Lessons in Investing from Germany’s Repatriation Program

gold investmentLast year, Germany ordered the U.S. to return some of the latter’s gold from its New York vaults. A lot of speculation circulated because of this, and one of the most popular is that Germany is worried about a currency crisis. But whatever the reason is for Germany’s decision in requesting for some of its gold to be sent home, let’s take a look at the lessons we can learn from the issue.

Keep gold investments close to you

This is very important. Gold and the USD is inversely correlated so when the stocks are down, gold prices are up. Just because gold prices are down today due to the anticipated interest rates hike in the U.S. next year doesn’t mean that investors should remove physical gold in their portfolio. After all, people invest in the precious yellow metal in order have something to turn to in times of economic unrest, which is the very reason why Germany has gold investments in the first place.

Gold rewards investors who wait, and Germany is well aware of this as evidenced in their decision not to sell any of their gold until 2020. In 2000, the yellow metal was merely at $300 per ounce. Ten years later, gold’s price spiked to $1,300 per ounce – an increase of more than 300%.

Liquidation

Next is that you want to keep your precious yellow reserves ready for liquidation. After all, there’s no reason to have gold investments if you can’t sell it when you need to. This is the perhaps one of the main reasons why Germany wants to return some of its gold back home. If in case something bad happens to its economy, its gold reserves will be ready for disposal. With around 3,380 tons of gold, Germany would be able to sustain its own economy for at least an entire decade.

Keep some gold overseas

Despite the repatriation program, Germany never intended to return home all of its gold. The country has gold reserves kept all over the world primarily because it wants to be able to turn to something in case another country invades Germany. Thanks to the advancements of today’s investing, private investors can easily store gold overseas, too. People can distribute their gold investments in vaults located in Germany, London, U.S., Paris, etc.

Germany’s tactics to keep gold close and ready for liquidation are lessons that investors need to understand. People shouldn’t only invest in gold for immediate gains. Rather, they should also invest in it for its ability to cover assets in times of an economic slump.

Things to keep in mind while investing in gold

If you are planning to invest in gold here are some priceless tips to consider before starting off. Firstly, do not forget to shop around and research to know the market since it might cost you around thousands for a single mistake. Then, never go for numismatic gold coins as they are rare and come with high premiums.

Only buy the bullion bars and bullion coins as these are found is massive quantities and the premium here is minimal over spot price. Then, you have to compare various gold bullion items before buying as the values differs by each item.
Stay out of the fool’s gold or the gold ETFs since in this case you don’t get to own gold physically. Again, you have to diversify the physical holdings and buy various types of gold since concentrating on a single item narrows down your profit opportunities in case the market is down for your chosen item.