Apr 2012


Apr 2012

Investing in Gold

By StoneX Bullion

Popularity of Investing in Gold

Gold has come to be regarded as more than a commodity; it is currently considered an international currency so investing in gold has occupied one of the frontal places when it comes to the choices made by investors, regarding their portfolios. However, when bullion dealers refer to selling gold or buying it, on the spot market, they become part of transactions involving a commodity.

When investing in gold you can be sure that you will chose the precious metal with the highest popularity. It has become so in the latest years because people have a certain amount of disbelief regarding the evolution of currencies like the US dollar, which is also the currency to raise most of the suspicions. And not only people turn to investing into gold because of this reason. Central banks do it also, being the major players on the spot market.

The thing about gold and about investing in gold is that it is the precious metal which everyone wants from ordinary people to large bullion trading companies. The demand has become so substantial that has overcome the supply, making the price for this metal to highly increase, and we were witnesses to the evolution of this situation.

Forms of Investing in Gold

Investing in gold means investing in the following categories: in the physical form like bars and coins or investing into futures and derivatives. The latter instruments do not involve the investment into tangible precious metals and they are preferred by traders that prefer to speculate on the gold spot price. Speculators do not regard gold as an asset that guards them against economic distress. It is more an instrument to help them be profitable on the moment, depending on the evolution of the gold market.

Some people believe that for ordinary and small investors it is not that easy to invest in gold if we were to compare this with the usual stocks and bonds. And it is true, especially for the transactions developed on the spot market where professional traders will not get involved into a transaction with a private individual. Professional traders transact by following the principle of trading large quantities with low margins. Therefore, it would not be profitable for them to sell gold to an individual that maybe will keep its investing in gold for years.

Nevertheless, there still are bullion bars and coins in which anyone can invest in. These can be bought from almost everywhere; you just have to pay a little attention for them to be genuine and not counterfeited, so a little research about the dealer is required. So investing in gold can turn out to be not so complicated.

Why Investing in Gold?

When investing in gold people should think at investing in their economic future which is related to the evolution of the country they are leaving in. So this should be one major factor to weight in the favor of gold investments.

Another aspect people should regard when investing in gold is the evolution of the gold price, meaning the report established between supply and demand. For some years, demand has outgrown supply which determined the price to increase. That happened because everyone from central banks to small investors took the decision of investing in gold.