Why Buy Gold
October 24, 2009 8:26 am Investment, Money
In the last 10 years, gold has been increasing in price steadily and will continue to increase. Therefore if you have extra cash to invest, it is good to buy gold and keep it. In the 1970s, a gram of gold only cost $20; while the current price has gone up to $127 per gram! During very long period of mankind’s history gold was, actually, “money” – a measure of value for other goods. Now when somebody talks about reasons for buying gold, he or she usually means gold’s unique ability to save money, and as a rule such words as ‘inflation’ and ‘portofolio diversification’ are pronounced. When we speak ‘investment’ we mean something that can bring us profit. It’s really tricky question whether is possible to make a fortune on gold. The gold price is typically not very volatile, that makes it difficult to earn money on price fluctuation. It’s a very trait that makes gold convenient for saving money but not convenient for making profit. The average investor traditionally uses gold just as a ‘safe haven’.
Some authors argue about influence of inflation on the gold prices: “The main attraction for investors is that gold is seen as the ultimate hedge against inflation. While the pound or dollar may lose their value, depending on the fortunes of the economy, gold historically goes up in value when inflation gathers pace. That is because everyone from market traders to high-powered investors would prefer to be paid in gold when cash starts to lose its worth.” Others just states some facts about the gold rush: “We have seen people in Europe buying gold in quantities that are more typical of the Middle East and Asia. There has been a tremendous amount of activity in countries such as Germany and Switzerland, with people buying coins and 1kg bars, very often just to take home and hide.”
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