Gold Investments
Gold has been used for investments for a
very long time. It has a high value and is an independent resource. It is not
subject to individual countries or trading markets. It is not connected to
companies or governments. For these reasons, gold investment in gold can
usually help an investor to avoid some problems that can happen in the economic
environment.
Gold investment can mean investing in gold
bars, gold coins, and even gold jewelry. Many different sorts of gold accounts
are available in the investment world.
Gold markets
The gold market is a worldwide market.
London and New York are the two biggest market places for gold in the world.
Gold markets operate like other investment markets, similar to the stock
exchange. Buying and selling happens every day with gold prices influenced by
economic conditions within the markets.
Gold trading price
Like any other market resource, the price
of gold is decided by supply and demand. Gold has always been a valuable
resource. People will often store supplies of gold during times of economic
inflation. Political fighting and wars will also make people store gold.
Storing gold makes supply short and demand strong – the price goes up.
Making profit from gold
Some investors believe they can make
profit from gold when the price is rising. If they buy, the price will go
higher and they can sell for a profit.
Another way a gold trader can invest is to
sell gold when they believe that gold trading prices will go down. They can
sell gold in some markets (like in the Forex market), without “having” the
gold, and buy it back later-on. If they are right, they would make a profit.
Other investors think that it is better to
buy gold even when the price of gold is going down. They believe that the price
will rise again later on, and then they will make bigger profit when it does
rise.
Gold and market risk
Gold is subject to market risk just like
other currencies and commodities in the market. Usually, gold has less
volatility (movements up and down in value) than currencies. However, gold has
been quite volatile during the past years.
As an investment, gold has different
properties from other investments. Gold investor interest in the gold market is
traditionally strong which makes liquidity in the market high compared to some
other forms of trading. High liquidity means that there is a better chance of
finding a buyer when you want to sell, and finding a seller when you want to
buy.
In the gold trading market, people can
invest in coins and bars, jewelry, futures and options, exchange traded funds,
even gold certificates. Gold can be traded more quickly and at more narrow
spreads than many other currencies and commodities.