Goldman says go for gold. Here are 5 Things To Know Before Investing In Gold.

 

Gold investment

 

Gold investment: Goldman says go for gold; sets a target of $3,000 by next Christmas

 

In a report on business today, Goldman Sachs analysts predict that gold prices will reach new heights in 2025 due to increasing central bank demand and anticipated US interest rate reductions.

 

The investment banking firm believes that a potential second term for President Trump could positively impact gold prices, especially in light of increasing geopolitical tensions and concerns about US fiscal stability.

 

Before you decide to either invest in Gold or not , here are 5 things to know about Gold investment. 

5 Things to know before investing in Gold.

 

1.       1. Gold and the dollar sometimes have inverse relationship.

 

 The gold price and the trade- weighted US dollar can have an inverse relationship.

 

What does the trade-weighted show?

 

The trade-weighted value shows how US dollar gains or loses purchasing power against its trading partners.

 

Note, this relationship is no longer as accurate as it used to be in the  past under the gold standard.

 

2.     2.    You pay a premium when you buy a physical gold.

 

When you buy a gold coin with an ounce of fine gold from a dealer or a bank, you pay more than the gold price. The difference is called the premium.

 

3.      3.   You pay tax on collectible rates on physical gold.

 

Physical holdings in gold and other precious metals are considered as collectibles.

 

These holdings attract capital gains tax which is owed after you sell your holdings in gold.

 

This capital gains tax is is equal to your marginal tax rate up to a maximum of 28%.

 

4.    Physical gold is different from Gold stocks.

 

Gold stocks offers higher liquidity because they can easily be traded on public exchanges.  

 

But in period inflation spiral, physical gold provides more security and long-term stability.

 

Investing in either gold stocks or physical gold comes down to your risk tolerance.

 

5.    An investment in Gold does not provide consistent returns.

Why is Terry Smith not investing in Nvidia?

Stock

One would have expected one of the top fund managers in the world to be impressed by Nvidia stock that has almost tripled in 2024.

 

But this hasn’t been the case.

 

Terry Smith, UK's answer to Warren Buffett is not as positive on Nvidia Corp.’s stock as Wall street analysts are . Hes not interested.

 

What does Nvidia sell and why the surge in the value of its stock?

 

Nvidia sells computer chips, graphics processing units (GPUs) that processed data in AI software.

 

The rise of AI has led to increase in the demand for Nvidia's processors, known to be the most advanced among those available in the market.

 

Would the demand for Nvidia's processors continue to increase? Most likely?

 

So Why is Terry Smith not interested?

 

Maybe investing in Nvidia stock doesn’t align with his investment philosophy.

 

What is his investment philosophy?

 

Terry Smith has an investment philosophy that’s rooted in spotting companies with enduring business models.

 

The fund manger believes that such business model is the only way to build long term wealth.

 

Terry Smith gives two reasons why he’s not excited about Nvidia's stock.

 

His first reason in his words.

 

 

“It’s a company which has made – what people are calling in modern parts – a pivot twice in its business model, very successfully. You might say, what’s the problem? Well, because people who have to pivot in their business model sometimes get the pivot wrong.

“So, it moved from gaming chips to basically chips for digital currencies, very successfully. And then it moved from chips for digital currencies to GPUs for large language models and AI - very successfully.

 

“Jensen Huang – the founder, and the man who runs it – is clearly very clever – and they’ve done that very successfully, and all credit to them for doing that.

“However, bear in mind the following. On those two changes in the direction of what they were doing in the past, the stock went down 80% on both occasions. You’ve got to have a pretty strong stomach for that kind of stuff. And it does worry us that it’s not got the predictability that we seek in companies. One of the most important things we’re looking for is something that’s relatively predictable, and that doesn’t sound like it’s particularly predictable. Presumably at one time they may do that and it may go down 80% and it might not succeed. So that’s one thing.”

His second reason in his words.

 

“There’s only one thing more dangerous than being close to the consumer in a downturn and that’s not being close to the consumer.

“Because if you think it’s bad running a consumer products company in a downturn, when you might see a 5% to 10% downturn in demand, you can only begin to imagine what happens to people who are supplying to those consumer companies, particularly if they’re supplying capital equipment, which just goes on hold.

“They don’t have 5% to 10% downturns. They get properly strapped into the roller coaster at that point. That tends to be what happens to them. And there’s no doubt whatsoever that what Nvidia is doing is selling into a massive capital cycle. They’re building things which are going into people to put into data centres, to build models. They’re not selling direct to consumer. They’re two or three stages back from the consumer basically here.

“So, at some point, if the end demand for this falls, or even just doesn’t go up as fast as it has been going up, there’s going to be an interesting outcome.”

 

 

Why is capital gearing ratio important to business financing?

 

Business financing: Capital gearing.

This article first appeared on Ayi Post.

1. What is capital gearing?

2. Why is capital gearing ratio important to business?

3. Why is capital gearing ratio important to business financing?

Having a great business idea without a startup capital is like wandering a vast desert in search of an oasis. 

You are literally going to leap in when you see one. Then gulp down the water with all the impurities.

It’s wise to understand what capital gearing is before you decide to borrow or not to borrow to start your business.

What is capital gearing?

It’s a financial ratio that shows the amount of debt of a company to it’s equity. It’s a measure of financial risk. 

This risk increases toward volatility as the ratio of debt to equity gets higher.

The higher the gearing ratio, the more the interest payable on debt and the lower the earnings on equity. You may end up borrowing to service debt commitments.

The risk doesn’t end with sinking deeper into more debts, your control of the company could also be threatened.

