Shari’ah Standard No. 57: When To Add Gold Into Your Portfolio (Part 2)

Written by: Dr. Raymond Youngblood, Jr., International Gold Miner, and Ms. Sheridzma Ladjabangsa, LL.B, International Commodities Broker

IN THE NAME OF ALLAH, THE ALL-MERCIFUL, THE MOST MERCIFUL?All praise be to Allah, the Lord of all the worlds. He bestowed His favors abundantly on us.

We shall continue with the first excerpt written, "Shari'ah Standard No. 57: 1.8 Billion Muslims Invest In Gold (Part 1)," in our pursuance of our goal, to write a single flow of thoughts about Muslims investing and owning gold. Since gold is regulated by Shari'ah Standard No. 57, it will change the entire significance of owning the precious metal. To quantify the overview of the previous excerpt, the period for investing in gold will be further expounded in this article.

You should consider fundamentals and the technical factors that have historically influenced the gold price movements. "Gold CANNOT be planted, harvested, manufactured, and reproduced as a source. Its original source is mined from the earth.?

A precious metal such as gold does not lose value over time. Consider that few miners have the ability and resources to go to the jungles and deserts and extract. Many investors have now raised billions of dollars to mine gold on asteroids and distant planets.

Remember, don't be in a rush, but also don't consider for too long. At some point, you have to make your mind up to purchase. Every gram you don't buy goes to another buyer.?

Shari'ah Standard No. 57 has finally been adopted to include Physical Gold and Silver as halal investments, opening many opportunities. The audience for gold has grown to 1.8 billion Muslims in the world. This has just increased the demand by folds.?

The rationale behind the importance of timing when buying gold is to maximize the potential of its revenue generation. In other words, you want to make money with gold. Your gold should have instant value, an increased value, not a depreciated amount. You want to purchase gold when the price is reasonable to your budget, when your selling value is higher than your purchasing price, or when you can afford to keep it to sell later to your benefit. Buying gold early at the right time will generate a high net profit when you decide to sell, and buying it late means lower revenue, or worse, a loss.

Adding Gold To Your Portfolio:?When is the best time to start adding gold to your portfolio??

Firstly, buy when you can afford to purchase gold. Consider the fundamental and technical factors that drive the price fluctuations.?

Secondly, consider the gold resell value. Why are you buying it? Are you using gold to help you fight off inflation, safe-haven, medicals concerns, flipping to make money, retirement, uncertain currency rates, etc.?

Thirdly, buying multiple forms of gold. Consider purchasing bars versus coins versus jewelry. Often people think of gold based on their own needs. The value of a gold ring may have a better appeal to some people than a gold bar. So, consider the factors that drive the price of gold in jewelry. Is the cost of the jewelry based on the fabrication and other expenses, or have the vulnerable consumers been taking advantage? Is the artics value worth that high price? A piece of jewelry will not likely be 24 karts, the same as a gold bar.

On the other hand, the cost that drives up the price on the bar is the 6 to 9 intermediaries' fee markups. The cost of the minting process has an array of values deriving from the artwork, the stamping, polishing, and then marketing. Ask yourself one question. If every minted coin has the same artwork, why must it be valuable? Being rare is supposed to bring value. Having identical artwork on thousands or millions of coins does not make it scarce. The resell value in the current system is that you have to wait to gain value in the future.?

Don't be in a rush, but also don't decide too long. At some point, you have to make your mind up to purchase. The best source is someone you know that handles physical gold. It is typical for gold bars and coins to be fake. Trust the source. Consider buying a small amount. Have it tested for purity and weight. These are the most critical factors.

Fundamental Data:?Gold is traded against US dollars. Use specific market data to give you insight into the economic strength of your investment. Normal fluctuations of the gold price usually occur at the time fundamental data is released. Trust your gut, but review the data carefully.?

Consider For Example:?

• Employment Data: The US Bureau of Statistics provides employment and unemployment statistics.?
• Economic Development and Trade: For Gross Domestic Product Announcements, Consumer Price Index, ISM Non-Manufacturing PMI, Core Durable Goods, and other reports provide insight into the economic progress, rate of inflation, and in-trade growths.
• US Interest Rate: Federal Open Market Committee Announcements involve interest rates and the growth of the United States money supply. These pronouncements give insight into the movement of gold prices.?

