Thursday, February 28, 2013

Don't Sell Your Gold Trinidad & Tobago

Why are there more gold buyers than ever before in Trinidad & Tobago?

Within the last few years there has been an increased prevalence of advertisement attempting to induce consumers to part ways with their gold jewellery. Though the practice of cash for gold is not a new one and is a legitimate business; this article seeks to inform consumers before they make such a decision.


Clearly these new gold buyers realize something that the gold sellers or the public in general may not realize. Gold is very popular as an investment, particularly as a store of value and investors generally buy gold as a hedge or a safeguard against economic, political or social crises which look more and more likely by the day. Here’s why:

The US Is In Severe Economic Trouble and the $US dollar and by extension the $TT which is pegged to the $US will lose substantial value. Here are a few basic stats:
  • US national debt $US16.9 trillion
  • US Total GDP of $15.6 trillion
  • The actual liabilities of the federal government—including Social Security, Medicare, and federal employees' future retirement benefits—already exceed $86.8 trillion, or 550% of GDP
  • US Federal Budget Deficit $1.05 Trillion
  • Many European countries debt to GDP ratios are in similar or worse shape
In spite of the above because the US has the world reserve currency i.e. it is held in significant quantities by many governments and institutions and also tends to be the international pricing currency, the US has funded its budget shortfalls by simply printing $US which the world willingly accepts. (The Federal Reserves prints $US and buys US Treasuries effectively funding the US Federal Government). Had any other country opted for this approach they would have caused inflation within their economy. This occurs because there would be more dollars chasing a limited quantum of goods thereby bidding up prices.



The US is temporarily spared the inflationary effects as the rest of the world absorbs all these excess dollars and even hoards $US since the rest of the world deems the US dollar as a safe haven. These dollars therefore are currently stored all over the world and are not demanding any goods, services or assets of the US economy to any real extent. These inflationary chickens ultimately must come home to roost.


Since Trinidad's currency is artificially pegged to the $US when this inflation hits the United States Trinidad and Tobago will experience parallel loss in purchasing power. Even more so because Trinidad imports significant amounts of consumer good from the US.

Currently the world has implicit trust that the US dollar value is backed by the full faith and credit of the US i.e. the ability of a holder of a $US to purchase goods in the US at any time. Note that scarcity makes anything more valuable –conversely the increased availability of anything reduces is value. In other words when more dollars are printed the less existing dollars are worth.
 Gold historically has provided a means of protecting your purhasing power in uncertain economic times. Not suprisingly within the last 10 years gold has risen steadily as more and more people realise this. Apart from offering the prospective gold seller substantially less than the true market price the gold buyer also wants to take advantage of the seller's lack of percieved value of their gold especially when the seller lacks economic knowledge of what lies ahead. Don't allow youself to be taken advantage of.


On the contrary, invest and hold gold and silver and actually benefit from the inevitable outcome of the monetary devaluation (the $US or Trinidad and Tobago's dollar) in such a scenario the real purchasing power of gold, over the long term would likely remain constant or rise.

Other international investors are figuring this out as well, aside from governments and central banks, ordinary citizens of developing nations see gold as the present and future method of preserving wealth. In fact international central banks have begun sensing whats up ahead and have started to accumulate significant amounts of gold as an attempt to diversify their holdings and hedge against the inflationary effects of global money printing, central banks, for the first time since the mid 1960s, have become net buyers of gold.

It is highly recommend you hold on to your gold and other precious metals, moreover try to ensure your investments are invested in hard assets, real estate, agricultural lands, food production and/or productive businesses not government bonds denominated in $US or $TT or mutual funds that invest in these financial classes. Investments denominated in the Canadian dollar, Australian dollar, New Zealand dollar etc i.e. countries that have sound monetary systems should be considered.

13 comments:

  1. good to know this stuff i was about to sell my gold

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  2. Any chance you can advise where to purchase gold bullion in T&T? Thanks.

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    Replies
    1. Sorry don't know of any. Sadly if you import it you are subject to 15% duty and 15% VAT ouch!!

      Was considering setting up a company to provide same but even getting a precious metals licence apparently is a tall order.

      I would recommend buying gold and silver coins whenever you travel abroad or buying scrap / pawned gold / silver jewellery from the few pawn shops / jewellery stores that sell.

      Hope that helps. Let me know if you ever find any..... Congrats on having the right mindset.

      Cheers

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    2. Hello,

      I must say that I was pleasantly surprised when I stumbled across this article. Good to see that this conversation is taking place in T&T. Your article was quite comprehensive and you made it simple for the non-financial minds to understand.

      It so happens that I've been buying currency grade Gold for almost 1 year now from a foreign company that sells Gold from LBMA certified refineries. I also have it stored in their vaults for Free.

      It's very convenient, you can buy with your credit card or a wire transfer. It is also very affordable as they sell Gold in the smaller quantities of 1g, 2.5g and 5g as opposed to US$ 1300 + per ounce. You can request your Gold with Free delivery when it reaches at least 100g and the country based fee is about 14%. You will also get a discount on your purchases. It's pretty cool.

      If you want to know more about the company I use, you can contact me at wealthpreserve@gmail.com

      Delete
  3. are you all still located in san fernando i would like to still some gold as one of my friends told me about you

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  4. I wanted to sell my deceased husband's gold to pay off some debts that he has left behind. I am glad i did a google search first and found this article. Thank you

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  5. If you have scrap gold which you don't need or get new one then you have a choice to sell this and get new one which is for you. And here is buying all kind of gold.
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