Gold is a tangible asset not a paper one. It carries no debt like many countries or companies do. Another thing to consider is that it’s not immune to corporate scandals. Gold is also a rare precious metal that cannot be printed like paper money can be to infinity, therefore, supply is limited. The reputation of today’s modern currency which is paper, also known as “fiat money”, is being questioned today by the capital markets with regards to its stability. Recent events like the Federal Reserve’s quantitative easing program have propelled gold prices to higher levels.
Gold is also considered to be a potential safe asset from the uncertainty of global economic events, political unrest and rising or high inflation. The reason why it’s considered a safe haven is because gold is one of the oldest currencies since mankind started to use a monetary system. With that being said, looking back over the last few centuries, gold has held a respectable value for many centuries weathering turmoil created by the human race. Recent events like the European Debt Crisis have propelled gold prices to new records.
During inflationary times, gold prices can benefit because of its industrial characteristic. Gold is used in electronics because it’s malleable, does not tarnish and is a great semiconductor of heat and electricity. Gold demand is benefiting from the surging demand for smart phones, tablets, Ipods, game consoles and flat TV screens. Therefore, how does gold benefit during inflationary times? We’ll if materials, food, energy, commodities are rising, the mentality of “If you can’t beat them join them”, become a hedge against inflation. You buy commodities such as gold.
Jewelry demand is soaring in emerging economies such as Brazil, China, and India. Just a few years ago the majority of people in India and China were in the category of either poor or rich. There was not much of an in between. However, that is changing. An emerging middle class is sweeping through those nations and their lust for gold jewelry is robust. With that being said, China has relaxed consumer laws in regards to their citizens owning gold. These three nations with just over 2.3 billion people boast an enormous consumer market for gold.
Is it to late to invest in Gold? It depends on how you look at it. First off, adjusted for inflation, gold prices can go to $2400 per troy ounce. During the eighties and nineties gold prices were pretty much flat until a couple of years ago. Throughout the eighties and nineties, fuel, food, medical, electronics, real estate, etc., have increased substantially in price whilst gold prices have not kept pace with its true value. Gold prices in our opinion have a lot of catching up to do compared to many items that have increased in value within the last 30 years due to inflation. In fact, many analysts have a price forecast of $2400 per troy ounce. Secondly, including gold in investment portfolios is still a young trend. Approximately 10% to 15% of investment portfolios contain gold. Just a few years ago, a mere one percent! Therefore, gold has much more space for growth as an alternative investment asset. Imagine the price level gold can reach, as more and more investors join this asset trend towards gold!
There are many affordable ways to capitalize on the rising gold trend or trading the volatility. Financial products like Exchange Traded Funds, Futures, Options, Contracts for Differences (CFD), gold coins or bullion can provide solutions for the investor. However, which one is right for you? Best Market Investment can educate you in regards to which financial product is best for you. In fact, our Free Gold Investment Guide could give you market insight and a greater understanding on how to make money in today’s lucrative gold industry.