Ten Ways to Protect your Savings from Inflation

Most often the effects of inflation go unnoticed, especially when they vary fractionally, month-on-month. However, when rates are surging, and there's a rise in fuel and energy costs, the pressure on individuals is universally felt. Inflation is the loss of purchasing power over time. It means that the nation’s currency is reducing in value, while goods and services are becoming increasingly more expensive over time. Most recently, Turkey has been in the spotlight earlier this year for its sky-high inflation rate, last reported at 36% amid the country’s financial turmoil.  Many are now seeking investment alternatives to offset the damaging effects of inflation. As a more recent strategy, investors are now turning to cryptocurrencies like Bitcoin, as a store of wealth, instead of leaving their money in the bank.  Even though cryptocurrencies may not be the best store of value, due to their evident volatility, it is clear to see that investors are desperately seeking an alternative to fiat currencies - and their vulnerability against inflation. This article uncovers 10 investment strategies that can help you stay ahead of the curve, in order to protect your savings in the current, inflation-heavy environment.  Staying ahead of inflation Real asset prices are increasing day by day and many are noticing that living is becoming more and more expensive. In October 2021 inflation rates in the United States reached their all-time high at 6.2%, while inflation rates in the United Kingdom noticeably increased to above 2%. In many countries, inflation rates outpace the rate at which salary increases, at a great disadvantage to people and their hard-earned cash. Now, inflation rates are at an all-time high since those reached in 2009 - during the aftermath of the financial crisis. Inflation rates over the last 100 years 1. Gold Gold has historically been the asset class to successfully hedge against inflation, thereby proving it as a safe store of value. Other precious metals’ historical performance during times of increased inflation rates varied highly, whereas gold has maintained a steady increase of at least 500% in the past 20 years.  In the 1970s gold performed strongly in comparison to fiat currencies, while during the 1980s the returns were negative. More importantly, gold performs well during times of high volatility, especially within bear markets, even outperforming the stock market at times. With monetary platforms like Kinesis, investors can combat inflation by storing their gold in the Kinesis ecosystem, and simultaneously, earn a yield on their stored bullion holdings. In addition to the competitive appreciation of gold as an asset class, the yield enables users to gain a competitively high, positive return on their gold investment.  2. Cryptocurrency In the past few years, cryptocurrency markets noticed a huge surge and reached almost 3 trillion. Some of the currencies have even had 10,000x gains - enough to show an outperformance of all other asset classes. The reasoning behind using crypto as a hedge against inflation is that most of them have a limited - or finite - supply. For example, there is a total of 21 million Bitcoins which means that as more people want to hold them the demand will increase, while the supply stays the same. The biggest disadvantage of Bitcoin and other cryptocurrencies is their extremely high volatility. Due to this fact, you can see a mixed performance against fiat, but if you look at a longer time frame, the value of Bitcoin is increasing in comparison to fiat.  Bitcoin volatility vs other asset classes 3. Real Estate Buying a property and investing in real estate may be a good option to combat inflation. However, unlike the other assets mentioned above, it is no simple task to dip in and out of property investment, due to it being illiquid and requiring extensive management from the property owner. In the case of rental property, investors can manage - and hope to offset - the effects of inflation through contingencies like raising the rent for tenants each year. However, when inflation is escalating at an alarming rate, as it is today, this is not entirely feasible.  The biggest obstacle in the current economic environment is that residential properties are already overvalued in most countries. This is currently an issue in China’s property market, where house prices in Hong Kong have now surged to at least 46 times an individual's average income.  4. Commodities Commodities have proved to be one of the best assets used as a hedge against inflation. One study by Vanguard, for example, showed that for each 1% increase in inflation, commodities’ value increased between 7% and 9%. When we are talking about commodities we usually think about oil, agricultural crops, and livestock. However, commodities like oil are now beginning to lose ground as a thought-out investment, when a new wave of energy innovations like photovoltaic technology, could hold more potential for longevity.  Commodities perform well in specific situations but most of the time they are outperformed by other assets like stocks. 5. Equities In the past, the value of stocks outpaced inflation by around 7% on a yearly basis. This is one of the reasons why equities are usually one of the assets that investors give themselves the highest exposure to.  Investing in equities is a long-term game because during periods of increased inflation equities don’t tend to perform that well. The reason is that as prices rise, businesses have higher expenses, and that limits their growth as well as stock value. Investing in a single stock can be a risky investment strategy, so it's best to thoroughly consider the short, medium and long-term gain before committing to this investment type.  6. Dividend-paying stocks Choosing stocks that have a long history of paying dividends regularly is another good way to combat inflation. Some companies have even increased the dividends that they are paying out each year, such as 3M, and IBM. In addition to stock dividends, crypto dividends are another option for investors looking to increase their passive income on their crypto assets.  Crypto dividends are awarded to investors for completing certain actions with their crypto, such as through staking. However, it is important to consider the complexities here, by questioning whether there are terms for receiving crypto dividends, such as “lock-in periods”, for instance, where you cannot access your investment.  7. Inflation-protected annuity An annuity is a guaranteed payment from the insurance company that many people use for their retirement. The amount of money that you are being paid is usually lower in comparison to other asset classes, but the risk is also lower. There is also a possibility to add inflation protection, where the money you receive is connected to the CPI index. 8. Short-term bonds Short-term bonds are highly liquid and have a maturity of between 1 and 4 years. They are one of the safest options that are used during times of increased inflation, especially in comparison to equities.  Usually, increased inflation rates are followed by increased interest rates as well. This was observed last year, and continues at present, after the hawkish decision of the Federal Reserve produced an all-time high for the US Treasury bond yield, now sitting at 1.82%. 9. Fixed-rate loan Another option is taking a fixed-rate mortgage loan for 20-30 years with low interest, meaning that the rate stays the same in spite of any changes to the baseline interest rate of your country’s respective central bank.  However, it should be noted that any debt obligations always carry a certain level of risk. 10. TIPS Treasury inflation-protected securities are bonds issued by the US government. They rise together with inflation since it’s measured by the CPI, Consumer Price Index. When the value of TIPS increases, the interest paid increases as well, which protects investors especially during uncertain times of higher inflation. What is the future? Inflation is one of the many factors that investors need to be prepared for, especially when they are building an investment portfolio. To combat inflation it’s best not to leave your money “under the mattress”, but instead, invest it in various asset classes that hold - or better - increase in value over time, leveraging the initial value of your investment.  At times when inflation rates are on the rise could be the best moment to review your portfolio and investment decisions. Everyone wants to take home the value of their hard-earned cash, without worrying about losing that value due to uncontrollable factors, such as inflation. Since inflationary environments are becoming more of a norm than a rarity, investors must prepare to operate in a way that maximises the value of their investments, through analysing and diversifying their portfolio.  Want to protect your money in gold? Learn More

Doug Turner
Doug Turner

18/01/2022

Do Cryptocurrencies Pay Dividends?

