BEVERLY HILLS, Calif. -- (Business Wire)
Lisa Detanna, Managing Director, Senior Vice President, Investments,
the Global
Wealth Solutions Group of Raymond Jamesand theHandler
Investment Consulting Group of Raymond James discusses gold as an
investment.
Lisa Detanna, Managing Director, Senior Vice President, Investments, the Global Wealth Solutions Group of Raymond James (Photo: Business Wire)
Current economic concerns globally, and continued geopolitical issues
have peaked an interest in gold. The violence and issues in the Middle
East, Russia and the Ukraine, and a slowing economy in China, have given
some investors jitters. Historically, gold has been an alternative when
concerns like this arise. Global unrest is one factor that has advanced
the price of gold over 9% YTD 2014 and up 3% for the 2nd quarter. On
August 31, 2014 gold closed at $1,285 an ounce.
Spot prices, or actual gold prices peaked to almost $1,900 an ounce in
August of 2011 and then dropped to $1,200 from 2011 to 2013 and now over
the last 6 months we have seen rising prices.
In the US we are starting to see signs of inflation beginning to creep
into the economic data, which has been a historical rationale to add
gold into an asset allocation. For the past few years the Federal
Reserve has pumped a lot of stimulus into the system and now the
bond buying program is slowing with an end in sight. When gold prices
fell dramatically people were looking for inflation in our economy but
it didn’t happen until this June when we saw a slight bump in the
numbers. We believe the Fed is targeting a 2% inflation rate, but it
also indicated that it is in no hurry to raise rates until sometime in
2015, depending on the economic data.
Gold tends to trade within a range, and can react quite dramatically to
various macro events while still displaying general seasonality trends,
we believe investors that trade and are more aggressive can use this
volatility to their advantage – adding to positions in higher-quality
core names that are temporarily depressed on the back of broader market
sell-offs, and lightening up on positions as they outperform, trading
near highs. There are a few ways to invest in gold. Buying the gold
itself can be cumbersome and difficult to store. Investors can buy
stocks that mine gold, or have exposure to gold by utilizing other
diversified investment vehicles.
Gold stocks are a way to invest in the gold mining companies. If you do
not wish to buy gold directly you can buy the underlying companies that
mine gold. Some gold stocks pay dividends which mean you get income from
these investments. When you sell the stock you will have a (short or
long depending on your time held in the investment) capital gain or
loss, depending upon whether the stock price rises or falls and your tax
bracket. The miners (gold stocks) fell dramatically when they expanded
when gold was at its high and assumptions for expansion were made at
those high prices. When the growth in the companies did not occur the
companies took a beating. Miners had to cut capacity, cut expenses and
shut down unproductive and unprofitable mines and the higher quality
names with lower price of production is where our team would focus on to
reduce risk. Investors will continue to place a growing emphasis on
those companies and management teams best positioned to achieve solid,
steady predictable operations, with profitable growth. For a list of our
recommendations please go to the Raymond
James corporate research website.
Our team, the Global Wealth Solutions Group of Raymond James and The Handler
Investment Consulting Group of Raymond James recommends that
investors use a diversified approach that is unbiased, with open
architecture construction and professional management at reasonable
costs. Currently, depending upon the client risk tolerance and
investments objectives, we do have an allocation to this alternative
space. For investors that want exposure to commodities, or natural
resources, rather than purchasing the commodities or gold itself; our
team looks for investments that have a diversified approach to this
sector and can be interchanged as needed with the economy’s ebbs and
flows.
Disclosures:
Views expressed are the current option of the author, but not
necessarily those of Raymond James & Associates. The author’s opinions
are subject to change without notice.
The price of gold has been subject to dramatic price movements over
short periods of time and may be affected by elements such as currency
devaluations or revaluations, economic conditions within an individual
country, trade imbalances, or trade or currency restrictions between
countries. As a result, the market prices of securities of companies
mining or processing gold may also be affected.
Gold is subject to the special risks associated with investing in
precious metals, including but not limited to: price may be subject to
wide fluctuation; the market is relatively limited; the sources are
concentrated in countries that have potential for instability; and the
market is unregulated.
International investing involves additional risks such as currency
fluctuations, differing financial accounting standards, and possible
political and economic instability. These risks are greater in emerging
markets. Companies engaged in business related to a specific sector are
subject to fierce competition and their products and services may be
subject to rapid obsolescence. There are additional risks associated
with investing in an individual sector, including limited
diversification.
Diversification and strategic asset
allocation do not ensure a profit or protect against a loss.
Investments are subject to market risk, including possible loss of
principal. The process of rebalancing may carry tax consequences. No
investment strategy can guarantee success.
Dividends are not guaranteed and must be authorized by the company's
board of directors. Statements of forecast are for informational
purposes only and are not guaranteed to occur.
Information provided is intended to be general in nature, is not a
complete statement of all information necessary for making an investment
decision, and is not a recommendation or a solicitation to buy or sell
any security. Investments and strategies mentioned may not be suitable
for all investors. Past performance may not be indicative of future
results. Changes in tax laws may occur at any time and could have a
substantial impact upon each person's situation. While we are familiar
with the tax provisions of the issues presented herein, as Financial
Advisors of Raymond James & Associates we are not qualified to render
advice on tax or legal matters. Please consult a qualified professional
to discuss these matters. Raymond James & Associates, Inc. member New
York Stock Exchange/SIPC.
Contact Lisa
Detanna at 310.285.4506 for further information. The Global Wealth
Solutions Group of Beverly Hills is located at 9595 Wilshire Blvd.,
Suite 300, Beverly Hills, CA 90210
About Raymond James Financial, Inc.
Raymond James Financial, Inc. (NYSE: RJF) is a leading diversified
financial services company providing private client group, capital
markets, asset management, banking, and other services to individuals,
corporations, and municipalities. Its three principal wholly owned
broker-dealers, Raymond James & Associates, Raymond James Financial
Services, and Raymond James Ltd., have approximately 6,200 financial
advisors serving in excess of 2.5 million client accounts in
approximately 2,500 locations throughout the United States, Canada and
overseas. Total client assets are approximately $473 billion. Public
since 1983, the firm has been listed on the New York Stock Exchange
since 1986 under the symbol RJF. Additional information is available at www.raymondjames.com.
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Contacts:
Raymond James Financial, Inc.
Courtney Kershaw, 310-285-4506
Courtney.Kershaw@Raymondjames.com
Source: Raymond James Financial, Inc.
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