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Why Buy Gold?

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by: No more debt !
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Word Count: 593
Date: Fri, 22 Jun 2012 Time: 10:18 PM

Why buy gold? Many of us ask ourselves this question daily, as we ponder on the benefits that gold investment would bring about should we choose to invest.

In the recent economic turmoil that the world is facing, especially the recession in America, many have turned to gold investment as a safety net. Why gold? Gold has come a long way since its first discovery, being used as trading money in exchange with the barter system, as well as jewellery and home decoration. Aside from that, even from the olden days, gold's value has always been high and its inception into the society has led it to be where it is today. A prized commodity which price is always mounting, however, still depends on the general economic well-being; currency stock markets; the outlook for inflation; and sentiment.

Many have speculated that gold would be a good investment, so where are we in the life cycle of this gold rush? Can gold still be a rewarding investment, or do we risk joining the influx of desperate speculators?

The price of gold has certainly performed well. From 2007 to 2009, the dollar price of gold rose from around $600 to $1,000. It has been volatile since and struggled to reach those heights again, but it beat all other asset classes in 2008.

But it's by no means a one-way bet. There have been periods where strong rallies have been followed by alarming falls. The end of the 1970s, for example, saw a spectacular gold bubble, as concerns over oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution led to a rush on the metal. Despite the uncertainty of gold, as some would claim, it is fast becoming more than just a commodity as more and more people begin to see its ability for investment when all else becomes too risky.

Especially now that the world currencies are in trouble, due to the stock market's current condition and the uncertainty in forex trading, gold has become a safer alternative for most. Its ability to hold its value and protect from erosion of assets value in times of inflation worries, eases the minds of most investors. According to Chris Wyllie, partner and head of portfolio management at the Iveagh Wealth fund, says:"People have spotted the opportunities in gold and it's becoming a rather crowded trade." So part of the reason for the high price could be over-reaction, and this could unwind if sentiment changes, leading to a price fall. Therefore concluding that, sentiment, like the rest, matters just as much. Due to the human reaction towards the currency stock market and other major marketable investments, it can ultimately lead to how gold would perform.

However, despite the many views on gold, major investors still consider investing into it due to its staying power and various ways of how to invest into it has helped many see the benefits it can bring. Since there are more alternatives of investing in gold, even for small-time investors, there are tons of benefits they can reap from the increasing amount of gold investment programs offered around. Any investment into gold has its pros and cons, regardless, as mentioned; many forms of gold investment are available to cater for all kinds of investors, which lead us to believe that gold is still a commodity worthy of your time.

About the Author

Precious G is a writer at Gold Investment Malaysia. The No #1 Blog on Gold Investment in Malaysia.

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