Cryptocurrency dividends pay the highest interest of all asset classes. A dividend is a share of profit paid by the company to its investors and shareholders. Currently, the interest rate that you get from banks is negligible, and stocks usually pay between 4-6%. Some coins with a higher market cap pay up to 10% and crypto stable coins pay up to 20%, while on some cryptocurrencies you can even earn up to 100% per year.  Usually, when people think about dividends they think of those that traditionally come from stock market investments. Crypto dividends appeared in 2018, with the introduction of decentralised finance. This gave people the ability to do yield farming, staking, liquidity providing, lending, and earn interest on their investment. Crypto dividends and different earning methods experienced a huge surge of demand and despite high volatility, they became the best way of earning interest. Just a few days ago, a tech and infrastructure company called BTCS Inc. announced that they will be the first Nasdaq-listed company to pay dividends to their shareholders in Bitcoin. Right after the announcement, their stock price increased by 44%. What are crypto dividends? Crypto dividends are rewards that are earned for holding or performing a specific action with different assets. The amount of dividend granted is frequently based upon the amount of cryptocurrency the investor holds or, if they receive dividends for performing a specific action, this could be through staking or claiming a reward on their platform. The interest rate is usually represented in annual percentage yield (or APY) and represents the returns over a period of a year. How to earn crypto dividends When it comes to the stock market, investors are paid from the profit that a company generates. In the cryptocurrency markets, there are many different principles of how and when dividends are paid. The most popular ways of earning dividends in the blockchain space are by staking, yield farming, lending, and airdrops. Staking is used in proof of stake protocols to verify transactions on the blockchain network. The number of coins you stake usually correlates with the number of transactions you verify and you receive rewards based on that. Yield farming is when you provide liquidity on a trading pair and you gain interest based on the usage of this trading pair. Usually, the returns on yield farming are higher but there is a risk of losing your investment if there is a drastic change in price. This is called impermanent loss. Crypto lending or borrowing is where you lend your cryptocurrency asset for a rate of interest that is repaid after a certain time. Usually, people offer their ETH or BTC as collateral to take stable coins or fiat which they can use to buy more crypto, gold, or even real estate. Crypto airdrops are distributions of specific coins or tokens to a community, usually in response to performing some action required by the company that offers the airdrop. The biggest airdrop was performed by Decred and the users that are still holding their tokens are estimated to have around $500,000. Another way to earn a passive income is through investing in stable coins, for example, by earning a return - or yield. Most often, your return is paid in the currency that you invested in, as is the case on the Kinesis Money platform which pays out in physical gold and silver, for storing precious metals in its ecosystem.   As with investing, it is important to consider the extent of the risk posed, as well as things like safety or “lock-in” terms. With stable coins like Kinesis' KAU and KAG, there is the added benefit of securing value over time with the currencies backed by physical precious metals, in addition to no “lock-in” terms, that gives utility and liquidity to users’ investments. Crypto dividends methods and coins Depending on your preference, you should choose a combination of options that will combine high returns for the risk you are willing to take. Here are some of the best options for earning interest on your crypto.  Ethereum 2.0 is currently the asset that is staked the most with almost 160 billion. The largest platform for staking ETH 2.0 is Lido finance with an interest rate of 4.8%. Even though the risk and reward ratio is great, you won’t be able to use your Ethereum until ETH 2.0 is released — and the date for that is still unknown. Curve finance or CRV is the largest liquidity pool built on the Ethereum chain. Currently, there are 23.3 billion assets locked on the platform. The curve became famous for its market-making algorithm which allows users to exchange stable coins that are pegged to fiat. The interest rate for fiat is pretty high, around 20%, and since prices won’t change a lot, it decreases the chances of impermanent loss. Maker DAO or MKR is a decentralised lending and borrowing platform. It is currently second (by size) with 19 billion assets locked. On Maker DAO, usually, people provide ETH or some other cryptocurrency as collateral and loan DAI as a stable coin. If the price of collateral goes down, you either need to provide more of it or you need to accept a 13% loss. There are many ways and platforms where you can earn dividends on your assets. Make sure to do your own research, especially if you are looking to earn interest on some smaller coins. Trading vs dividends Many people think that they need to do daily or swing trading to get earnings in the crypto markets but, as we’ve discussed, there are other ways of getting passive income.  Daily traders try to identify good entry and exit points and execute the trades from a few minutes to a few hours. Swing traders are doing the same thing, but usually, the trades last from a few days up to a few months. Since the frequency of the trades in swing trading is lower they are usually aiming for a bigger return per trade. In today's markets, crypto dividends can be high, and just by holding or staking assets, investors can outperform most traders. Also, volatility is decreasing over time which lowers the potential for traders to identify good entry and exit points and get the same returns as they were able to do in the past. Due to this, most people will fare better by staking and earning passive income than trading. Future of crypto dividends Decentralised finance is still a new and fast-evolving field in the blockchain space. We had many different tries and different approaches to earning interest on your crypto. Many of them failed, many of them are still in the experimental phase and evolving as well. The most recent boom was Olympus DAO and its forks that are giving over 1000x per year if the price remains the same. We are still early and decentralised finance is one of the most bullish segments in the blockchain industry. To find out more about cryptocurrency investment, see our blog Learn More

Doug Turner
Doug Turner

13/01/2022

What's The Difference Between Gold And Bullion?

