Is Investing In Gold A Good Idea: Facts You Don’t Know
If you have money to invest, is investing in gold a good idea?
Such question and other similar queries are just proper for anyone who is in the process of making a choice where to put one’s money in.Actually there are so many types of investment available. Investing in gold or silver, and later to sell it is just one of your many options.
Before one further pursues this question, you must know certain basic facts about gold investment:
1. Gold is the most popular form of investment among precious metals
Gold is part of men’s history since the dawn of civilization and will continue to play a vital part in the present time and in the future.The allure and appeal of this yellow metal to man’s mind and imagination is beyond dispute.
Just like silver and platinum, gold is a precious metal which has a high demand throughout the world. As such, gold has high economic values. A number of people invest their money in gold as a strategy to preserve and maintain capital during hard economic times.
Some people reason out that in case an economy collapsed, the value of money will be worthless. In this scenario, you could trade in gold as a substitute for money.
Investment in gold serves as a hedge or protection against political, social and economic uncertainty or instability. The prices of gold tend to go up in the event of political or economic turmoil especially when the inflation is high.
2. Investment in gold is a high-risk investment
High-risk investment is a kind of investment that carries with it a high potential risk or risk of loss in return for large profit or gains. While it is true that you can earn huge amount of profits from gold, there is always the tendency of losing some or all of your financial investment.If you are really contemplating investing money in gold then you must be in a position to afford losing your investment funds in view of the risk.
3. The market for gold is subject to speculation
Just like in any other type of high-risk investment, gold is always subject to speculation like in futures contracts and derivatives.Future contract is an agreement between two parties to buy or sell a particular commodity of definite quality and quantity based on the price today, the delivery and payment of which is to be made at a specific future date. This simply reflects the expectation and intentions between the buyers who hopes that the price will be going to increase, while the seller hopes that the price will go down in the future.
4. The price of gold is subject to supply and demand
The price of gold is always subject to market fluctuations based on the supply and demand side of the market. If you are planning to invest in gold, or buy and sell gold, you must constantly monitor any development in the market especially the price movement of gold and must be decisive and quick to make any decision to insure profits and avoid losses on the basis of gold market indicators.
5. Gold does not earn interest or dividends
Unlike money in the banks or stocks of a company, gold itself as a form of investment does not earn any interest or dividends. The intrinsic value of gold depends upon factors outside of itself which is the appreciation or depreciation of its prices. Thus, it appears that it will always have this speculative element.
To be a wise investor in gold and to find the right answer to the question “is investing in gold a good idea” – you must have an informed judgment. One way of doing this is to weigh and consider the facts presented here. Your sound judgment in the light of the basic facts is good as gold.
