Federal Reserve Raises Interest Rates – No Better Time to Invest in Commodities

gold bars - the commodity of choiceMarket investors have reveled in low interest rates for years now, but it seems the good times for bonds and stocks are about to come to an end. The announcement from the Federal Reserve to raise interest rates several times in 2016 will undoubtedly spark a negative reaction for treasury bonds. So where can investors turn when the value of bonds begin to drop and capital prices start going up?

One obvious option would be commodities, or commodity exchange-traded funds. Higher interest rates generally reduce market price of physical commodities since producers tend to want to extract and sell their supply sooner rather than later. Companies are not keen on letting their inventories gather dust while customers are in a purchasing mood. Look at oil and precious metals to get a good idea how commodity markets respond to rate hikes. While it’s true that speculators also tend to shift out of commodity contracts, the increased appreciation of domestic equity will naturally lower the price of traded commodities with a global demand.

The general consensus is that a raise in interest rates will lower commodity prices, but at what rate? Will we witness another surge of commodity sales on the markets, akin to what we saw thirty years ago?

Maybe, maybe not.

a host of investment strategies

It’s a sixty-four dollar question, because quite a lot has changed since the 1980’s. With the economies in India and China closing in on the United States, and with a host of other markets seeing a rise in their respective middle classes, economic conditions in the U.S. is as much dependent on international developments as domestic. You also have to factor in the artificially inflated environment that years of low interest rates have created, along with a growing national debt that shows no signs of slowing down any time soon. Many currently consider the U.S. economy as weak and vulnerable, making it uncertain whether higher rates will truly strengthen the dollar. The Fed’s decision to boost interest rates was a necessary move, but it might not be enough to put the economy back on track. If the dollar remains weakened, even after a series of adjustments, commodities such as gold and precious metals would undoubtedly emerge victorious.

A prudent move would be to invest in commodities as soon as the market reactions to the rate corrections start to show, together with a portfolio diversification in commodity ETF’s. This would provide you with a healthy supply of physical assets along with company equity in related market sectors. For instance, if the economy tanks as a consequence of insufficient financial policy reform, your rare commodities will see an exponential increase in global demand and price. However, if the Fed’s move is a complete success and commodity prices go down, your investment in ETF’s are less likely to see a volatile shift in capital appreciation, as they are less sensitive to short-term price fluctuations.

commodity investment chart

Whether you’re an convinced optimist or intrinsic pessimist in terms of future economic developments, rare commodities represent a relatively safe haven for your money. Combined with similar investments to give you the same benefits and flexibility as other financial areas, you can diversify your funds according to personal preference.…

Gold Bars for Sale: Insure your Wealth and Generate Growing Profits with a Single Investment

gold bars in a chestGold bars for sale have recently become the hottest investment on the market – once again. The Chinese stock market has been slowing down significantly in the past months, mainly due to government regulations. This has created a financial void in the far East, forcing investors to flee to the Western markets. The US markets are still in recovery from the last big crisis and are predicted to slow in growth this year.

Conditions of the global economy are changing fast, financial forecasts are uncertain, and people are worried. It’s in times like these that the popularity of hard assets typically increase. Gold bars for sale, like most precious metals, represent the kind of investments that have a built-in resistance to trends of unpredictable market shifts. Gold is the calm water in an otherwise storming sea, which is why investors like to diversify their bets in gold bars for sale in a slowing economy. By opening up a precious metals investment account through sites like www.brightgoldenfuture.com, anyone can find gold bars for sale as a way to protect their funds from the next market crash. Purchasing gold bars will both secure your wealth and increase your funds over time. Because gold bars are regarded as a base of economic stability, their capital appreciation keeps growing over time. In the event of a financial recession, the spot price of gold tends to go up as investors abandon their paper assets for more tangible products.

gold bar in hand

Keep in mind that gold is not a short-term investment, meaning it’s not for those looking to make an easy buck fast. Rather think of it as a purchase that will ensure that you have a healthy fund to live from when the time comes for you to retire. For this purpose, the best option is to setup a precious metals IRA (individual retirement account) backed by real gold bars. By signing up with a independently rated gold provider through the website listed above, you have the option of choosing gold bars for sale, either for direct home shipment or kept in a gold IRA. After buying your gold bars, your provider will keep them stored under your name in one of their secure storage facilities. When you apply for a gold IRA, a self-directed IRA will be created. This allows for a wider range of investments than your typical IRA and can include anything from traditional stocks and bonds to rare commodities. If you already have a retirement savings account in place, your gold bar provider will deal directly with your current custodian to transfer your funds into precious metals.

