Major Changes at The Federal Reserve Will Likely Be Good For Gold

OWNx Team Gold & Silver Market, News & Current Events

The Federal Reserve is arguably one of the most powerful institutions in the world. Its monetary policy affects every country in the world, either directly or indirectly. Like any organization that has been politicized (which the Fed certainly has), it takes on an ideological bent that manifests in its policy. So what happens when the leadership of that organization changes?

We’re not just talking about the impending replacement of Fed Chair, Janet Yellen. We’re talking about replacing her as well as four of the seven board members. This hasn’t happened since Woodrow Wilson’s presidency. President Trump and President Obama see the world a bit differently. While Obama generally praised the Fed, Trump has been more critical.

This means that, in the next several months, we can expect a significant change in the ideological makeup of one of the most powerful institutions on the planet. You might want to read that again. It’s a big deal.

The Fed has been on a rate tightening cycle over the past twelve months. Since the turn of the century, the Fed’s record on managing the economy while raising rates is not very good. And today, there are any number of things that could break if rates continue to rise. For starters, the sovereign debt crisis would come to center stage as budget deficits explode.

President Trump knows this. He is also very pro-business. Therefore, he is likely to appoint Fed Board members and a Fed Chair who will be quick to tap the brakes on the rate tightening cycle and reverse course quickly if necessary.

The result? According to Jim Rickards, “You should expect lower real rates, slower balance sheet normalization, and higher inflation than markets are now pricing. This will not happen all at once, but in stages over the next year. The biggest winner will be gold. The time to enter your gold position, if you don’t already have one, is now.”

We’ll just leave Jim’s thoughts for you to consider.

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Gold Is The Safe Haven Asset To Own Now

OWNx Team Global Finance and Economics, Gold & Silver Market

Gold has long been viewed as a safe haven asset during times of economic and geopolitical uncertainty. As we look around the world today, there certainly is a measure of both of those. The question many gold and silver holders ask is, “why haven’t the metals moved up in price more than they have over the last year?”

The answer lies in a several areas.

Sentiment

Presently, stock market sentiment (the belief that prices will rise) is still pretty strong. This is not unusual when markets reach and extend all-time highs. If the broader markets are making new highs, the crowd sees less of a reason to own safe haven assets.

However, contrarian and value investors see this as an opportunity. Investors are supposed to “buy low, sell high.” You can’t buy low when a market is at all time highs. It’s more likely that you end up chasing the last few upticks before the herd turns and runs the other way. By this measure, gold and silver are well positioned for gains in the coming years.

Recent History

“Let’s be realistic. Gold and silver have been trading sideways now for the last four years while the stock market has made new highs. People like to be in the “hot” markets. That’s great – if they invested before they became hot. That is where real gains are made.

Again, by that measure, gold and silver bullion are well positioned. As we enter into the eighth year of economic expansion, interest rates are on the rise. An already long expansion (by historical standards) is due for a pause, and rising rates has been a key catalyst in causing those pauses to sometimes cause more harm than expected. When money begins to leave the stock and bond markets, it has to find a place to go. Precious metals are well positioned historically and from a value perspective to receive a nice portion of those funds.

Crypto Currencies

We would be ignoring an elephant in the room if we did not acknowledge that crypto currencies have taken some of the investment funds that otherwise would find their way to gold and silver coins and bullion. Some, like Bitcoin, are being touted as the next “safe haven” currency.

It would be wise to look at this from another perspective. Cryptos are the shiny new object in the investing world. There have been spectacular gains for early speculators. However, they have never been tested in a real crisis. They have not stood the test of time. While some cryptos may find their way into a safe haven status eventually, the first time they, as a group, experience real volatility in a crisis, it would not be a surprise to see a major sell-off. It also would not be a surprise to see that when that happens, those funds – already earmarked for “safe haven” investments – flow strongly in the direction of gold and silver.

It’s been a difficult market over the last few years for gold and silver investors. The factors that have caused that to happen also now favor a change for gold and silver in the not too distant future.

Note: The opinions presented here are only for educational purposes and should not be considered investment advice. Consult a qualified investment adviser before making any investments.

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The Insanity of a Cashless Monetary System: Why You Need Physical Gold and Silver

OWNx Team Money & Financial Technology, News & Current Events

The old saying “cash is king” may soon be dealt a major blow. Governments around the world are experimenting with the idea of going 100% “cashless.” While this may sound like a good idea, it perpetuates the trend toward our monetary system becoming increasingly hyper-efficient.

This is not a good thing.

