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3 POLITICAL RISKS OF GOLD INVESTING
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3 POLITICAL RISKS OF GOLD INVESTING

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Political risks of gold investing are: 1. prohibition of gold ownership, 2. nationalization of gold mines and 3. a fixed gold price ...

Political risks of gold investing are: 1. prohibition of gold ownership, 2. nationalization of gold mines and 3. a fixed gold price ...

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  • 1. EXCLUSIVE
    3 Political
    Risks of
    Gold Investing
    www.goldratefortoday.org
  • 2. The political risk of gold investing means that the government can change laws and regulations that may harm your investment in gold
    These government interventions can happen in the country of the investor or in another country
    Both would have an impact on the gold price
    3 POLITICAL Risks of Gold INVESTING
    www.goldratefortoday.org
  • 3. First, prohibition of Gold Ownership
    It is thinkable that the government prohibits the possession of gold and requires gold holders to sell their asset to the government at a fixed price
    3 POLITICAL Risks of Gold INVESTING
    www.goldratefortoday.org
  • 4. In 1934 Franklin D. Roosevelt passed a law that made it illegal to possess gold
    The only exception was gold for industrial and artistic purposes
    The price was fixed at US$ 20.67 for which one ounce of gold had to be exchanged
    3 POLITICAL Risks of Gold INVESTING
    www.goldratefortoday.org
  • 5. The US congress passed this law to prevent private gold to become a competing currency
    The possession of gold by private citizens with only legalized 39 years later in 1973 by the President Gerald Ford
    3 POLITICAL Risks of Gold INVESTING
    www.goldratefortoday.org
  • 6. Second, nationalization of gold mines
    Politicians could also nationalize gold mines or heavily tax companies that produce and trade in this precious metal
    3 POLITICAL Risks of Gold INVESTING
    www.goldratefortoday.org
  • 7. In 2005 Chavez, the Venezuelan president announced the confiscation of the property held by Crystallex, a Toronto-based gold-mining company
    This resulted in a drop of its share price by 50 per cent in a single day
    Besides that, the dictator levied taxes on many foreign companies
    3 POLITICAL Risks of Gold INVESTING
    www.goldratefortoday.org
  • 8. Third, fixed gold price
    The government could first, limit and control gold trading by restricting the amount of gold to be sold or by determining a fixed price
    3 POLITICAL Risks of Gold INVESTING
    www.goldratefortoday.org
  • 9. Before 1972 the gold price either directly (classical gold standard) or indirectly (Bretton Woods System) determined the value, and the exchange rates of the currencies of most Western Nations
    Therefore, their governments determined a fixed gold price
    3 POLITICAL Risks of Gold INVESTING
    www.goldratefortoday.org
  • 10. During this time, the gold rate was not volatile which made trading and speculating in this precious metal a futile act
    Even though currently the gold price follows the law of the market, future governments might reintroduce a fixed gold rate so that the national currency can be pegged to this metal
    3 POLITICAL Risks of Gold INVESTING
    www.goldratefortoday.org
  • 11. Or the government might decide that gold trades for a too high rate
    The US Commodities Futures Commission already has the authority to dictate a trading halt for futures
    This might be used on gold futures
    3 POLITICAL Risks of Gold INVESTING
    www.goldratefortoday.org
  • 12. How to anticipate and circumvent these government risks?
    First, an investment in gold mines should occur only in stable countries, such as Canada and Australia (unless high risk investments are desired)
    3 POLITICAL Risks of Gold INVESTING
    www.goldratefortoday.org
  • 13. Second, it might be wise to distribute personal gold reserves to several countries, in case of confiscation
    Third, investors should always be well-informed about world news which can influence the gold price
    3 POLITICAL Risks of Gold INVESTING
    www.goldratefortoday.org
  • 14. Visit my blog:
    www.goldratefortoday.org
    Live Gold Rates,
    Independent Trading Advise and
    many Resources about Gold Investing
    Interested in More?
    www.goldratefortoday.org

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