The purchasing of gold has long been seen as a solid and smart investment. Gold, for hundreds of years, has been associated with wealth and power. Even today, where much of the world has deviated from the gold standard, gold is still a powerful investment. Investors note that during times of economic uncertainty a desire to buy gold within the investment community and, more specifically, the community at large, increases. So, what makes people decide to buy gold and is it a good idea?
Gold has a History of Holding its Value
Gold buyers know that the commodity has a lengthy history as a good investment because it holds its value. Gold tends to increase in value during times of economic uncertainty, including inflation and deflation. It also increases when the value of the U.S. dollar dips. Between 1998-2008, the United States Dollar declined sharply – the price of gold increased substantially during that time.
Gold buyers interested in the true, gold standard of gold, cannot go wrong with coins or bullion. Gold bullion is considered the ultimate signal of wealth and has been considered an investment for hundreds of years. Coins can be used in the same manner. This type of gold purchasing is intended for those who are interested in the actual value of the product, rather than the value of production.
Gold Buyers are Diversifying Their Portfolio
Diversifying a portfolio is something of a security measure to ensure one’s entire portfolio is not destroyed in one fell swoop. This is a countermeasure that has become even more important recently, as the markets have a tendency to swing violently. Gold and the stock market actually have a negative correlation with one another. For example, in the 1980s and the early 1990s, the stock market soared, but gold prices stayed relatively stagnant or dropped. Alternatively, between 1998 and 2008, the stock market swung violently and economic uncertainty took hold across the world. During this same period, gold prices soared. Between 2008 and 2012, the price of gold continued to rise as the stock market struggled to gain footing.
You can choose to diversify your portfolio by purchasing stock in gold production companies or buying into gold mutual funds. Junior gold stocks are less mature mines, and more speculative for the more seasoned investors.
Gold Bars are in High Demand in Emerging Markets
There has been a boom in emerging markets over the last decade. For example, the technology boom in India has raised the middle class, allowing them to buy more luxuries. China is seeing a similar rise in class. These emerging markets also have a psychological connection with gold, and when new money is breathed into these new markets, many people choose to buy gold.
In China, gold bars are seen as a solid investment plan. In India, gold is used as a symbol of stature and the more gold jewelry one wears to important events the more sophisticated they are considered. Thusly the demand for gold soars in September and October, the traditional months for marriage in India.
Because of these emerging markets, experts suggest the purchase of gold bars. Gold bars can be purchased at a variety of dealers, but it is important to look at the business before making an actual purchase of a product.
Pinto Gold is one of the leading gold experts in Canada, if you are interested in buying gold as an investment, contact Pinto Gold for more information!