Your creditors may want to teach you best ways to run your business profitably. 

This may come in the form of business partnership and so called, “business support”. In most cases, their way will not be on the same level with your vision.

Before you look to lenders for funding, have an amount of equity that would guarantee a lower capital gearing. 

Your capital gearing should be a ratio that keeps with you, the control and the freedom to be proactive and react quickly to evolving trends.

Only borrow when you’re certain you will have a positive leverage. 

That is, only when projections indicate that your earnings from the application of debt are going to be greater than interest payable on debt.

But should you even borrow to start a business? 

The answer is Yes. Debt financing is not a bad idea if you’ve sincerely mastered strategies that guarantee favorable returns on intended investment.

You must also be ready to work hard and proceed as if you were bootstrapping.

As a takeaway, keep the gearing ratio lower than 25 percent.

Is today a good time to invest in a CD?

 

Investing in CDs.

This article fist appeared here.

Personal financial advisors believe it is.

A recent news item on investopedia suggests that depositing money into a CD  may help to reach the goal of earning an extra $2,000 over the next 12 months.

The report further suggests that In the next 12 months, there’s a real possibility that the Fed will lower rates.

If that happens, CD and savings rates will follow suit and also drop. Locking in a high-paying CD now can help you enjoy 5.00% interest rates for longer, even if other rates drop. 

What is a Certificate of Deposit?

This article first appeared here.

A certificate of deposit (CD) is a savings account that pays a fixed interest rate on money deposited and held for an agreed period of time.

A withdrawal before agreed period attracts an early withdrawal penalty.

What are the things that make an investment in CDs attractive?

1. An investment in CD has low risk, is safe (if you open a CD with a bank that’s insured) and requires no monitoring.

2. A CD offers a fixed interest rate (Annual Percentage Yield-APY) that is usually higher that interests on other bank's traditional savings accounts.

Retirement savings v Emergency fund in uncertain economic times.

 

This article first appeared here.

Which  should be the priority in uncertain economic times? Retirement savings  or emergency fund?

When you’re nearing your retirement and you’re  working and living on a tight budget in  uncertain economic times, when future economic environment is unpredictable, it’s always going to be difficult to know which to prioritize between retirement savings and emergency fund.

The reality of life is, both are necessary.

It is necessary to set aside a stash of money to take care of income and  spending upsets.

No one prays for a job loss but it can’t be ruled out in uncertain economic times.

And in life, no one prays for unwanted expenses like a medical emergency, but it still happens.

So, an emergency fund is necessary.

 The regular contribution to  retirement savings is also necessary. 

Why is it necessary? 

70 years is the age of retirement from active service. 

You’re expected to bow out of active service when you clock 70 and depend on your retirement savings as your major source of income.

So since both are necessary to help reduce financial stress and avoid interruption to a lifestyle you are used to, you need to strike a balance.

How can this balance be achieved?

By working out a ratio that allows you to contribute regularly to reach the maximum level of your retirement savings and also have a cash reserve that’d cover at least, one year expenses on basic needs. 

This is a conservative approach.

You may decide to have a balance that suits your personal preference and career field.

Why is it important to trust each other?

 

We lose more by having the habit of not trusting until we have a reason than by choosing to trust first before a reason not to trust any more shows up.

Choosing the latter, yes, would lead to unpleasant consequences when those you trust for no reason disappoints. But at least, it would leave the doors to the heart on both ends open, until the heart finds someone trustworthy enough to keep.

On the contrary, choosing not trust at all until you have a reason to trust is sure going to make you suspicious of everyone you meet at the first time. 

The suspicion could also, lay the foundation to stereotype those who don’t fit into the culture of those you call, “mind”.

Suspicion and stereotyping have caused a lot of people to lose opportunities to make great friends and find great team mates to complete them and help them realize their dreams. 

It’s not easy for people with difficult-to-trust attitude to change and move in the opposite direction. Making the transition takes time.

This period of transition would have been saved and great relationships built if one had a trusting attitude. 

“Nothing is worth more than laughter.- Frida Kahlo.

“Nothing is worth more than laughter. It is strength to laugh and to abandon oneself, to be light.”– Frida Kahlo.

Laughter is the best medicine some claim. Is this true?

Does laughter improve your health?

Yes it does. Humor is the strength that lightens the burdens we all carry. How does laughter give us this strength?

It helps us to release anger, gives us the ability to forgive quickly and the reward is, the reduction of pains that in turn, protects us from the destructiveness of stress.

It’s almost practically impossible to go through the daily grind of life without facing life’s problems. At every turn and twist, we meet problems in our careers and relationships. These problems affect both our emotional and physical health.

Most of us, forget to use the strength that laughter offers us to overcome these problems, grow our careers, strengthen relationships and improve our health. 

Experts claim a good hearty laugh relieves physical tension and stress and leaves the muscles relaxed for up to 45 minutes after.

How does laughter do this?

Experts say that laughter increase infection-fighting antibodies and improve hormones which erect resistant walls against disease invasion. 

Laughter does more. Laughter opens the door and releases endorphins, the body’s natural feel-good chemicals, which relieve pain temporarily and improve the total sense of well-being. 

So, laughter improves your mental health and it improves your relationships with others. It improves your mood and makes your attractive to others. If laughter eases tension, gives you joy, makes you feel good and attracts great people to you, why don’t you learn to laugh more?

Laugh more and be filled with the illuminating ability to light up your path and the path of others. Problems will never end, as long as you are alive, but laughter can give you the strength to laugh at your problems and have a great happy life.