Federal Reserve Chairlady and Members Speeches and Press Conferences:?Listen to the US Federal Chairman's speeches about the rate of inflation and economic outlook. This can change the gold prices in global markets. When the Fed Chair and traders have different opinions regarding the financial strength of the market, that's when substantial fluctuations can occur. As quoted from BullionVault, some notes on gold's performance comparison as against the US Data (www.bullionvault.com/gold-guide/annual-asset-performance-comparison)

1. Gold topped this US asset performance table 6 times in the last 40 years, behind commercial real estate (REITs, 11 times), foreign stock markets (9x), and US equities (7x);
2. Gold also came bottom nine times worse than any other primary asset class and just ahead of commodities (8 times);
3. Gold’s 40-year change (+669% gross of costs) has beaten inflation (328%), housing (598%, excluding costs + yield) and cash (cumulative 535%). Commodities have dropped below end-1975 levels (-3.05%);
4. REITs are the best-performing asset both since 1977 (6,787% cumulative gains on reported performance before costs) and also so far in the 21st century (up 536% since 1999);
5. Gold is the next best performer since 1999 (+299%) and then corporate bonds (174%);
6. Gold's worst year was 1981, costing US investors 32%. 2008 was the worst year for REITs (down 37%), US stocks (down 37%), and overseas equities (down 43%);
7. Since 1977 gold rose in all three years when US stocks lost 10% or more, averaging 9.6% gains. It averaged 11.3% when REITs fell the same, rising on 3 of 5 occasions;
8. The US stock market has now risen eight calendar years running, matching its 1980s' bull run and just one year behind its 1990s' record stretch;
9. Cash interest rates have lagged inflation 16 times since 1977, twelve of them since 2002. Gold rose in all but 3 of those events (2013-2015);
10. Gold lagged CPI inflation consistently from 1994-2001. Note that in all of those eight years, cash in the bank beat inflation.

World Fundamentals Central Bank and Investor Purchases:?

• Banks and investors know they can use gold strategically as a hedge.?
• They use it against changing policies and uncertainties without a focus on the current gold prices.?
• They focus on diversification to their portfolios.?
• They have the intention to earn from vast differences of the gold price when buying directly from the mines or from the first round of brokers (usually 6 to 9 middlemen can handle the gold before the end-user) and then reselling it.?

Geopolitical Tensions:?

• Gold correlates with geopolitical problems as a safe haven against geopolitical tensions to turn to in times of uncertainty.?
• Investors trust gold since it does not possess any counter-party risks, and its prices always increase over time.?

Seasonal Events:?

According to CaseyResearch.com, "The only month gold has been down in every market condition is March 2017. But this worst performance poses a great opportunity to buy gold because of its lower attractive price…"

1. The Festival/Wedding season in India (Dhanteras and Diwali)
2. Mid-autumn festival in China in September?
3. Valentine's Day in the US

Is It Good To Buy Gold:?

• Let us not get carried away with the confusion of the timing as to when to purchase gold.?
• We are a miner and a trader. "Is it always good to buy Gold from a direct source?" The answer would always be, Yes.?
• Let us explore a little why. "…From January 1934 with the introduction of the Gold Reserve Act and ending in August 1971, when Richard Nixon closed the United States' gold purchase window, the gold price was set at $35 per ounce.?
• Using that price and today's price of gold, at $1,258, a price appreciation of 3,494% can be deduced. As compared to DJIA, and FBNDX, since August 1971, from that time, both appreciated in value by 1,836% and 2.175% respectively…" (https://www.investopedia.com/ask/answers/020915/has-gold-been-good-investment-over-long-term.asp)

Next Article (Part 3): Shari'ah Standard No. 57: Where to Buy Gold

Dr. Raymond Youngblood, Jr., International Gold Miner www.youngbloodindustries.com and Ms. Sheridzma L. Ladjabangsa, International Commodities Broker (Marketing Director)

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