subject: 3 Tips To Bear In Mind Before You Invest In Gold [print this page] 3 Tips To Bear In Mind Before You Invest In Gold
Gold is the most common investment among all the precious metals. Investors generally purchase gold as a safe haven against financial, political, social or flat currency crisis. It includes investment market, burgeoning national debt, currency failure, inflation, war and social unrest. The gold has features of being money as shown in history of the gold standard, the contribution of gold reserves in central banking, gold's low correlation with other commodity prices, and its pricing in relation to flat currencies for the period of the economic crisis.
Gold has been invariably utilized as money and it has a comparative benchmark for currency equivalents that is based on the econmic regions or countries. Since 1919 the most common benchmark for the outlay of gold has been the London gold fixing, a twofold every day telephone meeting of legislative body from five bullion-trading firms of the London bullion merchandise. Also gold is traded constantly throughout the world based on the intra-day spot price, derived from over-the-counter gold-trading markets around the world.
If one desires to invest his or her funds by buying gold, here are the top things one should know:
1. Factors influencing the gold outlay. Like most freight, the price of gold is influenced by the supply and demand as well as speculation. But unlike the other merchandise, saving and disposing has a role to play in pricing the gold products. As of today, most of the gold ever mined still exists in accessible form such as bullion and mass-produced jewelry. Given the huge quantity of gold mined and stored, its price is affected by changes in sentiment rather than changes in annual production. In accordance to the study conducted by the World Gold Council, the annual mime production of gold over the last few years has been close to 2,500 tonnes. As much as 500 tonnes goes to retail investors and exchange traded gold funds, then again 2,000 tonnes goes to the jewelries, industrial and dental production.
A. Central banks and the International Monetary Fund is responsible for the gold pricing. The Washington Agreement on Gold (WAG) limits gold sales by its members. European central banks such as the Bank of England and Swiss National bank were key sellers of gold over this period. Although central banks do not generally announce gold purchases in advance.
B. Hedge against financial stress. Gold can serve as an armor against inflation, deflation or adverse currency movements. If the return on bonds, equities and real estate is not adequately compensating for risk and inflation then the demands for gold and other alternative investments such as commodities increases.
C. Jewellery and industrial demand. The requirement for gold goes to jewellery which accounts to one third of the annual gold demand. The largest consumer in volume terms, with 27% demand is India, followed by China and the USA.
D. Short Selling. Various well-documented mechanisms affect the price of gold. It includes artificial price suppression, arising from fractional-reserve banking and naked short selling in gold.
E. War Invasion and national emergency. During emergency demand of gold arises.
2. Benefaction Vehicles.
A. Gold bars and coins. Buying bullion gold bars is the most predictable way of investing gold. Distinctively, bars carry lower price premiums as compared to gold bullion coins. Then again larger bars carry an increased risk of falsification due to less stringent parameters for appearance. Another difference between coins and bars is that the former can be readily weighed, the latter is very difficult to compute. It has to be re-assayed.
B. Exchange-traded products. Like most stock exchanges, gold can be traded like shares.
C. Certificates. It allows gold investors to avoid risks and costs affiliated with the transfer and storage of physical bullion. Banks may release gold certificates, which is allocated or unallocated.
D. Financial statement. Many banks offer gold accounts where gold can be immediately bought or sold just like any foreign currency.
E. Mining companies. One can buy shares in gold mining companies.
3. Scams and frauds. Gold attracts numerous frauds. Understand the following:
A. High-yield holding programs
B. Advance fee fraud
C. Gold dust marketer
D. Counterfeit coins
E. Fraudulent mining companies with no gold reserves or potential of finding gold
F. Cash for gold
If you are interested in buying gold, be sure to adhere to these stuff as to avoid any complications . On the other hand, if you find yourself doing the selling part, it is decisive to be a clever and well-informed merchant as well. Know where and how to sell your gold pieces. Do a research on your target market. Surely, there are several online websites that you can get information and even promote and sell your valuable gold items. Just be sharp and be cautious when selling products online. Read testimonials from past customers and traders. Commemorate that before entering the world of gold trade, be it investing or selling, carefully follow these helpful guidelines so you won't find yourself being fooled.
