Characteristics, which an investor in gold and silver investments should internalize both for shares and for the trade under consideration of the economic key data!
Dr. Peter Riedi of the company EM Global Service AG in the dialogue with Dr. Rainer Schreiber, personnel and management consultant and member of the Federal association of the German business and economists registered association with seat in Duesseldorf.
Experts organize themselves – high production level, uniform quality, trade well organized
The Fachvereinigung Edelmetalle e.V. with its headquarters in Pforzheim/Germany in connection with the Berufsverband des Deutschen Münzenfachhandel e.V. with its headquarters in Cologne/Germany are the authorities of the precious metal trade and the refineries. These have a good name. Quality control and multi-eye principle have a long tradition. For example, the Association of Precious Metal Dealers and Jewelers in Vienna/Austria has existed since 1377 AD. German and international members from this sphere of activity commit themselves to control but also to develop the strict guidelines and basic pillars of trade and production and furthermore stand by the investors and customers with words and deeds in sensitive questions from this sector; because precious metals are „powerful and sustainable“ since time immemorial! In the book of the books of the Bible the term gold is found nearly five hundred times and in the text silver is mentioned about four hundred times.
Introduction – paper assets or tangible assets?
The fluctuations on the stock exchange can be compared with a clinical thermometer.
These provide information or even indications about the state of the economy or even a currency. Regardless of this, the stock exchange is also a place of speculation and manipulation and often reveals itself in the guise of a casino. Those who intend to invest a fortune here with the aim of maximizing profits need intuition, courage but also knowledge of economics. In addition, uncertainties, fears and hopes, as well as faith in the future, are factors of considerable fluctuations on the stock market. Factors that are always familiar to us from everyday life.
Precious metals have a different approach – here the eternal material value is in the foreground and not a paper value.
Tangible assets in the field of metals
Gold and silver as well as all other precious and semi-precious metals have a well-founded correlation to each other. The economic law of supply and demand also applies in this sector.
Megatrends speak for commodities GOLD – SILVER – PLATIN – PALLADIUM
Dr. Peter Riedi: „All precious metals are physically acquired and held in custody. The precious metals are stored in a high security vault of a Swiss or Liechtenstein security company. Due to population growth and the growth of buyers with purchasing power in global terms as well as economic growth, there is a significant shortage. Due to sustainable management and high hurdles for new procurement (environmental and economic), values continue to rise.“
At the present time, investing in gold and silver is quite lucrative. Both the shares of precious metal mining companies and the natural price of gold and silver per ounce have increased significantly, and have held up in the market due to the multi-layered crises. This can certainly change again to the detriment of investors. However, the fact is that despite the fluctuations, the value of gold and silver has remained consistent over the millennia to the present day.
According to a publication by J.P. Morgan Bank, an investment in gold and silver could yield an average annual return of 5.2 percent. Both the average annual return on a home of 3.4 percent and the average annual return on an investment in oil of 3.3 percent can be used as reference data, and is, moreover, also higher than the inflation of close to 2.0 percent and the moderate 2.1 percent that investors have achieved on average per year over this period. It should be noted that the official inflation rate will differ from the unofficial inflation rate; because hidden in the zero interest rate policy is a much higher inflation rate.
Natural values in gold and silver as well as the shares of the companies that mine precious metals or are involved in this economic sector can therefore actually play a decisive role for long-term investments.
Investors but also small investors who want to invest in gold and silver for the long term should know the following key figures – the one time one of economics – in their sleep. The key figures are of macroeconomic nature and apply in the same way also to gold and silver mining companies, others are again very concrete and should be internalized like a prayer wheel always with the goal to be able to judge the respective constellations at the stock exchange better.
The inflation rate
The national inflation rate is a fundamental factor in macroeconomics. According to current doctrine, higher inflation rates between 4 to 6 percent should have a positive effect on the demand for gold and silver, while low inflation rates or deflationary times are not particularly favorable for precious metals.
The underlying idea manifested in the theory from is simple: when the economy grows, the central bank increases the money supply and this dilutes the value of money already in circulation, making both products and services, including gold, more expensive. Then, at least according to the theoretical considerations, the value of an ounce of gold should increase.
In addition, interest rates and inflation can cause a mutual „push-pull“ effect. These two reactions can cause a correlation – behave in opposite ways as a result. Higher inflation rates, which usually have a good effect on the demand for gold and silver, can also be accompanied by interest rate increases by the central bank. This would not be good news for precious metals, because the opportunity costs will then widen. The price of an ounce of silver or gold should always be seen in the context of the general global economy in relation to supply and demand, with a mining company’s total cost of production revealing an accurate view of a mine’s true operating costs and profit maximization. In this context, it is useful to consider the following, possible costs of a mine: Royalties, production royalties, byproduct revenue, inventory write-downs, administrative costs, exploration and research costs, and capital expenditures. These business metrics should be monitored by an investor on an ongoing basis, provided the investor has the ability to obtain the data. Due to higher environmental regulations and more difficult to obtain reserves, these costs are increasing. Precious metals in kind are well suited – this has been known for many centuries – to hedge against inflation or currency reform and other imponderables. Located in the heart of Europe, EM Global Service AG designs and manages commodity and precious metal concepts. The range of services of EM Global Service AG includes the acquisition, custody and security of physical precious metals for the owners, the buyers. The company with her team builds on economic stability and secure it with reliability and discretion in asset custody in the heart of Europe. Further information under www.em-global-serevice.li
Dr. Rainer Schreiber
Lecturer adult education & personnel consultant
About the author:
Personnel consultant and honorary lecturer Dr. Rainer Schreiber with a degree in economics with a focus on financing, controlling, human resources and training. He works in professional adult education and publishes on management personnel consulting, demographic change and economic policy.
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Dr. Peter Riedi
Located in the heart of Europe, EM Global Service AG designs and manages commodity and precious metal concepts. The range of services of EM Global Service AG includes the acquisition, custody and security of physical precious metals for the owners, the buyers. The company with her team builds on economic stability and secure it with reliability and discretion in asset custody in the heart of Europe. For more information, visit www.em-global-serevice.li