Gold is a valued resource and is considered to be the standard of excellence. From the beginning, gold has been sought by the inhabitants of every nation on earth. Gold, with its beautiful luster and stable composition, is free from rust and corrosion even when exposed to the elements. Gold is used for jewelry, electronic components, medical uses, and dentistry. Gold is even used in the culinary arts as it is perfectly safe to ingest.
And, of course, gold has been used for centuries as currency with gold coins and ingots. The price of gold fluctuates, and you must be careful when buying to make sure that you are dealing with a reputable source. If you have been considering investing your money in gold, keep reading below for more interesting information.
Gold As Currency
Gold has been a standard of currency the world over for thousands of years. Gold was an easy exchange when it came to goods and services instead of the barter system and was soon standardized by minting coins and ingots. With gold being turned into actual coins now, these riches could be stored and used for accumulating wealth.
Eventually, paper money would take over, and coins would no longer be minted in gold for standard purchases. If you are buying gold coins today, you would not be spending them on groceries but likely saving them in a vault or safety deposit box as an investment. The price of gold in a minted ten-dollar gold coin would be exponentially more valuable than just the ten-dollar denomination struck on the coin. When it comes to the price of gold, it works more like the stock market than actual currency, with sometimes wide fluctuations in value depending on the market.
Investing In Gold
Gold is considered a precious metal and is, by nature, in limited supply. Supply and demand, of course, factor into the price of gold just like any other commodity. Gold is also a stable commodity and is valued the world over. As such, gold is considered a safe investment. Even if the local economy fails, gold still holds its value. Supply is also directly related to how much is being mined. You can watch the price of gold as it actually fluctuates in the market at any time during business hours for the stock market buy looking for live gold prices online.
Physical Gold
Investing in gold is a good hedge against inflation for the most part. Typically when the US dollar goes down in value, gold goes up. Gold, of course, is directly affected by supply and demand, much like other commodities, but history bears out that even in times of recession, gold will still be a positive investment strategy. The easiest way to buy gold is still purchasing and holding the actual metal, such as bullion, and then storing it someplace safe, such as a safety deposit box. Keep in mind that you will need to do your own research to make sure that you are getting the best deal. Gold coins are another popular option for investing. Make sure that you are buying from a reputable dealer and know what you are actually getting.
EFT (Exchange Traded Funds)
Another way to buy gold is through exchange-traded funds or EFT. Shares of EFT are bought and sold anytime during the day while the market is open like any other stock. Shares amount to one-tenth of an ounce of gold on the market. This means that if gold is trading for $1000.00 an ounce, the gold EFT will cost you approximately $100.00, or one-tenth. As an alternative, you can also buy EFT shares for companies that mine gold.
In either of the above scenarios, you will likely be dealing with a broker and be subject to brokerage fees, just like if you were buying stock in a company. If you are making regular trades, there will be commissions and fees to consider.
Gold Futures Options
For investors without much capital to invest, there are always gold futures or options on EFT. This basically means that you have the right, but you are not actually obligated to buy or sell gold at a price for a period of time based on whether you believe that the price is going to go up or down. If you are wrong, you only stand to lose the premium you paid to enter. This maximizes the potential for gain and minimizes the risk. Again, know what transaction fees you will incur.
Supply And Demand
According to the World Gold Council, in the first half of 2022, jewelry made up just about 44% of the gold demand. Jewelry can be a fun way to invest in gold, as you can always wear it and pass it on as part of your estate. When it comes to buying jewelry for gold investment, consider the cost of workmanship and not just the actual value of the gold. Be sure to factor in the cost of insurance policies to protect your valuable pieces. Of course, as demand goes up, the price of gold follows. It is reported that some of the largest consumers of gold jewelry are The United States, India, and China.
Another sector that factors into the supply and demand scenario is industrial gold. Gold is commonly used as a metal in the manufacturing of medical devices for cardiac stents. The technology relies on gold as a conductor in precision electronics manufacturing. As consumer demands increase, the cost of gold will continue to rise.
Should You Invest In Gold?
Gold is here to stay. Because investing in gold is considered a “safe haven” as gold tends to excel on returns. Investing in gold is a popular diversification strategy for many investors worldwide rather than putting all of their money into one sector in the market. When times get tough, gold has been known to weather the storm as a hedge against inflation, making it very desirable as a safeguard to your portfolio.
