Blockchain written by author Roger Wattenhofer. He’s a professor at ETH Zurich and formerly worked at Brown University and was involved with Microsoft Research.  He’s a prolific writer who has published over 250 articles on the science of cryptocurrency.

He goes through the route of explaining the systems through the scientific method, starting from the basics of building the systems. He also shows the different ways algorithms are created for the sole purpose of developing a blockchain.

For those out there more inclined to the financial and economic aspects of bitcoin, Blockchain: Blueprint for a New Economy by Melanie Swan is a great book. Swan is the founder of the Institute for Blockchain Studies. Their sole purpose is to look at the implications inherent in spreading the decentralized technology.

She decided to write the book when it became intuitive to her that blockchains were more than just a new way to utilize digital currencies but a new era akin to the advent of the computer and Internet age. Everything will be more secure as well as private, while being traceable at the same time. It sounds like a paradox but that is why blockchain is so important.

Blockchain is ushering in the new age that will allow for large-scale global projects to be undertaken that just weren’t feasible under the current models that currently exist.  It is an alluring investment that will pave the way for the future.

Is Bitcoin the New Gold?

Gold prices took a pummeling while stock markets rode the crest of a wave. But, based on the traditional view held by a number of investors, that the precious metal is best used as a hedge against inflation and when a safe-haven is required against falling prices, you would have expected gold to stage a rally when markets entered choppy waters.

The fact that the gold price has failed to shine and recover its value as rapidly as it has done in the past, when faced with a similar economic scenario, has prompted some analysts and investors to ponder whether the role of gold has changed, in the face of competition from other investment options such as digital currencies like bitcoin.

Interesting parallels

If you track the historical progress of bitcoin and gold prices, there was a period of about four years between 2008 and 2012, where values ran virtually in tandem, in an upward trajectory.

Although the price movements associated with bitcoin were more erratic than the gold price fluctuations at times, they both managed to end up in a similar state of popularity with investors. What happened after that period of virtual cohabitation in the eyes of market watchers, was that gold fell out of favor and bitcoin values managed to virtually triple in value, while gold prices dropped 25% in the same timeframe.

Too early for conclusions

We all know the problem with statistics and you can often make them work for your argument if you pick the right way of looking at a situation, and choose a period where the figures work in favor of your opinion.

It would definitely be wrong to assume that investors are now prepared to flee gold markets in favor of a new kid on the block such as bitcoin, which is what it is when you consider how long gold has played a part in our financial thinking.

The impact of QE

A major factor that heavily influenced gold and bitcoin rallies, was the monthly intervention of the Fed with their quantitative easing (QE) program.

Although there is an argument to support why the Fed intervened in such a big way, their actions did have the effect of undermining the perceived value of national currencies and also hinted that inflation could easily get out of control, without QE.

What happens with an action like QE, is that it doesn’t create the same response as more traditional monetary easing policies achieve. QE is not very effective in boosting aggregate demand or commodity prices, but can impact asset prices.

This form of intervention has proved to have a negative influence on gold prices.

Are bitcoins similar to gold in this respect?

Using this line of thinking and seeing what effect QE had on gold prices, you might reasonably think that bitcoins could be just as vulnerable to downward price pressures. Bitcoins and the concept of digital currencies in general, have certainly gained some credibility, and there are investors who are now prepared to view bitcoin as a viable alternative to gold, when looking for an instrument to shelter against a decline in the value of paper currencies.

A rise in the popularity of bitcoins has helped fuel a growth in demand for the digital currency, which in turn,  has helped to boost the price accordingly.

In terms of deciding whether bitcoin is truly the new gold, it should be remembered that the bitcoin market is still thinly traded and largely unregulated in comparison to the established gold market.

This means that sentiment and prices could just as easily swing away from the digital currency and the conclusion has to be that whilst it can be a useful instrument, it could be a risk conclusion to reach that bitcoin is about to replace gold as the default safe-haven in times of trouble.

7 Principles of Investing After Retirement

Once you have retired and have more time on your hands in theory, your risk-profile and strategy will almost certainly adjust in order to look at ways of making your money work as hard as possible, but with a view to generating income to boost your retirement income.

