Because the idea of investing in gold seems to be a good strategy for a growing number of people who may never have thought earlier exposure to raw materials or real assets?
We know from ancient times that the yellow metal has had a special charm, but what exactly are the reasons for investing in gold is considered a good way to allocate some of your assets?
After all, you can t carry a bar of gold bullion and around in your Pocket if you offered some gold coins, when the payment for a new car or buying some properties, you would throw the salesperson in confusion.
Get free INO Trading alerts when you subscribe to our free Newsletter universe merchandise here. Simply fill out the simple form below. Is as easy as 1-2-3!So gold is not ideal as currency for everyday transactions, and given that normal is stored as 400 bar ingot oz Troy, it does not at first seem to be a practical investment.
But let s look at why gold has advantages compared to other asset classes in which traders expect to make profits and investors for capital growth and preserve their wealth.
Periods of economic uncertainty and geopolitical
Throughout history, people have turned to precious metals like gold and silver, because it is difficult to manipulate them in the same way that paper currencies can be manipulated.
When you think of investing in gold bullion, let's say you're doing to preserve your wealth and maintain purchasing power, when we face exceptional world events and uncertain.
The price of gold rose sharply in January 1980, soon after the Soviet Union invaded Afghanistan because of the uncertainty about how it could affect the activities and the global economy.
Gold is seen as an insurance policy, it is universally accepted and there is no risk of the counter party.
A hedge against inflation
Look how the Federal Reserve was forced to pump billions more dollars in the US paper financial system as a bank after another was on the verge of collapse.
In fact, the day when Bear Stearns was allowed to go to the wall, the price of gold hit its all-time high of $ 1.011 a Troy ounce in March 2008.
Suffice to say that every minute of every day the Government spends over $ 16,000 more than back in tax revenue.
And this is first of all the latest turmoil and enormous financial stimulus package proposed by President-elect Obama, along with the billions earmarked for u.s. auto industry seeking congressional approval.
Gold is seen as a hedge against inflation in the long term as its supply is finite, and relatively limited because it must be extracted, which is the main source of the metal.
This contrast with the money supply of paper money, as the US dollar that central banks can expand easily.
Studies that go back as far as the 18th century show that the purchasing power in the long term is best preserved by investing in gold. Consider that in this long period, an increase of 1 percent in the United States prices led to a 1 percent increase in the price of gold dollar.
Hedge against the u.s. dollar
Many traders and investors see as gold and other commodities can be used as a hedge against the weakness of the dollar.
And all the different classes of commodities, gold is the best, since it has a coefficient of correlation between 0.4 and 0.6.
The closer to-1 more an asset moves in the opposite direction to its reference, while + 1 means that moves very much in line with the activity.
Gold, a low volatility of raw materials
A study looking at how volatile commodities can be found that gold was less volatile, with a value of 15 per cent from the average, while base metals, zinc, nickel and lead and crude oil have been shown to be very volatile to about 35 percent.
In the long term is less volatile than a broad portfolio of international equities.
One of the reasons for the relatively low volatility of gold is that there is a good geographical spread of mining production and reserves, compared to other products such as oil that is concentrated in the Middle East.
In this way is less vulnerable to occasional surging caused by geopolitical tensions.
A means to diversify portfolios
In recent years increasingly pension and mutual funds have added to their portfolios to increase diversification in particular gold and raw materials.
Because the price of the metal does not physically move positively or negatively compared to the main asset classes, you took this strategic decision to invest in gold.
Portfolio managers are able to increase the rate of return of a diversified portfolio, including a small percentage of gold, say between 2 to 4 percent of its total activities. Other related articles:
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There are many ways to commodity traders and investors to consider gaining exposure to gold. They could use the path of paper that includes gold futures or certificates or perhaps using an exchange traded fund (or ETF), which are owned by someone else.
Alternatively, you could choose to invest in shares of gold mining, physical gold (including gold coins and bars), or bullion banks trade the services of a private guardian of ingots.
If you're thinking of looking more closely at the merits of gold and whatever route you choose, you are advised to seek professional financial advice and check the personal tax implications of your decision.
One thing is certain, however, given the profound changes in the global economy, more and more people are now looking at the merits of investing in gold to preserve their capital.
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