Introduction to Gold Investing
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PrintConspiracy theories, government intervention, international secret cabals, transmutation, mystical powers—no, this isn’t the X-Files movie. Welcome to investing in gold.
The emotional aspects of gold are something we are exposed to from a very young age. Gold is everywhere: our parents’ wedding rings, pirate treasure, chocolate “gold” coins, royal artifacts, glittering fillings in rap videos… It’s that deep cultural importance of gold that makes gold an anomaly in the world of commodity investing.
While many commodities are affected by more than just supply and demand, the price of gold drifts farthest from that balance. For example, gold has played a role in currency going back to the earliest recorded civilizations. Today is no different, with governments and central banks holding gold as a store of value to support their currencies. Speculators spend a lot of time thinking about the role of these agencies and their manipulation of the price of gold.
Of course, gold is also affected by supply and demand. It is estimated the Indian public holds more than 13,000 tonnes of gold. As the economies in India, China, and other countries continue to develop, the demand for gold jewelry will continue to increase. Gold is also used in electronics. While the majority of gold produced is used in jewelry, it is estimated that up to 20% of production goes into the manufacture of electronics.
The exact reasons are difficult to pin down, but gold is worth more US dollars now than at any other time in history. The US dollar has been declining, but gold is also at all-time highs in Japanese yen, British pounds and euros. Another big part of the story is that gold is not at all-time highs when its historical prices are adjusted for inflation. When gold hit $850 per ounce in January 1980, gold was worth almost $2,400 current dollars. Many look at this number and say gold has a lot of potential to rise even beyond current record prices.
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December 1st, 2008 at 10:52 am
The government is printing money so fast that even cash isn’t a safe bet any more. And even though gold has slumped during this crisis, the long-term outlook for gold investing remains attractive. Once institutional investors stop dumping gold holdings and the US dollar rally stalls, gold will zoom back up to $1,000 an ounce and beyond.
http://www.contrarianprofits.com/articles/why-gold-wont-disappoint-for-much-longer/9127
February 22nd, 2010 at 11:03 am
The emotional aspect of gold certainly does make it diff to navigate in the market place, especially when fear and greed enter the equation. Personally, I take a non-speculative approach to gold. I look at it more like insurandce and a hedge against inflation and possible the devaluation of our currency. http://www.goldvestments.com
August 25th, 2010 at 10:00 am
Gold is the best hedge against all this uncertainty. I am so happy that I purchased Gold @ $700 an ounce. I bought it on leverage from Empire Wealth Management Group. Invested $100k and they with the leverage I control $300k of Gold which is 428 ounces! My $100k investment is now worth $525,000. I am so happy that I listened to my dad.