The fundamental point about investing after retirement is that you are speculating to accumulate with a pot of money that represents the main body of your financial wealth. It is a sum of money that you have worked hard to grow, and now that you reached a point where your income is going to be limited in comparison to when you were working and earning regularly, you can’t afford to take too many risks with your capital.

So just what are the basic principles that you need to try and adhere to for investing after retirement?

#1 – Review your portfolio

The message to keep in mind is that it is going to be extremely difficult to earn back your nest egg without the support of a steady monthly salary.

Your primary goal is to invest as wisely as you possibly can.While you are still in work and investment markets suffer a downturn, causing the value of your holdings to drop, you have a number of options open to you, such as working longer and postponing your retirement until the situation recovers.

When you have made the leap into retirement and quit your job, you no longer have that option available, unless you try to get back into regular employment.

As you probably don’t fancy the idea of going back to work as a viable option, the sensible approach at your retirement would be to conduct a review of your existing portfolio as your first priority.

You will want to take a look at how balanced your investments are and whether you are exposed to more risk than you are comfortable with in certain areas.

#2 – Work out how much you need

You will need to work out how much money you need each month and calculate an annual total income that you require in order to be able to pay all of your bills and have enough money to live on and do what you want to do in your retirement.

As a guide, if you were able to limit your drawdown to no more than 4% of the total amount of money you have available in your retirement pot and then draw a similar sum each year thereafter, with an adjustment by the rate of inflation, you should be able to live off your savings at this rate for about 30 years without depleting your savings.

Conduct a review of all of your investments and decide how much you can afford to withdraw each year and whether this balances with your needs. You should also take a look to see if your current investments provide a balance in relation to growth, safety of your capital and income generation, that you are comfortable with.

#3 – Plan for the future – even in retirement

An elementary mistake that a lot of retirees tend to make is to view their portfolio with an element of finality and this makes them too risk-averse and unwilling to look beyond their current financial position.

Many of us are living longer than ever before and although none of us know exactly how long we have, the truth of the matter is that many retirees can actually devote more of their savings to growing their money through alternative investment and stock market strategies than they think they should at first glance.

If you retire at about the standard age of 65 years, the majority of financial experts are of the opinion that you can safely afford to allocate half of your assets in sensible alternative investments and stocks and the rest in a mixture of bonds and cash.

This is a much higher figure than many of us would probably be comfortable with initially, but when you look at the potential difference it could make to your retirement income, it is an investment principle that is certainly worthy of your consideration.

You can also then adjust the percentages as you get older, so for example, you should probably consider adjusting the ratio to something like around 37% of your assets in stocks and alternative investments five years into retirement, and so on.

#4 – Understand your investments

There are now many more ways to invest your money than ever before and you are no longer limited to stocks, bonds and mutual funds.

You can invest in alternative investments such as intellectual property rights, REITs, Gold ETFs and collectables and wine, to name just a few alternative investment opportunities.

Not all of these investments will be suitable for your risk profile or circumstances, but if you work on the basis that risk can arise from not knowing what you are doing or investing in, make sure you understand all of the investments you have and know what the risks and rewards are.

#5 – Diversify your investment mix

Work on the basic calculation that you have somewhere between 15 and 30 years of living expenses in retirement that needs to be generated from your investments.

Adopting this mindset should encourage you to diversify your investment mix and combat the effects of inflation as well as addressing the possibility that you could potentially outlive your money if you don’t consider some riskier strategies, within reason.

#6 – Generate income

You are going to need income as a retiree of course, as you don’t have a month salary to rely on to cover your living expenses.

Alternative investments offer you a viable option of generating an income without relying on the traditional investment classes such as stocks and bonds. As with stocks, there are a variety of different alternative investments which have varying levels of risk attached to them.

You probably don’t want to expose yourself to volatile investments but there are a number of perfectly plausible alternative investments that could prove worthy of inclusion in your portfolio and generate a decent income, without putting your capital at great risk.

A good example of this would be investing in infrastructure and property funds which provide you with exposure to real assets while also generating a worthwhile income at the same time.

#7 – Keep some emergency funds

It is a good idea to try and set aside up to two years of living expenses in cash. Having some money that you can get hold of easily in an emergency situation will protect you from the need to sell some of your riskier investments at a loss and cover you for a period of time if you are falling slightly short of your income generation target.

