10 Reasons to invest in Gold

Gold is one of most traded metals on the international markets. This makes it the most fluid metallic commodity investment to make.

The following are top 10 reasons to invest in gold:

High demand: Due to its increasing rarity, the demand for gold is constantly on a long-term upward trend which ensures that it is consistently in high demand.

Inflation proof: Gold is an international and universal standard that is safe from influences of one country’s monetary policy. Thus, unlike ordinary currencies, it is free from adverse inflationary pressure.

Fiscal Stability: Unlike major international legal tenders such as Dollar, Euro, Sterling Pound, Yen, Yuan, etc. it remains stable irrespective of changes in political and legal status of a given regime.

Standard measure of value: Gold is a universal standard measure of value and therefore is a standard against which major international currencies and reserves are based on. Thus, its value can be exchanged wherever and whenever you want, independent of the geo-political limitations.

Appreciative nature: Due its declining availability, gold’s value cannot be diluted by consequence of over-supply. Consequently, although there could be short-term shocks, its value keeps on appreciating in the long-term.

Portfolio Mix: Due to the various units of gold and gold equivalents, gold can be easily blended with other investments to form a secure and diversified investment portfolio.

Store of value: Consequently, most international reserves such as those of the World Bank and IMF and indeed reserves of major economies such as US, UK, India, China, Russia and others are stored in the form of gold.

Ornamental value: Gold is not like any other metal and for that matter, not like any other ordinary legal tender. It has an ornamental value and can thus be molded into various forms that make it gain higher value than its intrinsic value. The ornamental value of gold ensures that it will always be an emblem of beauty, class and nobility and therefore it will continue to be held in high esteem for ages to come.

Sentimental value: The sentimentality of gold has been appreciated since time immemorial. Gold remains the most precious gift that one can give to another. It is found in golden wedding rings, golden watches, golden chains, status chains such as mayoral and royal chains, medals of Honor and many other modes of appreciation. Gold will always hold its position as one of the most sentimental gifts awarded as a token of appreciation recognized and appreciated universally.

Security: Gold can be highly secure. Due to its universality in terms value determination, gold is easy to be insured and stored. Furthermore, gold has always been considered as the safest hedge, next to real estate. However, due global meltdown that has created thousands of foreclosures across US and EU, many people have lost faith in housing as a safe hedge and therefore are looking forward to gold as the only viable safe hedge whose value can hardly be lost due to global economic meltdown.

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4 Ways Not to Buy Gold

Investing on gold can be exciting, but there are several ways not to buy gold. Believe it or not, there is a right and wrong way to purchase gold! To make sure that you stay on the safe side, it is crucial that you should be aware of what you are dealing with. Here I am discussing 4 ways you should not follow while buying gold.

1) Don’t pay too much

The most important factor while buying gold is not overpaying. On the day that you purchase your gold, be sure that you are aware of the spot price. This information can be checked online at a variety of sources, including our Current Gold Price page, without any hassles. The typical markup over the spot price is 5-8%. If the asking price is more than the typical markup, never buy it.

2) Don’t consider the historical value

A lot of people make the mistake of purchasing coins for their historical value. In this situation, this is the wrong route to take. Keep in mind that coins of this type will not have any value other than their melt value (The metal value of coin). Some dealers try to charge extra markup by narrating the fabulous history associated with the coin. However, you are an investor here, not a historian. So, be aware of people who try to sell you these items.

3) Don’t buy out of confiscation panic

Be aware of confiscation scare tactics. Many dealers use the story of President Roosevelt (he ordered to confiscate gold from U.S. citizens due to circumstances, and some rare coins were exempted from it) to con people into purchasing coins that are extremely over-priced, saying that they are exempt from confiscation. Stay clear of situations such as this one.

4) Never borrow for buying gold

Borrowing to buy gold is a great mistake that some people tend to make. This method is referred to as buying or purchasing within or on a margin. Using this method will get you into more trouble that you may not be willing to endure. To stay clear of any issues or problems, it’s in your best interest not to purchase on a margin.

If you keep each of these tips and guidelines in mind while you’re purchasing or investing in gold, you will be on the road to success. It’s in your best interest not to get side-tracked or conned by dealers. If you’re not sure of what you’re doing and you want to a few of the most popular tactics that may be used, you should conduct a little research, such as on this site, before you step into this world.