Traders and experts often discuss gold and the commodities market, but the specific terms “gold” and “bullion” are actually quite different. While gold encompasses all forms of the metal and ways to trade in its market, including coins and bars, bullion includes the physical forms of other precious metals also traded, like silver and platinum. It’s important to understand these differences and the various forms gold can be invested in, so you can choose the best form for your goals and needs. The Gold Market Trading in the commodity market includes precious metals like gold, silver, and platinum. Historically, gold is valuable and has been used as currency. Its price remained relatively consistent until the 2008 financial crisis, when its price nearly doubled. In 2019 the price of gold increased by 13%, while in 2020 it went up by an incredible 26%. By contrast, 2021 wasn’t a great year for gold, due, in part, to the Federal Reserve announcing that the banks would increase interest rates sooner than expected. That caused the price of gold to decline by almost 4% in comparison to 2020. Gold price in 2021 There are many reasons to invest in gold since it is often viewed as a safe option compared with other investments. It often happens that the value of other asset classes like the FTSE 100 goes down, while the price of gold goes up. Here are some of the reasons gold is a good investment: Preservation. Gold’s long history makes it an attractive, secure form of long-term investment and wealth preservation. Its value continues to grow slowly, though it is less impacted by inflation and volatility. Hedging. Generally, gold maintains its value or prices even improve as the dollar falls. It is also not directly impacted by interest rates and is a scarce asset. This behaviour makes investing in gold a popular hedging technique, acting as insurance against economic events. Portfolio diversification. A portfolio made up of many different types of assets generally reduces risk and is stronger against volatility. Gold is often negatively correlated to the stock market, meaning that even as the stock market falls, gold may remain steady or prices may increase. Including gold can help diversify your portfolio and provide some protection against unforeseen events. Stock opportunities. Stocks in gold companies can usually maintain profitability even when the gold price is low. Many companies also pay dividends, making gold stocks a valuable buy for investors. Gold trading can take on a variety of forms: you can trade physical gold, purchase shares in gold mining companies, invest in gold ETFs, or trade in gold options and futures. Each of these methods provides different benefits and challenges and involves using different risk strategies. In this article, we’ll focus on trading in physical gold through bullion, coins, and bars. Investing in Bullion Gold bullion is physical gold that is at least 99.5% pure, in the form of bars or ingots. Investors can purchase bullion from banks or brokers online or in person, and store it themselves or with a third-party custodian. While you can buy the actual bars, investing in gold and silver bullion is easier to do via ETFs or futures contracts. It can sometimes even be considered legal tender. ETFs contain a collection of securities, which typically track an underlying index. Gold bullion ETFs track gold certificates, which can be exchanged for physical gold or the cash equivalent. While it’s not the same as owning a physical gold bar, investing in gold ETFs still grants access to the bullion market.  Futures contracts are agreements to sell and deliver gold bullion to the buyer at a set date for a set price. Until this happens, the buyer only owns a paper gold contract, which can be sold before the expiry date or rolled forward into a new one. It’s worth noting that this trade is in contracts, not shares. They can be quite profitable but also lead to heavy losses if the bullion price changes unfavourably. As a result, futures trading is usually suited for experienced investors. Options contracts are similar to futures in that the buyer and seller agree on a specific price of gold at a certain date. The difference is that with options trading the buyer doesn’t have an obligation to go through with the purchase while on the futures contract the trade will be executed. Banks often hold gold bullion as reserves, which is used to settle an international debt or stimulate the economy through lending. A central bank lends gold bullion to a bank, which sells the gold or lends it to mining companies, while the central bank receives the cash equivalent. If the bank sells bullion on the spot market, it receives cash.  This addition of gold in the market reduces its price, hopefully enough that the bank can buy it back at a lower price than it was originally sold for. If the bank lends the bullion to a mining company, it is usually repaid from the company’s future mining output. A mining firm would borrow the gold to finance a project or in a forward hedge contract, in which gold that has not yet been mined is pre-sold to buyers. Investing in Gold Coins Another way to invest in gold is to buy gold coins or bars; physical forms of gold that are typically more available and more manageable for everyday use. Coins, naturally, are more flexible, since you could sell a portion of your gold collection by selling some coins rather than your entire gold bar. Some coins may also have varying values if they are rare or antiques. Gold coins or bars can be purchased online or in person, too, through brokers, banks, or pawnshops, and stored independently. As the historical basis for most nations’ currency, gold coins can be safe investments and sold when the market price best suits the investor. Pros and Cons of Physical Gold Both of these methods involve owning physical gold, which has the benefit of control and the challenge of actual storage. Since investors hold the physical bar or coins, they can sell at any time the price is most attractive, and hold it when it is not. As outlined above, gold is generally considered a safe investment and a way to diversify and hedge your investment portfolio. However, it can be difficult to store bars of gold – they take up a lot of space, and could be lost or stolen. Many brokers offer insurance options for physical gold, or it can be stored at a bank. There are some websites where you can buy, sell, and store physical gold through a broker, and thus not have the responsibility of storing it yourself. Is Bullion or Gold a Better Investment? When comparing the difference between investing in gold or in bullion, it is important to consider your investment needs. While investment in bullion through ETFs, Futures or Options contracts enable you to incorporate gold into your portfolio, investors, however, do not have legal title ownership of the bullion. Instead, investors simply profit from the speculative or tracked value of gold as an asset, such as through its market price or the extent of its availability on the market.  For investors looking to access the fullest extent of benefits that physical gold offers, investment in gold coins, bars or digital gold, may be a more preferable option. In this way, investors can build their wealth, by being protected against market volatility, currency fluctuations and inflation risks, as well as being able to physically redeem their gold. Ultimately, the best investment choice will greatly depend on the investor’s goals, and the extent to which they intend to utilise their gold investment.

Doug Turner
Doug Turner

11/01/2022

Physical gold, digital gold, gold ETFs or gold bonds - which one should you get?

In this article, we will consider a number of different ways to invest in gold, helping you decide on how best to meet your investment goals. From the time of ancient civilization to the modern-day, gold has been a prized commodity. Once gold functioned largely as currency, but today, many investors buy gold as a diversifying asset, or as a hedge against economic uncertainty, political unrest and inflation. Why do investors choose gold? Nowadays, you can buy gold in many different forms. These range from physical coins and bullion to exchange-traded funds, derivatives and digital gold. Knowing which type of gold is right for your investment portfolio is key. Here are just some example of why investors might choose gold investment: Wealth Protection  Gold is often the asset investors turn to when the economy or political environment turns volatile, making it a strong, defensive investment. This is because gold often has a low correlation with movements in the broader stock or bond markets, making it a good hedge and way to diversify a portfolio.  Liquidity Gold is becoming a more accessible choice for the everyday investor, as options like digital gold are making the precious metal a more liquid investment option. Particularly for those just starting out in gold investment, these options with no "lock-in" terms are much more attractive than other traditional assets like bonds, where the waiting period until maturity greatly defers investor's realization of capital returns. Inflation proof Over the last 50 years, gold has proven to be a solid hedge against inflation, particularly when it is notably elevated. Furthermore, when inflation is high, gold also has significantly higher returns in comparison to other traditional investment vehicles. Growing Demand Demand for gold has also grown among investors in developed markets. This is reflected not only in holdings of physical gold bullion but in the increasing number of investors in gold ETFs. Portfolio diversification A sound investment portfolio is well-diversified, which means that the underlying assets do not all react the same way to economic and political events. The key to diversification is finding assets that are not closely correlated to one another. Gold has historically had a negative correlation to many stocks and other financial instruments, making it a good way to diversify any investment portfolio. What are the different types of gold investment? Nowadays, you can buy gold in many different forms. These range from physical coins and bullion to exchange-traded funds, derivatives and digital gold. Knowing which type of gold is right for your investment portfolio is key. Different products can be used to achieve different investment objectives. Physical gold: coins and bars Gold bullion refers to any form of pure (or nearly pure) gold that has been analysed and certified for its purity and quantity. While large bars may be impressive, their size (up to 400 troy ounces) makes them illiquid assets, and therefore costly to store. Small bars and coins have accounted for a large proportion of annual investment gold demand over the past decade. New markets, like China, have also been established, while older markets, like those in Europe, have re-emerged. If you are interested in buying physical gold, it is important to keep an eye on the spot price as an indicator for when to buy, in addition to prices from reputable dealers. Often when buying physical gold, investors must consider the insurance and storage costs of the investment. However, there are options, such as Kinesis, that have completely eliminated the need to pay for storage and insurance, making gold investment more accessible. Gold exchange traded funds (Gold ETFs) Gold exchange-traded funds enable investors to tap into precious metals investment, without owning the physical asset. Each share of these financial instruments represents a fixed amount of gold, such as one-tenth of an ounce. The funds can also be bought and sold just like stocks using a brokerage account. Gold ETFs make up a substantial proportion of global gold investments. They are backed by physical bullion and reflect the current price of gold in the market. Due to their facilitation of high liquidity, they are often the cause of great fluctuations in the gold market price, due to the ease at which investors can buy and sell. Sovereign gold bonds (SGBs) Less familiar to many investors, sovereign gold bonds are government securities denominated in grams of gold and issued by a reserve bank (such as the Reserve Bank of India) on behalf of the government. They are substitutes for holding physical gold: investors pay the issue price in cash and the bonds will be redeemed in cash on maturity. Some investors find bonds an attractive option as they offer the possibility to both enjoy capital appreciation and also earn interest every year.  One drawback of investing in gold bonds is that SGBs are issued in different tranches during the financial year, meaning they are not always available to buy. Secondly, they come with specific investment terms (such as eight years), so that early sale is not possible. Digital gold Digital gold, underpinned by the technology of blockchain, has enabled gold to become not only a mechanism for investment, but also a global currency.  In comparison to the other investment avenues mentioned above, digital gold may be the most accessible and user-friendly option for investors who want to utilise their gold as a fundamental utility.  With Kinesis, for example, users can buy digital gold that is fully allocated with physical gold bullion, and operate within a system where gold - and silver - can be bought, sold, and traded easily.  On top of this, system users have the ability to earn a usage-based, debt-free yield on their gold investment, whether they spend, trade, or simply hold it within the Kinesis ecosystem. Kinesis secures this yield for investors by giving a proportion of the transaction fees gathered across the entire system, back to investors each month. Which Investment? There are numerous ways to invest in gold today. If you would like to add precious metal to your investment portfolio, consider your existing assets and how gold can add value to what you already own. From there, take time to consider your specific needs and investment goals, in order to select the right type of investment for your needs, whether that be coins, bars, ETFs or digital gold.