Follow these seven investment principles after retirement and you should hopefully be able to enjoy some lazy days on the beach, without worrying about money.

6 Gold Stocks to Buy & Hold

Political and economic uncertainty, tensions in the Middle East, interest rate rises. The list is fairly extensive when it comes to finding reasons for stock markets to display a fair amount of volatility, which is why investors who are seeking a way to balance their portfolio and cover all bases, tend to look to gold as a decent hedge.

The start to 2016 provided ample evidence as to why gold stocks might be worth adding to your investment portfolio as a long term hold, so the question is, which gold stocks would make a good buy and hold?

Here is a look six gold stocks to consider, although it has to be pointed out that this isn’t a recommendation to invest or specific advice. The aim is simply to highlight some stocks which might make a good buy and hold proposition. You will have to make your own decisions on whether to invest or not.

Newmont Mining Corp – NEM

Some oil companies have been struggling to get a handle on their operating costs as prices have fallen and the mining sector has seen similar issues for a number of companies. This is an issue that has been successfully addressed by the Newmont MIning Corp, who recently announced that their all-in sustaining costs were expected to improve from $900-$950 an ounce to $850-$950 an ounce in 2017.

This is positive proof that the company has been successful in being able to reduce its operating costs and they expect that leaner fiscal management to progress over the next few years.

This aspect alone is a fair reason to consider Newmont Mining as a long term play, because the peaks and troughs of mining results with some mining sites performing worse than expected, means that with costs under control, they can benefit from increased production at other more productive sites.

Managing their production costs and output so well, will help the business to actually increase production levels overall and achieve sustainable production levels through to 2020 at least.

Analysts seem to agree with the positive outlook, as the ‘buy’ recommendations outweigh the ‘sell’ suggestions by a comfortable majority.

Goldcorp – GG

If you take a look at the recent stock performance of Goldcorp, you would quite rightly wonder why it would be on the radar of investors looking at gold stocks.

As with most investments, it often pays to take a long term view and despite the fact that Goldcorp have dropped about 30% in value YTD and also managed to lose $192 million in the third quarter of 2015 alone, those figures need to be viewed in context, as it hasn’t been bad news all round.

One particular nugget you can can glean from their latest earnings report, is that production rose by a healthy 40% in the third quarter, and this production boost was helped by new mines becoming operational, which would suggest that there is scope for those better production numbers to improve further over time.

Goldcorp now has a lower need for capital that in the past and this has meant that the business has in the space of just 12 months, turned a negative cash flow of $355 million 12 months ago, into positive cash flow of $243 million, just 52 weeks later.

Harmony Gold Mining Co – HMY

You can take two differing views with regard to the stock performance of Harmony Gold Mining.

The stock price is still dragging its heels and is 15% down from where it was about 12 months ago. However, the stock is actually up an impressive 161% since the end of 2015. The company recently reported positive earnings and is understood to be looking to grow through acquisitions and also benefit from debt repayments.

The stock was valued at $15 back in 2011, so the current average trading range of about $2.50, shows you what happened to gold stocks when everything seemed to be going so well in the stock markets.

Sentiment has definitely shifted in 2016 back towards gold stocks, with rises of 40% YTD being achieved across the sector, so as a long term hold, Harmony Gold may well have the scope to head some way back towards its 2011 stock value.

Sibanye Gold – SBGL

A gold stock that has already taken off at the start of 2016 is Sibanye Gold, which has already risen by a healthy 85% so far this year.

This stock is listed on the NYSE but the mining company operates in South Africa. It has estimated gold reserves of about 28 million ounces and uranium reserves estimated to be in the region of 102 million pounds.

Analysts tend to agree that the stock price should add further to its gains already achieved and it has a market capitalisation of $2.6 billion.

Barrick Gold Corp – ABX

Yet another gold stock to recover in 2016 is Barrick Gold Corp, which has risen by just over 60% so far in 2016.

The stock was changing hands recently at just over $11, but when you consider that the price was more in the region of $50 back in 2011, you can see that there is still scope to reach previously scaled heights again.

This is not beyond the realms of possibility, when you consider that Barrick Gold is one of the largest gold stocks in the world and has the financial resources to be able to embark on a significant acquisition spree if it chose to.

