In this article we discuss different gold investment companies and provide our gold price forecast for 2021 and beyond. We’ll also look at why gold may be a solid addition to your investment portfolio based on political and economic changes today.
Gold Investment Companies to Watch
Many Investors Believe that Gold Investment Companies Will Perform Well in the Future
The gold mine stock industry has been overlooked for many years. Moreover, precious metals have been unpopular and considered irrelevant. Since the 1990s, investors have been advising others to invest in stocks for pensions and 401(k) investments. In short, this advice was largely correct. As a result, Wall Street has hit all-time price levels in the past 20+ years. However, things may have shifted in 2020. Consequently, could this be the time to invest in gold investment companies?
Millionaire investor Doug Casey has been a proponent of owning gold investment companies for decades. In fact, he has been investing in gold mines for most of his life. During a recent interview, Casey discussed the political turmoil happening in the United States and rising gold prices.
“Look, there are quality small gold-mining companies run by really good, serially successful people that are geologists and mining engineers. That’s the kind of stuff you should buy. Buying major miners like Newmont and Barrick would also be profitable. But better to buy the next tier down — smaller, leveraged, growing. When these smaller gold stocks run, they can go 10 to 1 easily; some of them go 100 to 1. I’ve personally owned gold stocks that have gone 1,000 to 1… within just one gold cycle. So, this is the place to be, assuming I’m right about gold. I think I am.” -Doug Casey, The International Man
Accordingly, here are some gold investment companies that may be worth considering:
Barrick Gold (GOLD)
One of the world’s largest gold mining companies, Barrick mines gold and copper. They operate in 13 countries. Barrick has been popular lately because of its ability to generate a cash flow resulting from mining.
Warren Buffet recently invested millions of dollars in Barrick Gold Stocks. It’s interesting to note that Mr. Buffet has avoided gold for many years. Apparently, he has reversed course and believes investing in gold stocks is important.
A leading gold-focused royalty and streaming company. It operates from Toronto, Canada. Founded in 2007, they provide investors with exposure to the gold investment companies while limiting risk in the investment.
SPDR Gold Trust (GLD)
An ETF that holds physical gold. SPDR is billed as a cost-effective way for investors to profit from the gold bullion market with limited exposure to risk. It has been in operation since at least 2010. The fund also provided greater liquidity than holding physical precious metals.
Newmont Mining (NEM):
One of the world’s most popular gold investment companies. It claims to have the largest gold reserves in the world. It operates in 9 countries, including the United States.
Rio Tinto (RIO)
It is one of the largest international miners, operating in 36 countries worldwide. It mines iron ore, aluminum, copper, diamonds, titanium, borates and gold.
Kirkland Lake Gold (KL)
A much smaller operator, Kirkland Lake operates in Canada and Australia. Although Kirkland Lake is smaller, it boasts having no corporate debt and holds cash on hand.
Market Bubbles Historically Destroy Markets and Smaller Investors
In 2000, Many Retirees Lost 50% of Their Investments When the Dot Com Bubble Burst
The Dot Com Bubble that began in March 2000 caused the S&P 500 Index to drop almost 50%. This bubble bursting lasted until 2007. That means that if you were planning to retire in 2000, and many of your investments were locked into a Wall Street 401(k) that fell 50%, you couldn’t retire. Many people at this time were forced to return to work because they couldn’t afford to retire.
Currently, Wall Street stock prices are at record-breaking levels. Prices are high, interest rates are low, and everyone is cheering the mania. The question is whether markets are overpriced in a bubble.
Current Economic Crisis in the United States
According to Experian data, consumer debt has grown to around $14 Trillion in 2019. Debt for Americans has been increasing steadily since at least 2009. This debt includes things like credit cards, home loans, vehicle loans and student loans.
In addition, Americans are struggling financially right now because of COVID-19 shutdowns. Many people live paycheck-to-paycheck and have no savings. As a result, a sudden loss of employment caused them to face economic ruin or bankruptcy. Unemployment rates are estimated to be around 10-20%. This is the highest unemployment rate seen in decades.
Debt, Mortgages and Home Foreclosures in the United States
- Total Debt to GDP for the United states is over 150%
- The Federal Reserve currently owns approximately 30% of all mortgages in the U.S. today (over $2 Trillion)
- US National Debt is now over $26 Trillion
- Home foreclosures are beginning to increase
Alarming Trends at the Federal Reserve and Debt-to-GDP Ratio
Two alarming trends are that the debt to GDP ratio is at 150% and that the Federal Reserve Bank owns 30% of US mortgage securities. First, most experts agree that when the debt-to-GDP ratio climbs higher than 100%, you are in the economic danger zone. Historically, high debt-to-GDP ratios have ended badly.
Unfortunately, this is bad news for the United States economy. As a result, people’s investments and retirements could be badly damaged. So, what does an investor do to minimize risk and survive the upcoming economic depression? Let’s look at gold.
Gold Has a Limited Supply and Growing Demand
The Supply of Gold Is Finite; Demand for Gold Includes Industry, Jewelry and Money
There is a limited supply of gold on Earth. Moreover, gold miners throughout the world have a finite quantity of gold available for mining. At some point, the amount of gold removed from mines will diminish and become zero.
At the same time, gold demand continues to grow. For instance, gold has many uses in technology, jewelry, medicine and money. Jewelry made of gold has been popular for millennia. In addition, gold continues to grow in demand and popularity, especially in Asia. In fact, 70-80% of gold mined today goes to create jewelry.
Also, there are many industrial uses for gold including electronics, aerospace and medicine. For example, gold is a very efficient conductor of electricity. This property is utilized in many electronic components such as cell phones and computers. In addition, gold is a superior element to work with in dentistry. More important, gold is non-reactive, malleable and has anti-bacterial properties.