4 Steps to Follow When You Purchase Gold for Investment Purposes

Want to purchase gold? Are you thinking that you will have to invest a lot of money for it? Well, if yes, then are you aware about the several advantages that gold investment will give you in return? It isn’t so easy to invest in gold in this competitive market.
However, if you still want to have a secured future, then gold investment is a great option. If you can purchase gold in the form of coins or bars, then you’ll be able to make huge profit with it in the future when the price of gold will increase.

How Can You Purchase Gold?

Just like savings is important for a secured future, similarly it is equally important that you purchase gold and make a good investment. Read on to know how you can buy gold for investment.

1) Set up an account with stock broker

So, you’re thinking of buy gold? If yes, then you will have to set up an account with a stock broker. There are several stock brokers online such as Gainesville Coins so you should gather sufficient information about them before you decide to choose one for your gold investments. You need to know that gold exchange traded funds offer a less-expense route when you invest in gold.

2) Figure out the number of gold exchange traded fund shares

You will have to figure out the number of gold exchange traded fund shares that you want to buy. You need to divide the investment by the present price of the shares of the fund you’ve chosen. ETF shares are generally purchased in complete shares. As such, you may round off the fraction of your calculation.

3) Evaluate the present prices of gold ETFs

Planning to purchase gold? Make sure you evaluate the recent prices of gold exchange traded funds that are the owner of gold. You can use the symbols of stock like GLD, ETFs and SGOL that have share prices near about one-tenth the price of a speck of gold. Also, you need to know that PHYS and IAU are usually priced at about 1/100th the price of an ounce.

4) Buy gold ETF shares by means of trade screen

You may use trade screen for buying gold exchange traded fund shares with the help of your brokerage account. You need to know that exchange traded fund shares are bought in the same way just like the stock shares. Decide the number of shares you’re willing to purchase and make use of the market order to get them at the present market price.

So, if you are also considering buying gold for investment purposes, make sure you follow the steps discussed above. This way, your gold investment will be beneficial in the long run.

The 3 Types of Gold Buyers

Throughout the centuries, gold has been an important medium of exchange, store of value and in many cases, an attractive accessory. Yet, when it comes to investing, gold is a commodity like any other; it is volatile, subject to the rules of supply and demand, and it can return huge gains if bought at the right time.

There are many different types of buyers in the gold market, just as there are in stocks and other commodities.

Speculators

As I said before, gold is a relatively volatile commodity, which is no bad thing since volatility is what creates price movement and allows us to profit from our investments.

Speculators, however, do not buy gold with the intention of holding it as an investment for long periods. More likely, speculators, such as hedge fund traders or day traders, seek to buy gold for just a short amount of time, riding the recent trend until they get a signal to close their positions. They will also happily short gold if their methods suggest money can be made by selling the metal.

 But there are others who get caught up in the speculation too, the innocent public. All too often, the average person on the street will hear about the gold price ramping up, maybe reading in the paper about how traders are making huge sums of money in the gold market and they will get involved in buying gold too.

 The problem is, by the time the average person on the street ask themselves whether they should buy gold now it is nearly always too late.  News reports generally come too late for the general public and inexperienced investors nearly always lose their shirts when trying to time the markets.

Hedgers

Unlike speculators, hedgers have legitimate reasons for buying and selling gold since their business is often dependent on the price of the metal. Hedgers such as gold miners, gold service companies and financial institutions need to balance their exposure so will buy and sell gold futures to do so.

Interestingly, hedgers often catch market bottoms and top much better than speculators and data from the Commodity Futures Trading Commission (CFTC)can be used to analyze this relationship.

Investors

For the average investor, the preferred way to buy gold is as along-term holding. My analysis suggests that gold provides not only a viable alternative to other asset classes, but it is a commodity that can give decent returns, more than stocks in the right environments.

The ability to time the market is likely to improve returns and investors should refrain from following the crowd, particularly when speculators are bidding the price up.

In this way, the best time to buy gold occurs when any of the following conditions line-up:

  • When inflation is expected to rise sharply
  • When the gold price is at historical inflation-adjusted lows
  • When financial or national crisis may be imminent

When the price of gold is below its cost of production (supply and demand)