Gold Fields Ltd – GFI

A similar story in terms of the stock performance, is unfolding at Gold Fields.

The stock has managed to recover about half of its 2011 stock valuation, but it is still down about 25% compared to where it was about 12 months ago. The company’s all-in costs are current running at $942 per ounce and in its last quarterly update published in December 2015, it has achieved a $47 million cash inflow from operating activities.

The CEO Nick Holland has promised ongoing cost saving initiatives and it is believed that a strong international portfolio will allow the company to further improve how the balance sheet looks in 2016.

Taking a look at the price of gold now and comparing the price to the 2011 high of $1,980, you can soon see that gold stocks in general do offer plenty of potential upsides. There will be inevitable bumps in the road and sentiment can always change if economic conditions improve again, but at current prices, a rise in the price of gold as investors seek a safe haven, should translate to miners stocks as well.

The six gold stocks highlighted could represent a good buy and hold opportunity, but only you can decide if that is likely to be the case or not. This post does not constitute a recommendation to buy and at the time of publishing the author has no holdings in the above companies.

An Introduction to Fine Art Investment

It is easy to understand why investing in fine art can seem such an attractive proposition, as it presents the potential opportunity to acquire something of beauty that you may enjoy looking at, while offering the tempting scenario that it might increase in value while in your possession.

Not all investments offer this enticing situation where you can maybe prosper from something that you derive pleasure from, but even with that to consider, you have to approach fine art investing with the same level of caution and diligence that you would with any other investment opportunity.

Weighing up the pros and cons

One of the first things to consider is all the respective pros and cons associated with investing in art.

As with many investments, there are advantages and disadvantages that you need to consider and put into perspective, so that you can find a balanced argument that either you are comfortable with and decide to invest, or makes you walk away and settle for enjoying art in a gallery rather than trying to own it.

One of the fundamental points to consider, which many art investors consider to be a definite positive, is the fact that there is no underlying financial market which can introduce any major volatility or negative influences to prices.

Prices will rise and fall in line with market sentiment and current trends, but the sort of boom or bust scenario that you can get with some market investments, doesn’t tend to happen in fine art investing.

Another positive aspect to fine art investing is the fact that you can sometimes enjoy physical ownership of the artwork, although some investment strategies may involve a broker storing and maintaining the art on your behalf, rather like wine investing.

Not all artwork will appreciate over time of course, but at least there is the reasonable prospect of that happening if you buy right, but you can say that for a lot of investments.

One of the definite downsides to consider is that artwork is a fairly illiquid, so if you want or need to sell in a hurry, you will either be unable to do so or it will probably cost you to do so.

Trends are an important consideration

Some high-profile artists never seem to lose their popularity but putting those aside and looking at the art market in general terms, you will quickly discover that a lot of art markets are relatively unpredictable and heavily influenced by trends.

The story of the artist who painted the picture is often a strong influential factor when it comes to resale values and price trends, so you should always consider the artist and their story, as well as appreciate the art itself.

What sort of returns can you expect?

It won’t take you too long to find some story of spectacular success on the internet involving an art investment, such as the buyer of the Peter Doig painting The Architect’s Home in the Ravine who paid £314,650 for the artwork, and subsequently sold it just over a decade later for a staggering £7.7 million.

The fact that an estimated 20% of registered buyers at the major art auctions were new clients and the total number of bidders has risen by about 50% in the last decade, tells you that stories of spectacular gains have not gone unnoticed.

Volatility in art markets is generally lower when compared to equity markets so you are potentially investing in calmer waters most of the time. It is also encouraging to note that art investments have shown positive returns over the longer term.

If you look at the figures produced by the Mei Moses World Art Index, which is a general art index covering all genres, returns from art investments have managed to keep pace with the performance of the S&P 500 over the last 50 years, and has even managed to beat it, if you take the last decade in isolation.

As the global art market is still growing and more buyers are appearing on the horizon, especially those with some new wealth to invest such as a number of Chinese investors for example, this is helping to maintain some healthy returns for investors.

Fine art investing is not a one-way route to profit of course and even in a booming market and with a greater pool of willing buyers, there will still be some art investments that ultimately disappoint the owners of artwork, simply because of changing trends or other considerations.