Finally, gold coins remain in demand all over the world. Coins made of gold have been used for hundreds or thousands of years. They are easily recognizable and highly desirable. More importantly, gold coins have withstood the test of time and continue to be sought after in the 21st century. Real money is sound money. Obviously, gold is real, sound money. Clearly, gold investment companies can be a great addition to an investment portfolio.
Five Reasons to Buy Gold:
- Gold is a store of value. National currencies (even the U.S. Dollar) come and go. But Gold has been around for thousands of years as real money.
- It is a liquid asset. Gold (and other metals) can be easily bought and sold in most large cities around the world. It can be exchanged for most currencies this way.
- Gold is a tangible asset. You can hold gold coins in your hand or put them in your safe. No waiting for the bank to open to get them. No worrying about destruction by fire or a hacker.
- It is a hedge against inflation. Gold tends to thrive during a crisis. Investors tend to jump into gold when stocks go lower.
- Gold is private. No other asset offers privacy like a gold coin. A transaction in gold between you and another person is truly a private affair.
Gold in Your Portfolio
It is common to hold anywhere from 5-10% of an investment portfolio in gold investment companies. In fact, there are some international investment portfolios known to hold as much as 30% of assets in both physical gold and gold investment companies.
History of Gold
The use of gold as a commodity and as money dates back at least 4,000-6,000 years. Approximately 4,500 years ago, the Mesopotamians made jewelry from gold. However, it’s believed that gold was being used even prior to this era. For example, gold was used as a construction material to decorate walls, burial sites and masks of cultures such as the Egyptians, the Greeks and the Romans.
Gold for Trading and Exchange
It is believed that around 1,500 B.C. in Egypt, gold was being used as the official currency of exchange for merchants and traders. Shortly thereafter, gold took its place as the primary trading currency throughout the world. Mining for gold became a major industry world-wide. Coins made of gold were produced and distributed throughout Europe and Asia.
Gold Standard Dollars
Fast forward to the year 1792. The United States passed the Coinage Act which dictates that silver and gold will be used as the standard for valuing currency. The Act defined the U.S. Dollar as equivalent to 24.75 grams of gold and 371.25 grams of silver. The paper currency printed in the United States was officially backed and redeemable in silver and gold.
Later, in 1968, U.S. Currency was no longer backed by gold. Then in 1971, the U.S. Dollar is devalued in price and the program of conversion of dollars back to gold was terminated. In other words, U.S. Dollars were no longer backed by gold.
The Beauty and Utility of Gold
Shiny gold coins and jewelry have been considered beautiful for centuries. Women and men have donned gold jewelry for as long as we have kept track of history. From a physical perspective, gold is malleable and easily altered to make jewelry, coins or even thin sheets. Scientifically, gold is non-reactive and non-corrosive, both of which are highly desirable characteristics. Gold is even safe to use in the human body. For example, dentists have used gold for years to repair teeth.
How to Buy Gold
Buy Gold as Physical Coins/Bars or Gold investment companies
Investing in gold has never been easier. Gold merchants and brokerage firms are competing for your business online. If you want to purchase physical gold, you can do this at your local coin shop.
Another option for purchasing gold is buying online. Buying from a website has become more secure in recent years, but you must do diligent research to verify the buyer. Only buy from established suppliers that have been around for a long time and have positive feedback. Preferably you can get a recommendation from a friend.
Finally, buying gold stocks is just as easy as buying stock in GM or Amazon. Many online brokerage firms offer the ability to buy these shares for a reasonable fee.
Future of Gold and Gold Investment Companies
Unemployment, Debt, 0% Interest and Fed Money Printing Drive Gold Prices Higher
We at Piggy Bank Coins believe that gold (and silver) and gold investment companies have a bright future. Holding a real money asset such as gold and gold investment companies will always be highly regarded by investors. In addition, having gold in your investment portfolio is considered by many to be a safe and secure option. It’s important to grow your wealth while minimizing risk. Specifically, gold is a real, tangible money that can be a store of wealth for a lifetime.
We believe the gold price forecast indicates that demand will continue to grow and that investors should continue to hold gold and silver. With the political and economic instability created in the United States, gold prices will likely increase. For instance, investors will continue to move toward safe harbors. Make no mistake, gold is the safe harbor.
Second, since 1944 the US Dollar has operated as the world reserve currency. However, the US economy appears to be faltering with high unemployment, high national debt, near-zero percent interest rates and inflation from Federal Reserve money printing. As a result, investors will be looking for something safe to hold on to, and precious metals may be that rock.
The Gold Price Forecast Predictions
Four Gold Price Predictions: $2,300, $3,000-$8,000, $15,000 and $26,000.
Goldman Sachs raised its gold price forecast in July 2020. The investing firm believes that gold will hit $2,300 per ounce as investors flee other falling price investments such as real estate.
According to Jeff Clark, Senior Analyst at GoldSilver gold has a 95% likelihood of going higher in 2021. In addition, he is predicting $3,000-$8,000 gold in the next 5 years.
In an interview with Kitco News in mid-2020, Investor Jim Rickards predicts that gold will rise to $15,000 per ounce before 2025. He bases his prediction on inflationary forces.
In the same interview with Jim Rickards, Investor Peter Schiff predicted gold will rise as high as $26,000 per ounce. He bases his prediction on extrapolating DOW Jones trading values in relation to gold in 1932 and currently.
Learn More about Gold and Silver
Get a copy of the “Free Gold and Silver Buyer’s Guide” today. It’s free and has some great information in it about investing.
If you want to learn about the history of money, check out Mike Maloney’s free “Hidden Secrets of Money” video series. It’s a gold mine of information that can help you better understand money and where the world stands today financially. Highly recommended!
Disclaimer: It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.
In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, in order to help you make the best choice for you.