Value of Gold

It is known that, gold has a long history starting thousand years back.  It has been used in jewels, as a mean for transaction, as a currency, in circuits etc. but no matter the time, it symbolizes the wealth and prosperity of the holder. During wars, gold was the first valuable thing to loot and now all countries have large quantities of it in their reserves (check the link that describes the countries having the largest amounts).

Golden mask from Mycenae grave in Thessalonica museum

In the last ten years we saw a major increase in price. After the .com bubble and the 9/11 attacks, gold allured investors in this economic uncertainty.  It worth’s mentioning that gold, silver and other commodities are being trade like stocks and they are valued in dollars (which means that any changes in price, has to be recalculated in local currency ). The price of course is based on demand and there are different types. First of all we have countries, who buy large quantities for their treasury like Russia and China to support their currency. Then we have industrial use like jewels, circuits etc and we see this happen mainly in Asia where growth is rapid.  Then there are big investors, who trade metal in physical form or ETFs (which is something like “stocks based on commodities”) and play long or short.  Finally we have small investors or individuals who buy gold from banks in order to secure their fortune, in the ongoing economic and political uncertainty.

But what really triggers demand except growth rates? The last 2-3 years, due to the world fluidity state, gold prices have sky rocketed because, both investors and individuals have found a safe bunker for their capital. Also another major role is inflation.  Some countries and mostly USA,  try to overcome their crisis by printing money, which in return leads to inflation and devaluation of their currency.  As we saw gold’s value is based on us dollar and so, for investors to avoid the inflation shock, yellow god is an excellent lifeboat.

We saw that gold can be bought in physical gold and as an ETF. About ETFs I suggest to talk to an investor you trust (although I wouldn’t recommend this choice, for reasons to be explained in the near future).  Physical gold can be bought as a bullion coin, as a bar or as a gold pound. Another good choice is not to invest in gold directly, but through stocks. When a gold company owns a mine and there is an increase in price the stocks of the company will increase as well, because the value of the business in increased!

Bullions coins and bars of gold

There you go! Some general staff that might be usefull and even save your saving from a possible oncoming ecomonic disaster!