Doug Turner
Doug Turner

30/12/2021

What Are ETFs?

Exchange-traded funds or ETFs have become a popular selection amongst investors aiming to broaden the variety of assets in their portfolios. This article explores ETFs, how they work, and the different types of ETFs available for investment. An ETF, or an exchange-traded fund, resembles a mutual fund that is traded like a stock. ETFs can diversify an investor's portfolio without increasing the time - and also initiative - they need to spend managing and assigning their financial investments. ETF Definition: What Does ETF Mean? To specify what an ETF is, firstly, let's break down the term ETF. ET is an abbreviation of “exchange-traded”, which is to say that something is traded on the stock market. Some examples include Nasdaq or the New York Stock Exchange. For people used to trading individual stocks, buying and selling an ETF will certainly feel familiar due to the fact that it’s traded in much the same way. In the abbreviation: ETF, ‘F’ stands for “fund”. One fund contains tens or even thousands of stocks or bonds. For investors familiar with a mutual fund, such as an index fund, trading an ETF will feel very similar, due to its diversity and low fees. ETFs often have lower costs than other types of funds, but this depends largely on the type, the risk and volatility of them, which can vary drastically. What are ETFs? An ETF or Exchange Traded Fund is a simple way for any investor to get exposure to a pool of bonds, stocks, or other assets without the need to acquire each of them separately. For example, when an investor buys stocks, they invest entirely into one company. When they buy a share of an ETF, on the other hand, investment is spread across various assets.  While the risk is significantly lower than investing in a single stock, ETFs still carry market risk. Since ETFs can imitate a market index like the S&P 500, their performance is normally based upon index volatility; when the index fluctuates in price, so does the price of the ETF. Considering the impact of recent market volatility, especially during the pandemic, ETFs may not be the most stable investment at present. In a classic fund, there is a fund manager who is actively picking where to invest, while ETF investments are handled passively. Because returns are gathered from the tracked valuation of pooled assets rather than the usage of those assets within a system, investors have little control over their potential returns. With Kinesis, however, every system participant has the potential to earn a yield in line with their personal usage of the Kinesis system, whether they are spending, sending or trading assets on the platform. How do ETFs work? An ETF company will buy different types of assets like stocks, bonds, or cryptocurrencies to create a fund that would track their efficiency on the market. Then, a share of that fund is sold to shareholders, giving them exposure to all the assets that the ETF holds.  The value of the ETF varies over time and is correlated with the underlying assets that the fund owns. Each ETF has its unique ticker, with its value based on these assets. Traders buy and sell an ETF during the day on a particular exchange, in much the same way as stocks.  Constant production of new shares and the redemption of existing ones leads to a daily change in the total amount of shares of ETF. In this way, the ETF maintains the market price of the ETF correlated with the securities they own. Types of ETFs There are different kinds of ETFs available to investors. Just some of these include: Stock ETFs are intended to increase the chances of long-term growth. While generally less risky, in comparison to buying a specific stock, they still hold more risk than other types of ETFs. Usually, they offer diversified exposure to a specific industry trying to cover both well-established companies in the space and the new entrants that have a high potential for high growth and returns. Bond ETFs are usually used to create regular money inflow for the investor. They are obtained from the interest paid from the specific bonds within the fund. They may consist of government bonds, company bonds, as well as state or even local bonds. In addition, they don’t have a maturity date and are traded at a discounted price. Sector ETFs or Industry ETFs are focused on investments in a particular sector. It can be tech, financial health care, or the industrial sector, for example. Different industries perform better during an expansion period, while others during contraction periods. Overall, the most important thing is that the sector or industry that the fund is tied to is prosperous in the long term. This type of investing is highly volatile but an ETF combats that by gaining exposure to multiple companies. Commodity ETFs invest in raw goods such as gold and crude oil. Investing in commodity ETFs gives investors exposure to all these assets. However, exposure does not equate to ownership. For instance, even if an investor profits from the success of a particular ETF that deals in gold bullion, they can never redeem the gold bullion as their own, at any time. This means that while ETFs may be cheaper than purchasing the physical commodities of the ETF, investors are limited in their access to the physical commodity. Currency ETFs track the performance of different currency pairs - both domestic and foreign ones. Currency ETFs speculate on currency prices during certain political or economic conditions. They are also used as a hedge against market volatility since they are less volatile than other ETFs. For example, the Bitcoin ETF means that investors can gain crypto exposure, without owning Bitcoin themselves. The Bottom Line As with all investments, ETFs offer numerous options on the market to suit the investor’s needs, giving exposure to certain assets. For instance, Stock ETFs enable investors with lower risk tolerance, the ability to spread market risk across multiple companies with varying chances of success.  While ETFs may offer investors significant exposure to assets, they do not enable a direct form of investment into those assets. With precious metals, which can act as a safe haven for an investor’s portfolio, Gold or Silver ETFs present the issue that investors cannot redeem the precious metals being traded via the ETF. In the case of commodities like precious metals, ownership can be more important than exposure, in order to access the fullest extent of their benefits.   Find out more about how you can invest in precious metals, in your name, with Kinesis here.

Doug Turner
Doug Turner

28/12/2021

Is gold a good investment?