You should also consider the fact that buying and selling art can be an expensive business, with purchase and resale fees reaching as much as 25% in many cases, plus the insurance premiums and storage costs, that you will have to deduct to arrive at your potential net profit figure.

The other major consideration with art investing is that it is not going to produce an income.

All things considered, probably the most sound advice from art experts is to buy what you like rather than what it might be worth in years to come.

If you have a good eye for art, you will achieve the win/win scenario of enjoying something beautiful hanging on your wall, that appreciates in value and earns you a decent return. You should also be in it for the long term, as most art investment funds and the general concensus of opinion is that you must be prepared to hold onto your art for about ten years or more, if you want to improve your odds of achieving a reasonable return on your investment.

6 Income Generating Alternative Investments to Consider

Past investment strategies are beginning to look even less relevant in today’s financial climate and whereas you could previously add some blue chip oil companies to your portfolio and enjoy a healthy dividend and some growth on the share price thrown in for good measure, those halcyon days seem to be well and truly over.

Recent announcements of losses that were once unthinkable, mean that investors should expect dividend cuts and to take one example to demonstrate how the landscape has changed, you only have to look at the scenario relating to Chevron.

They recently reported a quarterly loss for the first time since 2002 and they are indicative of the rest of the industry, because they are currently funding dividends through additional borrowing.

This can’t and won’t last forever, which means that we should prepare for some pain when it comes to the once seemingly unstoppable dividend gravy train, not just in the oil industry but other traditional investment sectors too.

So if you are not going to be able to generate a reasonable income from the usual suspects who have served you so well in the past, it is probably time to consider some alternative investments that could keep your money working hard and producing an acceptable return.

Website investing

We are now living in a digital world and many of the transactions and activities we carry out on a daily basis, are done through the internet.

The internet has grown-up in recent years in terms of being able to generate an income and there are now many ways to create a website that is able to generate income and profits. This means that website investing can be considered a viable alternative investment strategy, if you are able to build a portfolio of sites that you have control of and manage to find some well-run websites which do a pretty good impression of a generous ATM machine.

You are probably unlikely to be able to acquire a website which has the earning capacity of the likes of Google or ebay etc, which can generate earnings of more than $200 per second, but there are still plenty of decent opportunities.

There are several types of web sites that can help you generate a profit.

Blogs can be hugely popular and with a regular stream of new articles, they can generate a lot of interest and prove a good vehicle for advertising and income opportunities.Content-based websites with a well-established level of traffic are also worth considering, as are product & service sites which have been specifically designed to buy or sell a product or service.

if you follow the link to our website investing guide you can get some more information and links to research the ins and outs of website investing for income generation.

Ground rents

Investors looking to generate income from property, often look at the landlord route and add a portfolio of rental properties to try and generate an income from monthly rental payments.

An alternative investment worth looking at if you are wanting to generate an income is ground rents.

The demand for properties capable of producing a decent yield has helped to force up valuations and subsequently compressed yields, which is why the lesser-known route of ground rent investments could offer some value.

Ground rents should not be confused with service charge payments, which are based on the maintenance of the property. Ground rents are payments that are due to the freeholder of a property which has been sold on a leasehold basis and the default rate is understandably low on these payments, because the leaseholder risks losing their property.

This is an added attraction and a potential win/win scenario, as you can generate a regular income but if the leaseholder fails to pay, you could assume control of the property and even profit from finding a new leaseholder.

As default rates are historically low, it is better to concentrate on the income-generating opportunity that ground rents offer as an alternative investment strategy.

We have some further information on our site about ground rent investing, and you should be able to find a number of opportunities to look at when you carry out your own research.

Forestry investments

Although most of us have been told at some point in our lives that money doesn’t grow on trees, you could argue that it can be grown from trees.

Forestry investments are a viable alternative investment when it comes to generating an income over the longer term.

There are a number of funds that offer you the chance to pool your resources and invest in a forestry scheme, where the returns are unlikely to be spectacular but steady. Based on past performance, it is likely that you should be able to generate a return of about 4% to 5% annually, with the Investment Property Database calculating that their forestry index, covering a number of different portfolios, has delivered an annualized return of over 7% since 1992.