Hyper-Efficient Systems are Prone to Catastrophic Failure

A predatory animal, for example, may prey on several species, or depend on only one for its food supply. The latter will likely have more skill as a hunter when it comes to catching its only prey. However, if its prey adapts a new defense, or the hunter’s skills are compromised in any way, it will likely die. It became too efficient in its skills, and changing just one variable caused its food ecosystem to collapse.

This principle applies to all systems – including monetary systems. If all money is digital:

  • What happens when the electrical grid fails? It doesn’t have to be a global or national failure; it can be regional or local.
  • What happens if the monetary digits “disappear” due to hacking, failed hardware or poor software engineering? Data loss happens every day on a micro level. Nearly everyone alive today over the age of 20 has lost some data due to a system failure of some kind.

An all-digital cash society is ripe for catastrophic failure – not necessarily because of the design of the money (that is another subject), but because of the design of the delivery system. The United States electrical infrastructure is woefully in need of major upgrades – and we want to place 100% of the lifeblood of the economy on its back?

Not a wise idea.

Owning Gold and Silver Is One Way to Protect Yourself

Today, there are too many ways that your digitized money can disappear. This is why you need to have insurance. Physical commodities, including–and especially gold and silver, have, throughout history, been an anchor in every stable monetary system. Regardless of what happens with cryptocurrencies and digital money, this is not going to change, and it is why today, more than ever, it is smart to own some.

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3 Charts Show Why Value Investors Should Look at Gold

OWNx Team Gold & Silver Market

As they say, a picture is worth a thousand words. Thus, today’s post is mostly visual. Many markets have had a nice run over the last several years. In fact, they are approaching levels that, in the past, have signaled they may be getting overvalued.

The first chart is that of housing.

We all remember what happened after 2006. And while housing may yet have some more room to run, it is not a liquid asset as many people learned in the housing crash that followed.

The second chart is one that legendary investor Warren Buffett uses to measure the value of equities.

As you can see, it is rising toward the range where sharp reversals have occurred.  Maybe that is why Berkshire Hathaway has an unprecedented 40% cash position of over $100 billion.   

In an interview in June, he remarked, “We shouldn’t use your money that way for long periods.  The question is, ‘Are we going to be able to deploy it?’”

Maybe he should buy some silver like he did in the late 90s and early 2000s when it was $5 per ounce.

Finally, we have the two-year chart of Bitcoin.

History is not kind to parabolic moves, and that is what Bitcoin and other cryptocurrencies have seen over the last 12 months.

Value Investors Look For Undervalued Assets

Gold and silver have had a difficult stretch over the last five years. However, as we said in January, it appears they have indeed carved out a long-term bottom. This is the zone where value investors establish their position.

It looks like a good time for smart investors to own gold and silver. We can help you do so automatically over time, and even within a self-directed IRA.

(Note: OWNx is not a registered investment advisor company. The information given is for your consideration. You should always consult with an investment advisor before making any investment).

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Exchange Traded Funds: Real Gold or Fool’s Gold?

OWNx Team Gold & Silver Market

One negative by-product of a global economy is that cheap knockoffs can rise up in nearly any market, and can harm both the brand and reputation of the original product. In some respects, this is what has happened with the creation of gold (and silver) Exchange Traded Funds (ETFs).

From GLD to double and triple-leveraged long and short ETFs, there are ample offerings to try to entice gold investors with products that harm the brand and reputation of the original. They are literally a form of “fool’s gold.”

Gold as a Tangible Asset

First and foremost is gold’s 5000 year track record of acting as one of the most sought after tangible assets in history. There is an old adage: possession is 9/10th’s of the law. With ETF “gold”, you do not have, nor can you ever realistically hope to own any real gold.

As such, ETFs relegate gold to nothing more than a stock symbol, with the resulting ownership and utility value. They may use the word “gold” and track a price, but they certainly are not gold.

Gold as a Store of Value

Double and triple-leveraged ETFs are not a store of value. They are speculative vehicles which can quickly magnify or destroy your wealth. This is not the original “brand” that physical gold has developed over millennia.

Gold as Money

Gold is one of the oldest and most widely recognized items used for money in the world. Physical gold and silver are fungible (one bullion coin has the same intrinsic value as another), divisible, portable, durable, and can perform the functions of money: unit of account, medium of exchange, and store of value. ETFs perform none of these vital functions.

So, What’s In Your Portfolio?

Gold and silver bullion have specific functions in a person’s portfolio. Fool’s gold can be enticing; however, in the end it leaves you holding an empty shadow of the real thing.