This article will explore the investment potential of gold, the types of gold investments that exist and outline how you can get started. Gold has been a sought-after commodity for centuries and is one of the main investment tools used to combat the turbulence of financial markets. Owning gold, and precious metals more widely, can offer investors the ability to reduce volatility in their portfolio and maintain their wealth in uncertain times. Why Invest in Gold? Safe haven for investors Gold is a commodity, widely favoured in times of volatility - the like that many are witnessing today. It is well-known as a safe haven for investors since the price of gold has historically maintained a positive relationship with other market influencing factors, such as inflation. In fact, as Di Martino points out, gold is the least correlated asset in existence, against inflation. Gold is a finite precious metal, the value of which has increased over time. For many, gold has acted as an insurance policy during economic crises, as the value of gold is not directly impacted by factors like interest rates or the performance on the stock market. Rather, when traditional investment assets struggle to perform, such as dividend-yielding stocks or bonds, people return to gold as a stable investment choice. Inflation hedge For many years, gold investment has offered a capacity for wealth preservation and, as mentioned, the ability to act as a hedge against inflation. Not only is gold an asset that finds strength in its appreciating value, but investors can also earn a passive, monthly yield on all gold stored within the Kinesis ecosystem. Inflation occurs when there is a reduction in the purchasing power of money (indicated by the Consumer Price Index), while simultaneously, the prices of goods and services increase in the economy. One of the most notable examples of inflation, and its devastating impact, was seen in the instance of Zimbabwe, where hyperinflation caused the annual inflation rate to reach 737% by July 2020. Investing in gold can preserve the purchasing power of one’s money, therefore making it an effective way to store and grow wealth. Portfolio diversification Keen investors know the importance of having a well-diversified investment portfolio. In brief, diversification means holding assets that are not all affected the same way by political and economic events. For many, including gold is a common diversification tool as gold is usually negatively correlated with stock market fluctuations. This means that while other assets experience volatility, holding gold can counteract a certain level of risk presented by other investments. Types of Gold Investment Gold investment comes in many forms. Depending on your specific needs as an investor, one form may be better suited for your investment strategy than another.  Here we’ll cover some of the most common ways to invest in gold. Gold bullion and physical gold Buying physical gold bullion has been a popular investment in recent years. The metal can be traded in recognised formats, such as gold bars, ingots, or coins. These forms of gold can be bought from reputable dealers, banks, or brokerages, both online and offline. It is important to note that when it comes to physical gold coins or bullion, safe and secure storage is a must. This may involve paying a broker, bank, or another firm a fee. Alternatively, Kinesis offers investors the ability to store physical gold bullion, for life, and free of charge.  To find out more about how to access free bullion storage, click here Shares in gold mining companies Another option for investors is investment in gold stocks, also known as gold mining shares. Gold mining shares can be a little riskier than physical gold as you are investing in a business rather than the physical metal.  However, certain investors like to buy shares in gold companies as returns can be greater than physical gold. But like any share, they are prone to volatility, the price of the stock reflecting the company’s financial success and market position more than the price of gold itself.  When assessing shares in gold mining companies as an investment strategy, it is important to remember that this method may not be the optimal hedge against market risk. Gold exchange traded funds (gold ETFs) Gold or Silver ETFs, or an exchange-traded fund, are trusts that own physical gold or silver and sell shares that track and reflect the price of gold or silver.  Also known as the “paper markets”, investors may decide to invest in ETFs so as to avoid navigating costly storage options for their bullion.  However, the main issue with ETFs is that the investors own none of the physical bullion that they are trading, in their name, and hence, can never redeem it as their own.  Gold derivatives Gold derivatives are financial instruments in which prices are derived from physical gold. These derivatives include Futures and Forwards. Trading gold or other precious metal derivatives should only be undertaken by seasoned commodities traders, who have the necessary know-how and skill. Again, derivatives are a mere representation of the asset, and in no way shape or form mean that the investor owns the asset. Nowadays, it is becoming increasingly preferable to hold, and own physical assets, that possess the kind of intrinsic value that gold has displayed for thousands of years. Digital gold The innovation of blockchain and other digital technologies have created new investment options for gold, with the main one being digital gold. Through digitalisation, digital gold enables the asset to possess an added liquidity, the ease of instant buying and selling, and offers investors easy access to gold investment, without the hassle of physical storage.  With Kinesis, investors can utilise the - once impractical - asset of gold, as currency in their everyday transactional life. Kinesis gold (KAU) and Kinesis silver (KAG) currencies are native to Kinesis, based 1:1 on physical gold and silver, that enable investors to spend gold and silver on their virtual debit card, all while earning a yield. Is Gold a Good Investment Now? In a time of financial uncertainty, Kinesis provides investors with the option to take advantage of precious metals, as a debt and risk-free instrument that fundamentally protects wealth.  Against the volatility of high-risk investment assets, and their large scale returns, precious metals investment allows for a portion of your financial portfolio to be stored in a safe haven asset.  In addition to this, gold - and silver - stored in the Kinesis ecosystem maintains, and continues to build wealth, since the monetary system instils precious metals with vital yielding potential.  The Kinesis yield model supports and incentivises a return through participant usage of the monetary system. Whether minting Kinesis gold (KAU) and silver (KAG) currencies, spending, or storing precious metals in the system, Kinesis provides a cost-effective, liquid, and efficient investment option, against other traditional avenues on the market. To find out more about investing in gold, start with Kinesis here.