Investing in forests is not without risks of course, but provided you have realistic expectations and are not anticipating stellar returns, it has the potential to deliver a respectable income-generating performance.

Car parks for income

People will always need to park their car, and demand for parking spaces often creates the car-park full sign, which would be frustrating as a motorist but a welcome sign if you were the investor in that particular car park.

The phrase guaranteed-investment return is one to treat with caution when you see it used, but there is a fair case to argue that car park investments could come close to achieving that seemingly unattainable goal.

Investors need to tread carefully whenever they are looking to put their money into a new scheme and the advice with car park investing is to check out the opportunity thoroughly and invest only in areas where there is a proven high demand for parking spaces.

There is an article on investing in car parks on our site which you may want to read in addition to doing your own research on this income-generating alternative investment.

Infrastructure investments

Infrastructure investments can tick a lot of boxes for alternative investors, as they provide you with exposure to real assets, offer you genuine diversification and the icing on the cake, is there is an income yield available too.

Infrastructure and property funds as an alternative investment strategy can work well for individual investors, as they open up the chance to pool your cash with other investors and invest in a range of projects, all of which have varying maturity dates.

What this does, is create an opportunity to tap into infrastructure projects which are often regulated by governments and tend to be long term in nature, which means that you could benefit from regular income payments which are likely to be reliable and consistent, for a reasonable length of time.

Although this is not in any way a recommendation, if you take a look at the First State Global Listed Infrastructure Fund, you get a valuable insight into how these funds are structured and how they perform.

Many of its underlying investments are in major projects like road building and the fundamental point with infrastructure projects, is that many of them get completed regardless of the financial climate, whereas some other private projects can sometimes get shelved.

P2P lending

Peer-to-peer lending has revolutionized lending markets and allowed loans to be offered without having to go to a bank for funding.

P2P lending allows you to put any money you have in low-yield savings accounts to work, by agreeing to lend to borrowers who have been vetted by the lending platform you are using.

There are numerous portals to become an investor through and you have the ability to control and screen each loan you make, choosing your level of risk and the rate of return that you are comfortable with.

There is always the risk to your capital when you become a lender, but you can achieve much higher returns than would be possible in a low-interest rate environment like a savings account, with returns hopefully negating any losses that you might incur along the way.

It is achievable to earn somewhere between 5% and 9% through the various P2P lending sites and although there are clearly risks attached, earning an income from this alternative investment strategy, should definitely be achievable.

See: The Alternative for Your Savings that Could Earn You 9% This Year

Which Gold Investment Funds Should You Look at in 2016?

If you looked at what the price of gold has done over the the last three years, you could not be blamed for thinking that it would take a brave or foolish investor to consider putting any money into this precious metal.

Some gold funds plunged by as much as 80% and the price of gold fell 35% over a three-year period, but if you had bought into gold at those dramatic tipping points, you would have prospered recently as market sentiment has shifted in light of recent turmoil in the financial markets.

Gold has always been viewed as a decent hedge when stock market investors start to get nervous about a string of gloomy economic forecasts and unexpected events. The beginning of 2016 has been a chastening experience for many investors with trillions shaved off valuations, triggered by events in China and a general backdrop of political and economic uncertainty for the year ahead.

Market conditions

Having set the scene for the coming year and painted a picture of fluctuating valuations and market volatility, it is also necessary to understand what is going on in the gold-mining industry and how it has reacted to falling demand and prices.

The gold-mining has undergone a period of restructuring, which is not dissimilar to what has happened in the oil industry, which has also had to react to falling commodity prices and lower margins.

Gold producers can only give themselves the best chance of gaining a competitive advantage over their market rivals, if they are able to demonstrate and deliver a high level of cost-efficiency and keep production costs to a minimum.

These goals can only realistically be achieved through a period of restructuring and as has happened in the oil industry, many small players have seen their market share squeezed as a result of their cost inefficiencies and a lack of resources to be able to compete in a sustained low-price environment.

This period of consolidation has resulted in a number of operators becoming leaner and giving themselves more opportunity to become profitable, especially if the price of gold moves upwards and they can benefit through lower operating costs and better margins.

