Yellow Matter: Investing in Gold

The future of gold seems to be heading only one way and that is up. Gold is now consistently valued at around $2,000 per ounce according to the New York Commodity Exchange. While the gains from investing in gold may appeal to many investors to look at gold instead of deposit certificates, stocks and bonds, experts have stated that gold should not be looked at as a pure investment.

Instead, gold should be considered as a hedge, protecting the buyer from the losses that are common in other fields of  investments such as real estate or equities.

Gold is usually used as a hedge in order to combat inflation. The concept of gold being protected from inflation still stands.

Why is Gold Bought?

Gold is bought for two primary reasons, fear and symbolism. Fiscal and monetary policies around the world are now being designed to combat high fiscal deficits. Governments are also consistently looking to keep interest rates low in order to boost the purchasing power of the populace. The changes in policies and the austerity measures that are being implemented around the world makes gold a sound investment as it is not affected as much by inflation and market fluctuations.

The reason regarding fear is due to the apprehensions regarding the market. For example, after Standard & Poor had downgraded the United State’s debt rating, people feared another crash in the global economies wherein investments such as equities and bonds would be rendered useless and not profitable.

In order to fight this fear, gold appears as an almost invincible hedge.

Love For The Yellow

The other reason, being the symbolism aspect of the allure of gold, is primarily due to the prevalence of culture, more specifically in emerging economies such as China and India. Gold is considered an important symbol, much like how eternity rings in New York have a certain symbolism.

Most of the world sees gold as an element which corresponds to romance, whether it be marital or otherwise. Gold is seen as a gift which encapsulates the specialty of an occasion.

The symbolism factor is pretty strong as well. India and China account for more than half of the demand for gold bars around the world. Some may contend that such demand may bring down the value of gold. However, gold mining is a proliferated sector. Environmental concerns and regulations have also driven costs of exploration and mining to new heights, which will only serve to increase the value of gold.

Experts believe that it is now more difficult and more expensive to mine gold than fifty years ago, and the difficulty and expense is only going to increase.

Purchasing Gold

You can buy gold in many ways. You could go for the simple route of  buying jewelry. Head to the nearest jewelry store in New York which sells eternity rings and gold chains and rings and you will find something to wear as well as invest in. However, for more serious investments, here are a few other options:

  1. You can purchase gold bars or coins and these can be bought through dealers. These dealers usually charge an extra amount. Bars have a physical appeal attached to them. However, keep in mind that you will have to pay for transportation and storage. The regular gold bar measures at around 7 by 4 inches and has a rough weight of around twenty seven and a half pounds.
  2. Gold can also be purchased on exchanges as a futures option. The price in such exchanges is set per troy ounce and the price changes twice in a day in accordance to the standards and calculations of the World Gold Council. Futures means that there is an agreement to buy a certain amount (or sell) of gold at a stated price at a specified date. These agreements can be traded in exchanges.
  3. You could purchase stocks in gold mining and exploratory firms. Keep in mind that the financial health is not directly related to the price of gold and the fluctuations in these companies are affected by many other variables.
  4. The simplest way to invest in gold, apart from buying jewelry, is to buy exchange trade funds which have stakes in gold bullion. Again, exchange trade funds should only be used to hedge investments and to play with the prices of gold.

 Bio:

Andrew Walker is a financial consultant who specializes in investing in precious stones and metals as an alternative channel of investment. He has provided various clients with advice regarding the fluctuations of gold and how the market for gold works. He can also provide advice regarding the pros and cons of investing in eternity rings sold in New York, Gold Futures and anything else regarding the world of precious stones and metals.

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