Doug Turner
Doug Turner

23/12/2021

The Investors Guide to Gold and Silver in 2022

Gold has traditionally played a key role in the financial sector, becoming the most common safe haven in market storms. Its crucial role in a financial portfolio remains unchallenged and it seems very likely to continue for a long time. Gold represents stability, with central banks increasing their holding of bullion as reserves. Despite this, investors are always fighting against the markets while trying to find the best timing for buying bullion.  Another interesting point of analysis is the distinction between buying physical gold or paper gold and what are the advantages of both. This article starts explaining the current scenario for bullion, before analyzing the market drivers which are forecasted to move the gold price in 2022. The analysis continues presenting the advantages offered by Kinesis Money to gold investors.  What is the current state of the market? In the last few months, investors faced a challenging scenario. The Federal Reserve announced the beginning of tapering, while inflation continued to soar in the U.S. and in several other countries, proving to be much less transitory than forecasted by Central Banks. Moreover, the battle against Covid-19 is not yet over, with spikes of volatility due to the news related to the pandemic. Despite this, stocks continued their long rally that started in April 2020, with the market capitalization of almost all the major indices now surpassing pre-Covid-19 records. For example, the S&P 500 has reached the 4.700 points mark, around 900 more than the top of February 2020, while the Dax topped above 16,000, before slowing down after the growing fears related to the new Covid-9 variants. On the bonds market, the yield of the U.S. 10-year treasuries remains in the region of a modest 1.50 – 1.70%, well below the current level of inflation. But the scenario could change if inflation pressure continues to rise, or in the case that investors sense a risk that the price growth seriously goes out of control. Once again, gold seems ready to play a crucial role in the markets. Investing in Gold in 2022 There are not many certainties in the financial environment. However, it is certain that gold will continue to be a crucial asset for an investor’s portfolio, despite potential changes in the market. Why invest in Gold in 2022? The reasons for holding gold might be various and at times - complementary. Firstly, consider investing in gold in anticipation of its price rising. By holding your gold long-term, you can expect to achieve a capital gain as the price of bullion increases over time. 1. Gold is an appreciating store of value Charts speak for themselves, especially in a longer timeframe: Gold Chart from 1971-2021 - Gold climbs from $35 to $1,800 Over the past 50 years, gold achieved an average yearly performance of +10.6%, while in the last 20 years bullion price increased by 600%. The former historical top of 2011 at $1,920 was surpassed in the summer of 2020, when gold temporarily jumped above $2,000, before slowing down to $1,800/1,900. 2. Gold is a Safe Haven Another reason to incorporate gold into a portfolio is to protect yourself in the event of stock market turmoil. Historically, bullion has proved to be an excellent safe haven in the unfortunate scenario of share market collapse. An example of that was observed throughout the global stock market crash in February 2020, when gold managed to retain a positive performance (excluding the first chaotic weeks of March, where many traders were forced to close their position in gain on gold, in order to avoid margin calls on stocks and bonds). 3. Don’t put all Your Eggs in One Basket Holding gold is an excellent way of diversifying a portfolio, in line with the wise advice of Don Quixote. Gold is a unique commodity, with a low correlation to the majority of raw materials - and can also be used to mitigate potential risks. 4. Gold is a Hedge Against Inflation and Market Adversities Speaking of risk, bullion is well-suited to play an important role in the event of currency market turmoil. Central banks printed trillions of dollars, euros, pounds and yen in the last few years. As we try to crawl back to so-called normality, the Fed’s hawkish monetary policies might not necessarily make it any easier.  If investors lose their trust in central banks, gold could definitely jump to new highs. Therefore, its safe-haven role is also remarkable when analyzing the forex market. For investors, based in countries where the local currency is extremely volatile - as in Russia, India, or Turkey for example - gold could also be used as a hedge against further depreciation of the native currency. Moreover, bullion could also be held as a hedge against inflation. However, this subject may turn out to be a little tricky, as the relationship between gold and inflation is not always linear. What are the main market drivers for gold in 2022? Any gold price forecasts for 2022 should take the inflation rate and the Fed’s monetary policy into consideration. Of course, the development of the pandemic should be carefully monitored.  Now, let us analyze the main elements for gold investing in 2022, in more detail: 1. The Federal Reserve’s attempts at curbing Inflation Despite the Federal Reserve’s tapering announcement, gold managed to perform positively in October and November 2021. This happened mostly due to growing fears around uncontrolled inflation, which remains a central topic as we enter the new year. Indeed, in the event of investors losing their perception of central banks having enough control over price growth, a gold buying spree may ensue. Therefore, inflation and the central bank’s decisions over interest rates are two crucial market drivers for the gold sector. 2. Gold-backed ETFs In recent times, the demand for gold coming from physically-backed ETFs, has shown a strong correlation with the gold price. The growth in this sector could further boost the price of gold, in case the inflows continue. Price of Gold & ETF demand - From the World Gold Council (WGC) 3. Growing Demand for the Physical Gold In the last decade, we have seen strong demand for physical gold coming from central banks. Many countries, including Russia, China or Poland, vastly increased their gold reserves. It will be interesting to see whether this trend will continue in the next few years. Jewellery historically represents a strong percentage of physical gold demand. In this case, analysts are trying to forecast the solidity of jewellery sector demand for 2022-2025, and its potential impact on the bullion price. What are the key levels for the gold price in 2022?  If we take a look at the 2019-2021 gold price chart, we can identify many interesting support and resistance points that can later aid us in monitoring the year 2022. Gold Price - from 2019-2021 Let us start with analyzing the key resistances - the areas which can curb gold appreciation, and where we could expect sellers to be more active.  In the current scenario, with bullion traded at around $1,800, the first major level to monitor is placed at $1,870, on the top reached in November 2021. A surpass of this threshold could generate a further rally to the historical 2011 top in the region of $1,920, while the following key levels to monitor would be the psychological $2,000 mark which led to the historical high in July 2020, at $2,074. Similarly, in case of a new decline, the support zones - where we could expect significant buying volumes - are placed at $1,750 and also in the $1,670-$1,680 region. Much further, we can find $1,620 and the $1,520 - $1,500 area. How to Invest in Gold in 2022?  As many investors are looking for the perfect way to invest in gold, it’s important to make an informed choice between options available on the market. What are the differences between physical gold and paper gold and are there any emerging alternatives to these two choices? Paper and Physical Gold - What are the Key Differences? Physical gold has the advantage of tangibility, however paper gold is usually much cheaper in terms of spreads and commissions. Moreover, it is also easier and quicker to buy and sell. Thanks to modern trading platforms, it is possible to purchase and sell paper gold in just a few seconds, profiting from both short and long-term bullion movements. Fully Allocated, Digitalised Physical Gold Conclusively from this analysis, precious metals backed digital currencies - such as Kinesis KAU & KAG - could represent the perfect solution for modern investors. Kinesis native currencies merge both the enduring value and security of traditional physical gold with the technology-driven liquidity and ease of paper gold. Kinesis offers two tokens: Kinesis gold (KAU) and silver (KAG), which can be easily traded online. At the same time, the precious metals that back them are stored physically in Kinesis vaults and can be redeemed in physical bullion anytime, anywhere around the world. Moreover, Kinesis is paying KAU and KAG holders a recurring monthly, passive yield, which is paid directly into the holder's account in gold and silver. The Kinesis system also offers a sense of immediacy. Holders who store their gold with Kinesis, have the ability to spend, send and transfer their KAU and KAG as digitalised, physical currencies, just like regular cash. To summarise, with Kinesis Money assets, investors can access the benefit of receiving a monthly yield, traditionally associated with bonds, coupled with the potential growth of the physical gold price. Moreover, they can trade Kinesis gold just like paper gold, while also having the option of converting the Kinesis token into physical gold, whenever they wish to do so. https://www.youtube.com/watch?v=Q2ldZFJjii4 Investing in Silver in 2022 It’s not just gold that glitters.  In the precious metals environment, silver could also represent an interesting opportunity to diversify an investor’s portfolio. Silver metal is generally more volatile than gold, with wider movements in both directions. In other words, during the positive growth phases, silver can gain more value than gold (in percentage), while falls can also be broader. Many precious metal analysts, including the renowned Robert Kiyosaki, have a positive view of silver. Although its price seems to have been dramatically compressed in the last few years, with the rapid popularisation of physical silver - which is also reflected by the accelerating expansion of silver-focused online communities, such as Reddit-based WallStreetSilver - this could be the right time for the metal to start restoring its real market value. Silver price - from 2019 - 2021 The global physical demand for this precious metal is expected to grow in the future. In the last decade, we have already seen a tremendous increase in the industrial silver demand from the photovoltaic sector. In the upcoming years, analysts have forecasted a huge increase in the request for silver as a component in electric vehicles. Of course, this could have a strong impact on the silver price, increasing the chances that silver can outperform gold in the long run. Gold Vs. Silver Demand It is interesting to analyse the different uses of these two precious metals.  Gold is mostly used in jewellery and has a significant component of the demand coming from central banks and the investment sector.  Silver, on the other hand, is more exposed to the industrial demand and this could also represent an interesting point allowing investors to diversify their investment in silver. Both precious metals are equipped with a number of benefits that will make an excellent addition to any investor’s portfolio. However, the decision between gold or silver, as well as the form in which you find them most fitting your personal needs - is entirely up to you. * This article will be updated in line with market trends and advice throughout the year.

Carlo Alberto De Casa
Carlo Alberto De Casa

21/12/2021

Is Silver A Good Investment?

