Gold Investment – An Overview

Gold is the most precious gold on earth, and it is becoming an increasingly popular investment. In many ways it is the worldwide currency. Unlike other currencies, though, it appeals to people everywhere.

Historically gold was used as a trading currency, with people using it trade with other items before currencies existed. It has always been seen as valuable and still is to this day. Between 1946 and 1971 the price of gold was fixed at $35 an ounce. It was therefore a way of storing wealth, as it would not lose (but not gain either) its wealth. After 1971 the price rose dramatically surpassing $550 an ounce in 1980; more than fifteen times its previous value. It then dropped again and was as low as $351 in 1991, but this was still significantly higher than its $35 previous value. The rise in value soon started again as was a record high of $840 an ounce in early 2009. Over the past few months it has fluctuated.

Production of gold is low and this adds to its value as it is not easily obtainable. A large proportion is held by central banks such as the Bank of England and the Swiss National Bank.

People often seek gold in times of war as they are in fear of their currency being devalued. It is considered safer than cash as it will still hold value no matter what happens to their currency. Currency is valued worldwide so is not susceptible to the ups and downs in a particular country’s economy.

In the current economic times many have looked to gold as a way of safe guarding their saving. It is seen as a safe haven and due to potential currency devaluation this had made gold a more popular investment. This has especially been the case in the United States and the United Kingdom. It is being seen as an insurance in case a currency crashes. The problem for many though, is that it can no longer be used to purchase items, and many cannot afford to buy significant quantities of gold just for it to be stored and not used.

Gold is mostly seen as a way of saving, but it can also be used as an investment opportunity as they go up and down. Judging the gold price well will mean that a significant profit could be made. There are always likely to be times when the price is high and this is why people use it to save. But if gold is purchased when the price is low and then sold when high it will offer good returns.

Unlike other currencies, gold is not susceptible to inflation. If you save money now inflation will mean that it will be worth less in the future in real terms. This is not the case with gold. It is therefore a better way of saving for the future.

Andrew Marshall ©


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