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Everything You Need to Know About Gold - YouTube
Channel: Bloomberg Quicktake: Originals
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Thanks to market volatility,
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societal strife at home and abroad,
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many people are turning
to an age old investment
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that's supposedly rock solid.
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That's right.
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Gold.
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Now, you may have seen an ad like this,
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one or a thousand times, on cable TV.
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That's why I'm gonna do two things.
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Support our military and buy
gold from Rosland Capital.
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You need to protect
yourself in today's economy.
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When people start talking to you
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about the advantages of buying gold,
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you might rightfully suspect
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that they're trying to sell you some gold,
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but what we're really here to find out is,
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is gold a good investment
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and should I buy it off an ad on TV?
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To tell the whole story of
gold, we gotta go way back.
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Humanity's love affair with
gold dates back many millennia
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and is unique in its
globe spanning popularity.
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Both the Inca and Egyptian empires,
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two societies that never
knew about each other,
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believed it to be from the
bodies of the gods themselves.
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But for most of its history,
up until very recently,
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there was no concept of gold
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as something with a fluctuating price,
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or an investment.
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Gold didn't cost money,
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it was money.
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Then something changed.
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Well, even now gold, a
lot of people would say,
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doesn't have any return.
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There is no interest paid on gold.
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There's no coupon, there's no dividend.
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In a sense it has a return
in that the price can go up,
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but the price can go down as well.
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But through most of history,
that was not the case.
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It was an asset with no risk.
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It was exchanged at a fixed
price to the currency.
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So there was no risk in that asset,
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but there was no return either.
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And that's the historic
reason for investing in gold
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up until the 1970s,
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when of course Richard
Nixon takes the U.S. dollar
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off the gold standard,
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gold overnight goes from $35
to many times that amount,
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but the capital gain that you got on gold,
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if you'd bought it in
1972 and held to 1980
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was one of the great rallies in history.
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But if you think about what's
changed to the previous thing,
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previously it was a instrument
with no risk and no return.
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Now it's got a stupendous return,
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but it's also got a substantial risk,
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because if you then bought it in 1980,
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the price slid through the eighties
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and continued to slide
and slide and slide,
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until I think it was under $500 an ounce.
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So should people be investing in gold?
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One good reason why you
probably do want to hold
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a little bit of gold in your portfolio,
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which is that it behaves differently
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to everything else that
you've got, pretty much.
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If the stock market crashes,
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when people sell their stocks
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and squeeze out of that,
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some that will go into cash,
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but some of it will go into gold,
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and you only need a very small amount
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of that investment to push into gold
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to really push the price
up quite substantially.
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And how much gold should one person have?
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A lot of investment
advisors would say that
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you should have gold
at about, say 2% or so,
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of your overall portfolio.
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All right.
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I wanna buy some gold.
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How do I do it easily?
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My personal advice would be then,
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you may as well just
go the simplest method
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and trust that it'll prove okay,
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and at the moment, I would
say that's probably an ETF.
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ETFs, like the SPDR Gold Trust,
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ticker symbol GLD, offers shares backed
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by physical gold bars in
bank vaults around the world,
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and those shares trade just like stocks.
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Now I could invest in an
ETF that goes up or down
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with the price of gold,
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but heck gold looks cool.
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I wanna hold it in my hand.
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What's the easiest way for
someone to buy physical gold?
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If you're in the United States,
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the easiest way for most investors
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to get into physical gold,
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that means owning a piece of gold,
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is to buy gold bullion coins.
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What many Americans might not be aware of
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is the United States Government in 1986,
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authorized the Mint to start making
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American gold bullion coins,
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and I have a sample here.
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So this is what it looks like.
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Let me bring it up to the camera.
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It's a little bright, there it is.
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So, this is a one ounce gold coin.
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It's called the American Eagle Gold.
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It is the most popular gold
bullion coin in the world,
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outstripping the Krugerrand.
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The Mint doesn't have the ability
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to create a two-way market.
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So, what they end up
doing, is they sell it
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to a group of, what we
call authorized purchasers,
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which guarantee to buy the gold back
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if you wanna sell it back
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at whatever the market price is.
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So, all you have to do is
go right to the Mint website
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and it'll list the authorized purchasers.
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And those authorized purchasers
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not only sell that
directly to individuals,
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but they also sell it as a
wholesaler to other retailers.
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It should be mentioned that the U.S. Mint
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isn't the only name in the game
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when it comes to gold coins.
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Mints around the world offer coins
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for investment or collection.
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But before I finish up with Ed,
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I had to ask one question,
"What does Fort Knox look like?"
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I could tell you, but I'd
have to kill you Henry.
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You can't talk gold
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without talking about Fort Knox.
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The United States bullion depository
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is the single largest
gold vault in the world,
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and it hasn't been open
to the media since 1974.
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Here, they do a routine job routinely,
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and what glamor there is comes
from what they're guarding,
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a vast amount of gold.
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Inside its walls
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sit more than 147 million ounces of gold.
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There's a lot of gold at Fort Knox.
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You have never seen as much
gold as there is in Fort Knox,
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'cause the United States has
the largest gold reserves
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in the world, by a factor of three.
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It's incredible to be
around that much gold
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in such a small space.
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Take a look at YouTube
and you'll see no shortage
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of collectors, or as they
call themselves, stackers,
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who keep their precious metals on site.
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Why do they do it?
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I talked with the owner of the
account Silver Bean Counter,
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to find out.
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He wasn't willing to show his face,
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but you'd probably value your privacy too
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if you had tens of thousands of dollars
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of gold coins in your house.
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This is a 1924 American
Gold Eagle right here.
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This is a South African Krugerrand.
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Australian kangaroo, yes.
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You know, the big reasons
people purchase precious metals
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in the first place is
it's really untraceable,
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very common.
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Governments, businesses
don't know that you have it,
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so it's a good way to store
wealth in a very private way.
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I keep it all in a spreadsheet,
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so I have a running total.
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I know exactly what I spent on
something, when I bought it,
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what the spot price of the
precious metal was at the time,
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whether or not it's gold or silver,
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and then of course the
current value of it.
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I track that as well.
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Stacking is basically
purchasing of precious metals
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on a regular basis,
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whether or not you do it
weekly, with each paycheck,
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or monthly, you've got a budget
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that you set for yourself
and you just buy.
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The old stacker mentality is
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if you don't hold it, you don't own it,
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and that's why people don't like ETFs,
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or stackers don't like ETFs.
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I almost forgot.
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I never answered the
question that I asked up top.
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And should I buy it off an ad on TV?
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No.
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Just no.
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No to TV ad bullion dealers.
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I would take a look at
whoever is doing that ad
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and do research on the company first.
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Keep in mind, all that glitters isn't,
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well, you get the idea.
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