As a precious and industrial metal, silver has long been a safe alternative to traditional stocks and bonds trading. The last two years have been a tumultuous time for investors, so it’s no surprise that some may be looking into safer, “old-fashioned” investments. While silver can be volatile, precious metals are seen as safe-haven investments in uncertain times and can be a hedge against uncertainty, inflation, and stocks.  Why invest in silver? Silver is a small market, and not as well-known as gold, but it’s still physical, reliable money with growing demand. It’s classified as a commodity: a publicly-traded, tangible asset. Silver is real money Along with gold, silver is the ultimate form of money. Silver has no counterparty risk, has never been defaulted on, and has been used as a form of currency for over 4,000 years. As a physical asset, silver counteracts the turmoil of today’s digital trading and cyber currencies; it also cannot be hacked or vulnerable to cybercrime. When you hold silver, you hold a real, hard asset that is universally recognised as valuable. Silver is reliable As a physical coin or bullion, silver holds intrinsic, long-term value, so it can stand as an inflation hedge. Silver is impacted by different factors than the stock market, so it can help diversify your portfolio and counterbalance riskier investments. Also, silver is an industrial metal used in the manufacturing of lots of things, making its price performance and outlook relatively steady. Silver demand is growing Silver’s metallic properties put it at the forefront of both common manufacturing and innovative technological advances, such as electronics, medical equipment, and clean energy alternatives. As these fields expand, so does the demand for silver. In the last few years, global demand for silver has been surging. Combined with silver’s limited supply, this increasing demand suggests a positive impact on those who have silver in their portfolios. Silver vs. Gold investing Of course, silver seems less valuable an investment than gold at first glance. They’re both precious metals and tangible assets, but they have significant differences that can make silver a better investment. Silver is cheaper Silver literally costs less to buy than gold. The spot price of silver in the market has never exceeded that of gold -- by a lot. It’s not just cheap to buy, but can be more manageable to sell. While gold is sold by the ounce, silver can be broken down into smaller amounts, so you only have to sell what you need. Silver is more volatile The market for silver is so small that any cash movement can have a large impact on price. Its value is also influenced more by manufacturing cycles. This means that the silver market is more volatile, which means it falls more than gold in bear markets, but rises much higher and faster in bull markets. At the peak of the 2011 bull market, the gold/silver ratio sank to almost 30, demonstrating how silver outperforms gold. Risks of investing in silver As with all investments, there are some risks to consider when investing in silver. The main risk is something that can also be a benefit to investing in silver: its volatility. Especially in short time periods, silver’s spot price can shift up and down dramatically, so it can be easy to overpay or not get the full value of a sale. Sensitivity to shifts Since the value of silver is so tightly tied to industrial growth and the manufacturing industry, it can be hurt by an economic slowdown. A replacement metal in manufacturing, or a dramatic change in the industry, could also lead to a decrease in silver’s price. Limited potential Since silver is a physical commodity, it traditionally doesn’t offer interest or dividends like bonds and stocks, and cannot be built up like cyber currencies. Silver has limited income and can only appreciate so much, so your best chance to benefit is to sell during a price rise. Unpredictability  Silver’s value derives from multiple categories, so its price can be torn between industrial and investment valuations. If investors bid the price one way, the industrial world will react accordingly, changing the global supply of silver and thus its price. How to invest in silver There are two main ways to buy and sell silver: directly buying it yourself, or indirectly buying silver-related securities.  Physical coins or bullions You can buy physical silver bullion coins or bars; this way is relatively straightforward as you can buy from pawn shops or online vendors. It may cause some storage issues, however, but you’ll be in control of buying and selling the silver directly. Silver-related financial instruments Using these, you can buy and sell silver indirectly. For many, this is a more pragmatic approach. Silver stocks: You can buy shares of companies that mine or process silver (“miners”) or resell it (“streaming companies”). It’s important to note that there are few “pure players” here, since most companies mine silver together with other metals.Mutual funds or ETFs: You can invest in funds that hold silver in their portfolios, either in its physical form or in silver companies.Exchange-traded commodities (ETCs): You can invest in publicly traded securities that are much like the funds. ETCs also invest in physical silver, but the difference is that they are debt instruments, like bonds. The underlying commodity, silver, serves as collateral.Kinesis Silver: You can instantly purchase physical silver with Kinesis. Kinesis silver (KAG) is a yield-bearing digital representation of investment-grade silver bars that sit in Kinesis vaults, in your name.  Silver is underestimated as an “old-fashioned” investment, despite its historic value as money and essential industrial material. While it can be volatile, it’s viewed as a safe, tangible alternative investment or as a way to hedge against riskier investments. Commodities can be invested in directly, by buying the physical substance and holding or selling it, or indirectly by investing in funds that include it. If you have some investment experience and are willing to take some risk, investing in silver may be a good choice for you. LEARN HOW YOU CAN INVEST IN SILVER TODAY

Doug Turner
Doug Turner

17/12/2021

Digital Gold vs Physical Gold: What's the difference?

This article will define physical and digital gold, outline the respective benefits of each and explore their potential as investment avenues. Gold has often acted as an insurance policy during times of economic crisis, proving itself time and time again as a safe haven for investors. As technology advances, new forms of gold investment have arisen to provide gold bugs with alternatives to traditional physical ownership, including digital gold.  What is Digital Gold Investment? Digital gold - or digital gold currency (DGC) - offers investors the ability to own physical gold, with the added benefit of lower costs, and wider accessibility to the everyday investor. Previously, gold was largely inaccessible to the majority of investors, due to its costly storage fees and the complexity of having to physically withdraw the asset from a storage facility, broker, or bank.  Investing in digital gold is beneficial for many as, in many cases, there are no additional storage or insurance fees associated with the investment. Moreover, it is predominantly a case of practicality. As digital gold can be transacted across the world, with the vaulting of the underlying metals handled by the trading company.  Through regular auditing, investors have the assurance that each unit of digital gold is based 1:1 on physical gold bullion, at all times. If an investor decides to sell, the legal title of the underlying gold bullion is removed from the holder. Benefits of Investing in Digital Gold Some of the benefits of investing in digital gold are: Invest at any level With digital gold, investors can invest as much or as little as they want. There are no restrictions for minimum or maximum investment. Moreover, investors can purchase any quantity of physical gold – starting from just 0.01 gram with Kinesis – and receive a monthly passive yield on their holdings. Liquidate in seconds With digital gold, investors are offered the ability to instantly liquidate their gold, removing the costly and time-consuming process of accessing and selling gold, which investors face with traditional gold investment. With digital gold, it is always possible to spend your gold in a manner that has a utility equal to that of fiat currency - with the added financial security that gold historically maintains value over time. Inexpensive Investment in digital gold can be a cost-effective and efficient way of investing in gold. With no storage fees charged, investors are able to securely store physical gold without the primary expensive of traditional gold investment. Easy Redemption With all reputable providers, the gold bullion bars underpinning digital gold can easily and quickly be redeemed and delivered to the holder. Safe and Secure Investment The physical gold bars underpinning digital gold assets, are often insured and safely secured in vaulted facilities. For example, Kinesis securely stores the gold bars behind Kinesis gold in 13 world-class, fully insured vaults across 9 countries. Tracking of Investment Buying online gives you transparency of market prices and how much gold is on offer. This means investors can also get a better insight into real-time rates so they can take advantage of price movements. With digital gold, exchanges can be utilised to place market orders that line up with their preferred price for gold, allowing for greater tracking of fluctuations. What is Physical Gold Investment? Investing in physical gold has been a safety net for centuries as it has historically maintained its value over time, and due to this, demand has increased consistently. Physical gold can be bought in the form of jewellery, gold coins and bars.  Benefits of Physical Gold Investment Some of the benefits of investing in physical gold are: You hold it  Some investors, particularly collectors, choose physical gold because it is a tangible asset that they can hold in their hands, or store at home. While this presents certain security risks, some investors still choose this option as a reminder of the literal and symbolic wealth that physical gold still represents. Immediately accessible Some investors enjoy the security of having immediately accessible bullion within their homes. In the unlikely event of an economic failure, some investors prefer to keep their personal gold holdings close to hand.  Inheritance Investors can pass on physical gold to relatives as a way to hold wealth within the family unit. This is particularly the case with luxury jewellery, which makes the precious metal a lucrative investment option.  Benefits of both digital gold and physical gold: Some of the benefits of investing in physical gold or digital gold are: Inflation-proof Investment Gold is considered to be inflation-proof. This means you can buy gold today and sell in 20 years and still have the same relative value. Since the gold price has historically appreciated alongside rising inflation rates, gold investment has proven to protect individuals from the depreciating effect of monetary expansion policies - otherwise known as overprinting of currency. Due to this, investors often look to buy into gold as a hedge against inflation. Using the example of the US dollar, and contrasting it with gold, the two have often had an inversely correlated relationship. When gold has appreciated, the dollar has consistently depreciated, most notably after the fall of the Bretton Woods Agreement.  Historically appreciating value  Historically, gold has appreciated over time, and the return is based on price appreciation. If we compare the value of £100 worth of gold and £100 worth of British pounds in the 1980s, the purchasing power of that same £100 worth of gold in 2021 would certainly be stronger than the counterpart of £100 British pounds. Despite holding £100 worth of British pounds and £100 worth of gold, you would purchase less with GBP.   Is Digital or Physical Gold the better Investment? When comparing physical and digital gold it is important to consider what’s most important to you as an investor. Digital gold offers superior liquidity, value and security, but some investors will always prefer to have their gold within reach. That said, it’s important to consider that investors can take delivery of the underlying bullion behind their digital gold.  As an investor, the Kinesis Monetary system can be used simply to hold gold in storage, meanwhile earning a competitive yield, as well as utilising its fullest capacity as a global, digital currency. In October 2021, the Kinesis Holder’s yield figure was as high as 6.99%*, which competes with, and in many cases outperforms, traditional investment options on the market, such as property, government bonds and dividend-yielding stocks.  If you’re looking to build wealth and beat inflation, both physical gold and digital gold could be a good choice. Many gold bugs choose to divide their holdings between digital and physical gold. It is recommended that gold should take up 10-20% of a healthy investment portfolio to ensure investors are protected against market volatility, currency fluctuations and inflation risks. Take a look at how you can invest in Digital Gold today.  * with Kinesis between October 2020 - October 2021. Yields will fluctuate based on transaction volume. Please note that past yield figures are not indicative of future figures. 

