The Best Way to Lose Money on Gold

In any election there’s going to be a sizable contingent that isn’t happy with the result. In the heat of the moment, some vocal losers may make some strong proclamations – in 2004 it was Democrats planning to move to Canada, this time around it’s Republicans petitioning the White House for the right to secede. In the end, it’s just a way of voicing disapproval, but it’s not like most people are actually going to follow through on the promises they make in the throes of political frustration.

But there’s at least one response to the election that is having a real impact: changing investment behavior. Those who fear the market will suffer under President Obama’s 2nd term are aiming to diversify their financial exposure away from equities. In general, diversification is a great idea, and this could very well turn out to be a prescient move – we don’t know anyone with a crystal ball who can say for sure. But what we can say is that many are going about it one of the worst ways we can imagine. Via CNBC:

Demand for gold coins in the US has soared since the presidential election, as small investors fret about the lack of action to address America’s ballooning debt.

The US Mint’s sales of American Eagles, one of the most popular gold coins, leapt 131 percent in November, hitting their highest level in more than two years. The Royal Canadian Mint also had its strongest month of sales this year.

Gold coins? Haven’t we been through this already? (The answer is yes, we certainly have)

The CNBC article does point out that coins are a relatively small part of the overall gold market, but for anyone in danger of being duped by the idea that gold coins are the best way to gain exposure to the yellow metal, we urge you to reconsider. There are some extremely shady dealers out there (Goldline, for one, but they’re certainly not alone). The peddlers of gold coins are notorious for bait-and-switch sales practices, and in our opinion, collecting gold coins should fall into the same category as collecting stamps or baseball cards: don’t bet your livelihood on it.

Even if you’re not getting ripped off by an unscrupulous dealer, why pay the markup on coins instead of just buying bullion? Diversification is great, and there’s nothing wrong with buying gold, but when you’re taking as much as a 40% haircut on your investment up front… This is one bit of election-driven nonsense we could do without.

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, RCM's own estimates of performance based on account managed by advisors on its books, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.