Gems + ROI

Andrew Wood writes:

Diamonds may be a girl's best friend, but they do not always offer sparkling returns for an investor. Although smaller and more portable as a hard asset than gold ingots, they cannot be acquired via tax-efficient portfolio bonds alongside other precious assets. Works of art, property, vintage wines and collectibles, such as books, toys and comics are examples on which investors may wish to speculate. Trading in these markets can be problematic, expensive and pose security problems. Trading in bullion or precious artifacts is risky and cumbersome for the returns achieved.

In a bear market is it possible or prudent to invest in precious metals and stones, or should one stick to bonds and gilt-edged securities? If you recently acquired diamonds, thank your financial adviser for his foresight. A recent Asian mining takeover meant that share allocations nearly doubled for a junior mining organisation in the Madagascar market. Remaining assets in South Africa were hence rolled over into new corporate entities that rewarded investors with bonus share allocations in addition. Junior mining companies offer high potential in global commodity markets largely because of the China syndrome, which cannot be ignored.

Many investors tend to think of South Africa, Australia and possibly Amsterdam when considering gold, diamonds, or coal. But institutional asset traders deal in the commodity facts of the real world. China is actually the world's largest producer of gold and the largest holder of US dollars. It has hundreds of small gold mines that remain unexploited because of lack of expert mining methodologies and bureaucracy and natural resources mismanagement.

China's thirst for water, coal, copper and other resources is unstoppable. Australia has trouble meeting coal production requirements to sustain demand from Asian powers, which need these commodities to feed their vast but inefficient blast-furnace economies. China could exploit for maximum gain its vast gold deposits if it chooses to utilise western expertise. Would this propel China to world power status and also lead to substantial dividends via bond investments? For risk-averse investors wishing to diversify, a prudent allocation can be made in Global Emerging Markets (Gems) through collective fund vehicles specialising in such diversified precious assets. Smart investors worried about risk can easily have the best of both worlds by investing in such markets via a variety of individually structured offshore personal portfolio bonds.

Sparkling gems shining out in the junior mining sectors. Global emerging markets and the resurgent Asian economies of China, India, Indonesia and Thailand continue to be the prime movers for cautious investors with a sense of adventure. Investment in this market optimises one's position as a direct consequence of gaining access to the hundreds of gold mines in China that are underexplored and undeveloped.

Mitigating Gem investment risks. Although bond returns tend to be safe and steady but relatively low, Gem and global commodity market (GCM) asset investments are not guaranteed. Conversely, Gems aren't as risky as, say, corporate junk bonds, venture-capital projects and unlisted dot-com startups. To mitigate risks while optimising portfolio gains, investors should seek international independent advice from qualified specialists who are best positioned to structure the correct portfolio bond offshore according to your individual circumstances. These issues are of particular importance:

- Taxation and inheritance: regardless of performance of any asset, interests should be protected to the fullest extent possible.
- Dedicated local asset management teams: having your portfolio actively managed.
- Expense ratios and market level adjustment concerns: Gems not only sparkle more safely when acquired via tax-exempt trading bonds, but also save each way because trading or bid/offer spread differentials are substantially reduced.
- Gems' Diversity: bond investors can strategically acquire allocations in all these emerging market sectors and trade them profitably on a daily or monthly basis.

Diversity in mining companies, commodities, precious metals, or the exchange-traded funds that invest in Gem markets are the simplest, safest and smartest way of adding precious Gems to one's portfolio without undue concern that they will lose their sparkle. Diamonds may be a girl's best friend, but Gems are potentially more profitable in both the long and short-term term.

Useful link:
www.barclayspencer.com

How true!