WHY INVEST IN GOLD
Why Invest In Gold
There are various investment options in the world. Some choices are only reserved for the elite or for the rich investors and a few choices are available to everyone else. Among the few investment options that you have, gold is the best choice. Many people wonder why invest in gold when there are stocks, foreign exchange and various types of financial products such as mutual fund and equities. There are pragmatic reasons that address the pertinent question of why invest in gold.
Because It Is Safe
Gold is a safe investment option. It is immune to recessions. Gold prices do not react to worldly affairs or a country’s fiscal deficit. It has no connections to the stock market or the sentiments of investors. No major external factor can play any role in the pricing or value of gold. The only factor that can influence the price of gold is the lack of sufficient availability of the yellow metal. In such a case, you are better poised to make more money because the value of your gold would increase exponentially.
You can take a look at the history of gold for about a hundred years. You wouldn’t find any era or decade where gold prices have suffered steep crashes or any substantial devaluation. Gold prices, like value of land, would only increase. If you get an investment option that would ensure positive returns then there shouldn’t be any wonder as to why invest in gold.
Short & Long Term Returns
Banks have savings options and deposit schemes which offer assured returns. That way, you may consider investing in such schemes and financial products of the bank rather than investing in gold. Since both are safe, you may question why invest in gold instead of putting money in the bank.
Banks do not offer as high a return as gold does. You can do your own calculation. Check out the prices of gold in the last ten years and see how much it has appreciated. Check out the savings rates or returns of schemes offered by the best bank you can think of. See how much more you can make by investing the same amount of money in gold instead of doing so with a bank. Returns from the bank would be less than half that of gold even in the shorter term. Over long term, gold would provide returns that not many investment options can provide.
You Don’t Have To Be An Expert
For any investment, you need to know a fair bit about the industry or the product, whether it is land or bank savings schemes, stocks or foreign currency. To invest in gold, you do not have to be an expert in metallurgy. You can buy gold from a trusted source, as bars, bullions, jewelry or as bonds, and you can sit back and enjoy the returns.
Gold Investing Risk
Since ancient times, gold trading and investing has been used to create and maintain vast fortunes. Then as now, thousands of years later, there are certain risks involved. For the well-informed investor the rewards of financial gain and stability outweigh the risks, which are an inherent factor in all forms of commerce.
When it comes to gold, two of the largest to avoid are gold investing scams which run rampant across the marketplace, as well as the hidden or unexpected costs related to gold investing activities.
To provide an example of one of the scams in use right now, unscrupulous individuals offer to sell gold with the promise of storing it for their customers. In truth there is no actual gold in their possession and many of the worst offenders even charge the investors a storage fee. The investor is left with a lighter wallet and worthless paper. As for the hidden costs, issues such as the tax implications involved with gold investing could be surprising if investors are not prepared for them.
On the whole, gold investing is a smart way to build lasting wealth but like anything else, it pays to be well informed.
Gold As Money
For over two thousand years, various civilizations have used gold as money. People working for the kings and queens of a kingdom were all paid in gold. For more than three thousand years, gold has been used as payments or commissions. But, gold as money became much more widespread during the 4th and 5th century BC. Greeks popularized the use of gold as money during the Classic Period.
Today, we do not use gold as money but the two are synonymous nonetheless. Having gold is as good as having money, as long as you have an agency or a trader who would pay you money if you sell your gold or use it as collateral for a loan. In reality, gold is better than money since money hardly grows itself but the value of gold gets appreciated consistently.
The first time the Greeks used gold as money, it replaced the barter system. Through the next two and a half millennia, we have used gold in various ways. It has always remained as a precious metal but due to the scarcity of the yellow metal, building properties, temples, idols of gods and goddesses and making large ornamental assets had been abandoned as a practice. For many years in the recent past, global trade was carried out with gold as the currency. This was before the concept of currencies of different nations and a globally accepted foreign exchange system was put in place. It was only after the foreign exchange system came into existence that people across the world stopped using gold as money.
While gold is not used to trade things today, it is still the preferred investment choice of people across the world. Sovereign governments around the globe invest in gold and hold reserves as national assets. The value of gold as money has never witnessed depreciation and it never will.
Today, gold is found as bars, coins or bullions, exchange traded fund and as jewelry. Gold was valued and traded on the basis of weight, purity and form before and when countries used gold as money. Today it is valued on the same basis but in correlation to its corresponding value in a certain currency. The value of gold as money today is also dependent on the supply and demand in a specific country. Nations have different import and export duties on gold and several taxes on the precious metal which also affect the price of gold in a particular currency in a particular country.