Investment options

With the usual caveat that the following funds are just suggestions and not investment advice, based on a strategy for those considering how to invest in gold in 2016, here are some investment funds that you may wish to look at.

1) First Eagle Gold Fund Class C

The average return in the last five years of -18.72% is hardly likely to have you salivating at the prospect of making a big return on your investment, but this fund has done better than plenty and if you believe that the tide has turned for gold, the fund offers a good spread of stocks and physical bullion.

The fund includes a portfolio of gold-mining finance companies and operating firms who have a spread of long and short-term gold mines. A little over 20% of the fund’s assets are physical gold and silver bullion and it claims to be very cautious in its considerations of capital, operational and geopolitical risks associated with investing in gold directly and also gold-related securities.

2) Franklin Gold and Precious Metals Fund Advisor Class

You will find all of these funds have been in negative-return territory for a the last five years and its annual return comes out at -24.11%, which is again better than many.

One reason why you might want to consider this fund is that it adopts a no-nonsense research-driven approach that is concentrated on top-quality companies who can boast attractive production profiles combined with robust reserve bases and active exploration programs in place.

Almost 80% of this fund is invested in equities of gold producers and the portfolio is heavily weighted towards companies from North America and Canada. This fund is therefore not as dependent on the price of physical gold, although it is of course relevant to demand and could be well placed if more investors and consumers help to push prices higher and help to increase productivity levels.

3) American Century Global Fund Investor Class

If you are looking to generate an income from your investment, this fund seeks to achieve this by investing in companies actively engaged in mining,fabrication, processing, and distribution of gold.

The fund has achieved an average annual return of -23.99% and the portfolio is weighted towards gold producers based in Canada, who account for about 66% of the total allocation and U.S gold producers currently account for 12% of the funds assets.

One point to consider about this particular fund is that its top five holdings represent close to 40% of its total holdings, which could result in greater price volatility for the fund if these stocks perform poorly, unless of course they have chosen the right ones to prosper from a recovery in gold in 2016 and beyond.

Gold mutual funds are an alternative option for investors who are reluctant to put their money directly into physical gold and represent a slightly more conservative approach than some other ways of investing in gold such as gold exchange-traded funds or junior gold stocks, which is definitely a boom or bust option, and can result in potential triple-digit gains or losses if exploration plays don’t reap positive rewards.

Gold itself is still not a speculative asset in general terms despite the volatility in prices during recent times, but as part of your portfolio, you may well benefit from a patient and strategic involvement through a suitable fund, which may well display the green shoots of recovery if the markets continue to react adversely to economic and political events.

The 10 Most Precious US Coins of All Times

There are two distinct types of coin investment. Those that are worth equivalent to the precious metal they are made from and there are plenty of gold and silver coins in circulation.

Then there are the collectable coins which have a rarity value and are sought-after by those of us who are not only interested in the history behind each coin and its rarity value. If you asked the majority of coin collectors what their ultimate prize coin would be, many of them would name the 1804 Silver Dollar.

This coin qualifies as the most precious US coin of all time and if you are fortunate enough to own one of only 19 copies that are known to exist, that one dollar is probably worth an inflation-busting $10 million.

Here is a look at the coins that can be classed as in the top ten of the most precious and sought-after coins you can lay your hands on, if you have the financial resources to do so and can find a seller willing to part with it.

1804-Class-III-Silver-Dollar_Obv1804 Silver Dollar

The star of the show and probably the most prized collectible coin anywhere, is the 1804 Silver Dollar Draped Bust.

If you find a specimen that is in good condition it could worth anything up to $10 million, but as only 19 copies are known to exist, the chances of coming across this very rare coin are very slim indeed.

There are numerous envious numismatists who admire its rarity, beauty and design features but know that they will never be able to add this coin to their collection.

doubleeagle1933 Double Eagle

Although the Double Eagle is usurped in value by the 1804 Silver Dollar, many collectors consider this coin to be the most fascinating and famous coin around.

It is a fascinating story that has resulted in this becoming one the rarest coins in the world. A healthy 445,500 specimens of the Saint-Gaudens Double Eagle were minted back in 1933 but none of them were ever officially circulated and they were all subsequently melted down, with apparently just two of the coins spared.

