Gold is often described as being the global currency and is bought as a means of protecting an investment portfolio. It is extremely liquid; demand always outstrips supply; it tends to perform well when there is a recession, which is why it is considered to be a form of wealth protection; and it is easier and less expensive than ever to get involved in gold investment.
It is no longer necessary to have to buy large volumes of gold, or to become a numismatist in order to be able to identify the best gold coins for investment purposes – you can trade gold online in much the same way as you can trade shares and currencies.
Methods Of Investing
There are numerous methods of investing in gold. It is possible to trade in shares belonging to mining companies and other companies related to the gold industry. However, this is not really trading in gold and share price movements are governed by much more than the performance of the gold market itself.
It is possible to buy gold coins, gold jewellery, and even gold bullion, but there are problems associated with this form of investment too. The price of jewellery depends on its aesthetic value as well as how well it has been stored, while numismatism is a whole investment world in itself. Owning bullion not only requires that you have appropriate storage facilities, but if the facility is not accredited then the cost of selling it will also include the cost of having it appraised and tested by the buyer. What’s more, if you don’t want to invest in a whole bar, then you will struggle to find a partner and to buy the gold that you want.
Online gold trading accounts potentially offer the benefits of both worlds. You invest directly in the price of gold, which means that you stand to profit when gold prices rise, you can buy relatively small amounts of gold, and although you never take physical possession of the gold itself, you don’t need to arrange for the storage or assessment of the gold either.
Short Term Gains Or Long Term Investment?
Even though the gold price has slumped over the past four years, it has performed almost exactly as expected according to the state of the global economy. During the recession, gold prices hit unprecedented highs, and only recently as the world has recovered from this recession have gold prices started to fall again.
Although it is possible to trade gold with the aim of making short term gains, gold is often viewed as being a long term investment. In July 2005, the gold price averaged just over $422 per ounce, compared to the current $1,100 per ounce that it has been trading at recently, which is in fact a five year low. At its peak in 2011, the price reached a staggering $1,900.
The big difference between the high and low in gold prices over the last ten years does show its potential for long-term investment having nearly trebled in value even following a four year slump, but it also acts as a reminder to potential investors that gold investments, just like stock investments, have the potential to lose as well as to gain value. Successful investment means successfully predicting the movement in gold prices.