Some market analysts claim that the US economy is in good shape and is only going to grow stronger over the next years. It’s a commendable effort to instill some much needed trust in a system that has already suffered catastrophic failure. But none of them can ignore the fact that the Federal Reserve is currently flooding the market with liquidity in order to stimulate growth and might have to resort to yet another quantitative easing program if we continue to miss the annual GDP predictions. It’s a slippery slope and lots of things can go south in the process.

Germany is a good example of what can happen when you keep printing paper currency without any real value to back it up. The US has abandoned the gold standard and the dollar is supported by nothing but past performance and good faith. Hyperinflation is a very real issue and we might see it rear its ugly face once more if the markets don’t begin to stabilize.

gold bars in secure storage

Investing in gold bars for sale will see your funds protected in toppling top-heavy economic conditions. We’re all intimately connected to the global economy and what happens in one part of the world will inevitably affect us all. As more countries like China and India and their central banks start switching over to physical assets such as gold, its global market value will rise. This makes it only a matter of time before it also starts influencing spot prices in the US and Europe.

Gold bars for sale is wealth insurance. The many uses and the historical desirability of gold more or less guarantees its everlasting value in any country, at any time. Placing your money in gold is a good way to hedge your bets in politically unstable and financially volatile times, making sure that you can keep enjoying the good life even if things take a turn for the worse.

huge gold bar for sale

Don’t Buy the Hype: The New Risky Product for Financial Investors

risky investmentRemember when the economy tanked a few years back? The financial crisis of 2008, also known as The Great Recession, is the worst economic disaster in our time. What started as an artificially inflated housing market ended up nearly bringing down the entire global financial system, causing trillions of dollars in damage in the form of lost business revenue, job opportunities, stock value and pension funds.

Just how did a bunch of greedy banksters manage to topple the American economy, and why is it so important that we learn from their mistake?

The big crash of 2008 began in the real estate niche, a sector that is said to be the backbone of the modern world. The banks had already discovered how much money could be made from real estate investments, or more precisely, mortgage-backed securities. As this business venture continued to expand at a rapidly increasing rate, the banks started pooling more and more loans into their MBS. These loans were backed by physical real estate (homes) and were sold to private investors as well as other financial institutions and investment firms. To further grow their monthly income, the banks also began selling off the MBS through CDO’s (collateralized debt obligations). What they didn’t tell their investors was that these assets were often completely worthless, as they were propped up by subprime loans, i.e. unreliable income streams due to subpar credit conditions and adjustable interest rates.

money out the window

As the housing market continued to balloon like the bad guy from Big Trouble in Little China, the investors started to become anxious that the market was overvalued (which it was) and would eventually pop just like in the movie. To mitigate the risk involved, these investors approached third-party financial institutions to setup bets against their own CDO’s, should they fail. These were called credit default swaps (CDS) and were put in place to hedge their bets.

Think of hedging a bet through a CDS like buying stocks in a company while making a bet with a friend that these stocks will drop in value within 6 months. If the stock value goes up, you can sell some of them to pay your debt while still making a profit. If the stock goes down, you still win because you can collect on the bet you made with your friend.

win-win through hedged bet

You have to remember that this whole thing started during a time when the markets were booming and everyone were reaping the benefits of a growing economy. But as the banksters got more greedy, chasing ever higher returns on their investments, they started pushing CDO’s that were worth close to nothing. It couldn’t last, and it didn’t. In 2007, the bottom fell out of the housing market and the value of mortgage-backed securities plummeted. Many smaller investment firms went down with the sinking ship, while the big boys on the block had to be bailed out by the federal government to prevent a complete collapse of the American financial markets.

Now, with the economy on the rise again after nearly a decade of painful restraints, the banks are apparently doing a rerun of their last venture. The Fed is doing everything in its power to keep interest rates down in order to stimulate economic growth. This means the yield off bonds becomes lesser, eating into the profit margins of the financial institutions. Their solution? The bespoke tranche opportunity (BTO). Just like collateralized debt obligations and credit default swaps, a BTO lets an investor bet on the outcome of bonds, loans and security assets. You get the bank to make a derivative bet on your behalf through a customized package focused on a single and very specific investment product or strategy.