It later turned out that about 20 of the coins were stolen before they were sent for melting, but the Secret Service tracked 19 of the coins down. What is now known is that one of the coins is owned by a private collector who paid $7.9 million for it back in 2002 and ten other copies of the coin are safely stored away in Fort Knox.

1692182_orig1913 Liberty Nickel

Third place in the list goes to the 1913 Liberty Nickel, which has an estimated value of $5.9 million.

The reason why a nickel coin could be so valuable is that the coin is a real rarity, because it was produced without the knowledge of the U.S Mint. There are plenty of theories and stories as to how this bizarre situation came about, but the reason it is worth so much is not just down to the mystery surrounding the coin but also due to the fact that there are only five examples of this coin in existence.

765011804 Eagle Gold – Capped Bust

Acquiring this coin for your collection will set you back in the region of $5.1 million, but again the chances of buying one are very slim indeed.

Less than ten of the coins were ever produced and only four are known to be in existence. As well as the rarity aspect there is also an interesting story behind the coin, as the coin was actually minted in 1834 and intended for diplomatic presentations,some thirty years after the date on the coin.

1854-O_Double_Eagle_r1861 Double Eagle – Coronet Paquet Reverse

The story behind this coin is that the U.S Mint ceased production of the coin at the last minute, due to some design-revisions. A few of the coins had already been minted by the time the instructions to stop came through, meaning that there are only two known to exist, with a value of about $4.5 million each.

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1794 Silver Dollar – Flowing Hair

This coin is an iconic image and you can even buy a book which is dedicated to the story of this particular coin.

There are 125 documented examples of the 1794 Silver Dollar and its rarity combined with the fascination of the history associated with this elusive piece of metal, means that you are likely to have to find about $3.2 million to put one in your collection.

300-h01c_1794_NmlHd_o_Hydra1797 Half Cent – Liberty Cap

Back in 1795, President George Washington took positive action to address the copper shortage being experienced by the country, and he did this by instructing that the weight of certain coins should be reduced.

One of the rare coins that now exist as a result of this policy is the 1797 Half Cent, which fascinates numismatists everywhere and commands a value of about $3 million when one comes up for auction.

1873cc_dime_no_arrows_obv1873 CC Dime – Liberty Seated

If you love tales of the Wild West, this coin will definitely appeal. The 1873 Dime is considered to be the only unique issue produced by the Carson City Mint. It filled its coins using gold that was plundered from nearby mines and the value of one of these remaining examples if estimated to be about $2.7 million.

1855s1855 Three Dollar Gold Piece

There is only one known example of this coin and that changed hands back in 1982 for $687,500. Rumors persist that there is another example of the coin buried somewhere under a San Francisco building, but that is where it is likely to remain if the story is true.

This means that the only confirmed example of an 1855 Three Dollar Gold Piece is now said to be worth in the region of $2.7 million.

59814_Obv1885 “Trade” Silver Dollar

This trade dollar was designed by William Barber and there are only five proofs of this coin for 1885 in existence. The last auction of an authenticated 1885 Silver Dollar Trade coin was back in 2006 and it fetched $3.3 million.

The estimated current value of a genuine version of this coin is around $2.6 million, although a mint condition one would more likely fetch close to $3.5 million.

Investing in coins

Coins as an alternative investment is a growing in popularity but the conundrum is always trying to find the balance between investing and collecting, as the two don’t always meet in the middle.

A lot of investors start of with gold and silver bullion and progress into coins.

Rare coins are a mature and established market and if you are looking at investing in this area, you should be aware that rare coins are mainly defined by the fact that there a fewer coins available than the demand for them and also if they are at least pre 1930’s.

There are three main investment categories –

Rare certified U.S coins and in particular gold coins, are different to bullion. So while a current one-ounce gold American Eagle is not rare by any means, one that was minted back in the 1800’s might be a different story altogether.

Certified ancient coins are the next investment category. This is a growth area in coin collecting and this is mainly due to the fact that the Numismatic Guaranty NGC Grading System has created an opportunity that was not there before.

The other specific category is referred to as key date U.S coins. This is the term used to describe the rarest coins from a known series and this is the area where serious investors tend to be found.

It is always advisable to try and find a knowledgeable numismatist for guidance if you are looking at adding some coins to your alternative investment portfolio.