Doug Turner
Doug Turner

14/12/2021

Is it still worth investing in physical gold? 

For thousands of years, people have looked to gold as a sound investment and store of value. Today, particularly when the economy is going through a downturn, there is political instability, or the stock market is volatile, many investors start looking to gold as an attractive investment option. If gold isn’t part of your investment strategy, consider your existing portfolio and goals, and whether gold will make a good addition. Not only is gold a good way to diversify your portfolio, but it offers a number of other attractive benefits, including acting as a good hedge against rising prices when inflation accelerates.  Understanding your particular investment goals, existing portfolio, returns horizon (short-term or long-term) and need for liquidity should all guide your choice in whether to buy gold and in what form. If gold is the right choice for you, it is important to understand both how gold works and the various ways you can invest in precious metals. For example, you can purchase actual gold (i.e. gold bullion in the form of bars or coins), gold ETFs (exchange-traded funds), shares in gold mining companies, as well as digital gold. To make the most of your gold holdings, make sure you’re making the right choice for your specific needs. Benefits of investing in gold into 2022 No matter what type of gold you choose to hold, there are a number of benefits of investing in gold in both 2022 and beyond. Gold can act as a value safeguard during market dips  Many investors view gold as a safe haven during extreme market dips and volatility, helping preserve the value of their wealth. For instance, during the 2007-2008 bear market, the overall stock market plunged dramatically, while gold increased in the same period. Gold can act as an inflation hedge Gold has historically been a sound hedge against inflation because its price tends to rise when the cost of living increases. Moreover, gold is seen as a good store of value, meaning that people may be encouraged to buy gold when they believe that their local currency is losing value due to inflation. Gold offers protection against deflation Deflation is defined as a period in which prices decrease, business activity slows and the economy is burdened by excessive debt. During such periods, many people choose to hoard cash. Historically, some of the easiest ways to hold cash have been in gold and gold coins. Gold is a good choice during times of political uncertainty During times of political uncertainty, many people turn to gold. For this reason, it is often called the "crisis commodity”. Its price often rises when trust and confidence in governments are low. Gold demand is growing Many emerging market economies are growing, with their citizens’ and governments’ wealth increasing, leading to increased demand for gold and a rising gold price. For example, in rapidly-growing China, gold bars are a traditional form of saving, and demand for gold has been steadfast. India is the second-largest gold-consuming nation in the world and has also seen increased gold demand over recent years. Demand for gold has also grown among investors in developed markets. This is reflected not only in holdings of physical gold bullion but in the increasing number of investors in gold ETFs. Gold is good for portfolio diversification Savvy investors understand that a sound investment portfolio is well-diversified, meaning that the underlying assets do not all react the same way to economic and political events. The key to diversification is finding assets that are not closely correlated to one another. Gold has historically had a negative correlation to many stocks and other financial instruments, making it a good way to diversify any investment portfolio. Gold is held by major financial institutions Some investors may wonder whether gold still carries the importance in today's society that it once did. To see that this is true, one need only look at the significant gold holdings on the balance sheets of central banks and other financial organizations, such as the International Monetary Fund. In addition, several central banks have recently added to their gold reserves, evidencing their faith in gold as a sound store of value. Ways to invest in gold There are a number of different ways to invest in gold. Choosing the right type of gold investment is very important, ensuring it aligns with your investment goals and liquidity needs, among other factors. Physical gold Gold can be bought in physical forms such as ingots or coins. Unlike stocks or bonds which may pay periodic dividends, physical gold bullion is not an income-generating asset. Instead, the return on gold is based entirely on price appreciation. Moreover, an investment in gold also carries unique costs, such as storage and insurance.  Gold ETFs Gold or silver ETFs (Exchange-traded funds) are trusts that own physical gold and silver, selling their shares that track and reflect the price of gold or silver. However, the investor does not own the precious metals and at no point can they redeem the physical gold or silver bullion. Shares of gold mining stocks For some investors, buying shares of companies that mine gold is their preferred route to tap into gold investing. It is important to note that the value of shares in mining companies are not only influenced by the price of gold, but by internal business-specific factors that relate to the mining company itself. Digital gold For investors who want to tap into the benefits of gold investing, but do not want the hassle of managing physical gold, and desire an alternative to ETFs, digitalised gold may be the right investment.  Kinesis gold (KAU) and Kinesis silver (KAG) are digital currencies native to Kinesis, based 1:1 on physical gold and silver. Some of the benefits of investing in digital gold with Kinesis include: Earn a yield: Receive a passive yield on all KAU and KAG held.Get instant access: Buy, sell, and trade digitised physical gold and silver easily.Send globally:  Send KAU and KAG globally, cleared in 2-3 seconds.Choose the amount that’s right for you: On the Kinesis Money platform, you can purchase any quantity of spot physical gold – starting from just 0.1 gram. Gold investing in 2022 and beyond Many wise investors will be looking to gold both in 2022 and beyond, as part of their balanced investment portfolios. Before you jump into gold investing, consider all the options available to you and whether they meet your unique investment goals and needs. If you’re looking for an easy and safe way to get started investing in gold, Kinesis Money can set you on the right path.

Doug Turner
Doug Turner

09/12/2021