It’s the housing market all over again. Why would the banks behave like this after what happened last time? The answer is as simple as it is tragic. Not only did they make billions of dollars before the market crashed, but they also managed to avoid any severe consequences of their debacle. The taxpayers had to pick up the bill and nobody went to jail. An eventual financial penalty is apparently a small price to pay when you have the opportunity to resume the gamble of structured bet distribution. The big investment banks weren’t punished for their unethical practices and shady products – they were rewarded for them.

bankers shenanigans

Ever since the Glass-Steagall Act was repealed in the late 90’s, the banks have run amok across the American market. They’ve grown into behemoths too big to fail and they know it. To put a stop to this dangerous behavior, the government needs to step in and apply firm regulations. Until then, us private investors can use our power of purchase and stay clear of anything that resembles a subprime CDO or a BTO.

It’s just not worth the risk. There are plenty of other fish in the sea – ones that don’t smell funny nor leave an all-too bitter aftertaste.…

Invest in a Luxury Brand: Let Your Instincts Guide You

credit cardsA good investment can see your money stack up as if it was literally growing on trees. Combining business with personal interest and investing in an exclusive brand of your choice can both be financially rewarding and loads of fun. Take Marie, one of our assistant managers who just recently purchased shares in Gucci and a vintage case of Domaine Georges & Christophe Roumier Musigny Grand Cru, Cote des Nuits. The reason is simple: she loves handbags and expensive wine. She also believes in the future value of these brands and expect to make a healthy profit off her investment.

When investing in a luxury label based on personal taste, you always need to make an assessment of financial risk versus reward. This may seem obvious, but economic analysis all too often ends up playing second fiddle by far to the passionate investor. Some don’t even consider financial gain a priority at all.

expensive wine bottles

So you’re all about that little gourmet shop somewhere in the Andalusian hills that you and your fiancée visited last year, and you want to invest in their operations. Only, it turns out that they’re on the brink of bankruptcy and are about to lose their lease. Not a prudent investment, no matter how good their cheese is, wouldn’t you say? Or, how about those picturesque, hand-crafted dolls you saw some women making in Peru? Just because you would pay x amount of dollars for one, doesn’t mean the next person will. What if you ended up buying the whole lot, only to realize nobody at home gives one iota about little Peruvian handmade dolls? Going purely by your passion is not investing, it’s called collecting, and will mostly see you at a net loss.

luxury handbags

Measuring the probable success of certain brands can be a bit tricky, as the rate mostly relies on the intangible factor. Brand equity in the luxury industry goes beyond standard conditions such as product and service quality, making it a bit tricky to determine the most favorable option. How did Versace rise above other competitors? It wasn’t because their products are infinitely better, but because they managed to create an image that appeals to their targeted customers. The popularity of these brands is dependent on trends and emotions. They can be irrational and often unpredictable. Just because something is the hottest thing today, doesn’t guarantee its longevity as the hype can fade away by tomorrow.

Think of luxury investments like being out at sea on a yacht cruise. Even though the sun is blazing and there’s no wind, you know that the weather can turn on a dime, resulting in a sudden storm. That doesn’t mean you can’t have a good time while the weather is good, right? Even better, a little planning ahead will minimize the risk of you getting your new outfit soaked and ruined.

The best you can do is finding a respected luxury brand that’s already well established and speaks to your interests, while at the same time producing healthy profit margins and a good promise of return on your investment. As an investor, ask yourself, is this particular brand compatible with your chosen lifestyle and the image you wish to project in public? What is the major appeal, i.e. what does this brand stand for in your eyes. Not as an investor, but as a client. If you’re reluctant to find that personal attraction, you’re not in it for the right reasons and would be better off going with a more traditional investment.

golden doors opening

Life is about so much more than just money, after all. Luxury investments are not made solely for financial reasons. They speak to your very soul, as well as your checkbook. By focusing on this stellar combination of passion and wealth, you gain access to the upper tier of a select few. For these people, it’s as much about status and prestige as about economic opportunity. A well diversified investment portfolio of luxury brands can open up a host of previously closed doors for your social life and reputation, something that shouldn’t be overlooked.…