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Cryptocurrencies. Interesting? Yes. But They Are Not Gold

OWNx Team Money & Financial Technology

The hype is on. Ethereum and Bitcoin are catching the eye of a wider audience as their prices have risen to new levels. This rise, however, has been accompanied by significant volatility–not the kind of stuff most investors want to deal with.

Even though Bitcoin has been around since 2009, it has only become a relevant player in the currency world over the last two or three years. Some would argue that it still hasn’t gained relevancy.

Regardless, reality is we’re still in the very early stages of a global monetary revolution. That means it’s going to take years for the market to sort out who will be the long-term players in this newly emerging system. There will be spectacular successes, and there will be spectacular failures.

The first products to market (Bitcoin) do not always mean success. Remember the Palm Pilot? In 1997 it was the personal digital assistant. What about Friendster? Maybe you didn’t even know about them. They launched a year before MySpace in a market now dominated by Facebook.

The point is, as many raving fans as Bitcoin and Ethereum have now, you could have found an equally dedicated base of Palm Pilot users. However, innovation continued. Innovation versions 1.0, 2.0, and even 3.0 don’t always survive despite fans and hype. Millions of people learned this lesson the hard way in the dotcom bubble.

This brings us back to gold and silver. They have survived bubbles from tulip bulbs to pets.com. They will always be a stable anchor in any investment portfolio. And for value investors, today gold and silver compare very favorably to a stock market that has risen for eight years, and certainly to cryptocurrencies that haven’t yet found their place in the global monetary system.

Cryptocurrencies are not golden yet. In fact, they would need to become a stable asset for 5000 years before they can claim to be “as good as gold.” Based on where they are today, they have a long way to go.

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Three Steps to Balance Your Investment Portfolio in An Uncertain World

OWNx Team Money & Financial Technology

A Smart, Simple Strategy Can Minimize Risk and Maximize Returns

Back in the day, advisers recommended rebalancing your portfolio every year. In today’s rapidly changing investment world, regular examination of your investment portfolio is a must. Depending on your asset allocation mix, you may want to rebalance every three to six months.

Step #1 Assess Your Risk Appetite

  • The degree of healthy risk any one investor is willing to take on depends on many factors.
  • How well can you stomach volatility?
  • How much time do you have before you need the funds you invest?
  • What are your long-term objectives?

Answers to these questions will help you make wise decisions and avoid sleepless nights.

Investors need to consider their time horizon, risk tolerance, long-term objectives, and available capital to develop a strong allocation strategy, as each asset class has different levels of risk and reward. For example, an investor with a short time horizon and low tolerance for risk may feel more secure with a conservative approach, whereas an investor who has a longer time horizon may find an aggressive approach to be more suitable.

Each investor will want to rebalance their portfolio on a regular basis in order to maintain their profile, or change their strategy if their risk appetite changes.

Step #2 Know What You Don’t Know

In other words, be honest with yourself about your knowledge of the markets you’re investing in. More people are taking over management of their investments through online brokerage accounts and self-directed IRA retirement plans. This provides flexibility and control, which is important.

However, the current investing world can be complicated. Technology is moving quickly, disrupting many traditional markets, and of course there is the rise of the ever-volatile cryptocurrency world. Being honest with yourself about your knowledge of the markets will help you avoid investing in areas you don’t understand, and possibly getting caught on the wrong side of disruption or hype. It may mean making a call to a financial advisor – or two.

Step #3 Get it on Your Calendar

This is vital for those who manage their own portfolios. Today’s world is fast-paced, and there are many distractions that could cause you to delay your review. Set aside a specific day (or two) on a regular basis to do two things:

  1. Examine how much the investing landscape has changed. Have macroeconomic or geopolitical events occurred that might impact your allocation strategy? Is more or less risk prudent? Do you need to change your allocation percentages? Get your advisors involved.
  2. Crunch the numbers and rebalance. It’s easy to rationalize leaving things as they are, but if you spend time thinking through #1 and it makes sense to change things, do it.

Precious Metals Play a Role

Physical gold and silver have traditionally been an anchor for any investment portfolio, with an allocation percentage between 5% and 20% depending on risk appetite and global market and geopolitical conditions. In the last thirty years however, they fell out of favor as technology bypassed the industry, simultaneously bringing new assets online. While it became easy for anyone to buy and sell stocks and bonds within an online brokerage account, ownership of physical gold and silver was stuck with 80s technology and a lack of liquidity.

That has changed with the OWNx platform. Dollar-cost average into the gold and silver market until you reach your desired allocation. Buy and sell physical gold and silver as easy as trading stocks and bonds. The OWNx online Dashboard is available to everyone, including for those who choose to hold them within a self-directed IRA.

Understand your risk profile. Know your investing limitations. Set up a schedule and watch your portfolio closely. Then take advantage of today’s ability to bring the time-tested value of gold and silver into your investment strategy with a smart, simple online platform.

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Independence Day – A Time to Pause and Reflect

OWNx Team Blog, Gold & Silver Market, Money & Financial Technology, News & Current Events

As we celebrate the birth of our nation this weekend, we recognize both the challenges and opportunities that lie ahead for each of us and our nation as a whole. Whatever role gold and silver will play in your future, we will be here with timely, relevant news on the gold and silver market and how our financial world is changing.

Have a safe and happy 4th of July weekend.
The OWNx Team

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Gold Continues to Set a Long Term Base – 2017 Chart Looks Good

OWNx Team Gold & Silver Market, Money & Financial Technology, Retirement Planning

As we’ve looked at the gold and silver markets over the past year, we’re encouraged that our view of the metals carving out a long-term base since the end of 2015 is the correct one. The 2017 chart looks especially encouraging.

It has made a series of higher highs and higher lows since December of 2016. This is the kind of price action one can expect after a multi-year decline, as it builds a base for the next multi-year climb. For the smart, patient investor, gold and silver are poised to do well over the next several years.

It’s tempting to chase the broader markets as they reach new highs. One only has to look back to 2007 and 1999 to see that such a strategy doesn’t normally pay off well. There are times to enter markets, and there are times to hold. There are also times to stay on the sidelines.

If you’ve participated in the broader market rally over the last 18 months, that’s great. Prominent investors, such as bond fund manager Bill Gross, offer a word of caution here. In a recent article, he stated that he sees the stock market risk at a level not seen since 2008:“Instead of buying low and selling high, you’re buying high and crossing your fingers.”

Then there are the crypto-currencies,which have been getting a lot of media attention recently. Ethereum and Bitcoin have been on a tear over the last few months. Beware of chasing hockey stick charts, however, as they generally do not end well.

As thinly traded as crypto markets are, sudden price movements are common. Sometimes even extreme movements develop, such as this week on one exchange when the price of Ethereum crashed from $320 to 10 cents before recovering to $296 later that day. This follows a drop from the all-time high price of nearly $400 just last week.

Gold and silver play a very important role in today’s world. They offer a 5000-year history of long-term protection when currencies and markets become volatile. There’s no question that we’re in a window of time where that is happening. Continuing to allocate a portion of your savings to metal seems to be a prudent choice.

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Technology Has Increased the Value of Holding Gold and Silver in an IRA

OWNx Team Money & Financial Technology, Retirement Planning

IRA accounts serve a very specific purpose – to grow and protect long-term savings and investments. With geopolitical and economic trends shifting constantly, you need immediate access to as many of your assets as you possibly can in order to keep up with the changing landscape.

Many people hold assets such as real estate and private equity in their self-directed IRAs. The nature of the processes required to transact in those assets makes them relatively illiquid. It takes time to sell real estate and ownership in private companies. This limits their utility value to being strictly long-term, buy-and-hold investments, which in turn limits who will choose to hold those investments in their IRA.

With a world in rapid transition, holding what were previously believed to be stable, yet illiquid assets, may actually increase risk. You don’t have to go back very far to remember what happened with real estate between 2006 and 2010. It’s likely many people holding real estate in their self-directed IRA would have chosen to liquidate some and rebalance their portfolio if they’d had the opportunity.

Until recently, gold and silver have faced a similar problem. They are viewed as a desired asset to stabilize investment portfolios and provide protection against market volatility. However, the process to move them in and out of self-directed IRAs required a time commitment from the investor, and regularly took two weeks or longer to complete. Illiquidity limited their utility value.

Now that’s changed.

Financial technology is being developed to make access to a wide variety of assets much more simple and streamlined, thus making those assets much more valuable to a wider range of investors.

OWNx has integrated its popular gold and silver savings and trading platform with well- respected IRA custodians. Doing so has drastically decreased the time and hassle required to set up your accounts. However much more importantly, you now have 24×7 access to buy and sell your IRA gold and silver, enabling you to immediately react to changing market conditions. This level of liquidity is unprecedented in the world of precious metals self-directed IRAs.

So, is holding gold and silver in an IRA a good idea? Now that you can have full control over your assets, the answer might just be a resounding “yes.”

Learn more about our smart, simple, and safe self-directed IRA.

If you have any questions, give us a call at 888-519-1213.

 

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