Should You Invest in Gold?

Written by on August 8, 2013 in Money - No comments | Print this page

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buy gold

There are many different arguments going about whether you should be investing in gold or not at the moment.

Recently we have seen prices fall a bit, which may have gotten some people panicking. This does not mean that gold is a bad investment though.

You just need to do a bit of research on the market and understand how things work before you commit to investing in gold.  There are many things that can affect the price of gold in the market:

  • Inflation
  • Availability
  • Deflation
  • Political Turmoil
  • Dollar Price

All of these factors have a bearing on the price of gold. The economy in general also dictates the price. When the economy is doing well, and there is more money, people tend to buy more gold. When the economy is not doing as well, then traditionally this is when people sell their gold.

Swings and Roundabouts

There are a lot of people who will tell you that it is good to buy gold. And you will also be able to find just as many people who say it is not a good idea to buy gold. It all depends on how you look at it.

Recently the price of gold has fallen, and some people are selling their gold. Some wise investors know that you always see swings going both ways and try to use these in order to make some quick, easy money.

If they see the price of gold as low enough and they are pretty sure the price will swing back up, then they will buy the gold that people are selling, maybe at a loss, and turning over some easy profit.

Now if you can do this on a big enough scale, then you can make some easy money. We do not all have the money to invest millions of dollars in gold though, so this may not be of any use to you.

The Long Haul

Gold is generally thought of as a better long term investment rather than short term investment for the average investor. Buy as much gold as you can afford and keep it locked away securely and wait for the price to increase.

If you look back over the last ten years alone, you will see that the price of gold as gone up by over 300%. Gold does typically go up over a period of time, but the last 20 years have seen an unprecedented increase in the price of gold.

If you bought a Troy ounce of gold back in 1996, then this would have cost you about $369.00. The same weight of gold in 2012 will cost you $1664.00.

If you could afford to invest in let’s say 100 ounces in 1996, then the increase in value is around $129,500.00. This is not a bad profit for not having to do a lot!

If you can afford to invest a wedge of money and do not need an instant return on it, then gold can be a great investment. There are lots of people who have made money in buying and selling gold.

You can easily find people who will sell gold in Melbourne, Darwin and anywhere else in Australia, but do your research before you invest.

The Risks

There are some risks when investing in gold and there are other factors that you need to consider as well. For example, there is no interest offered on gold deposits so if you invest in physical gold, you will only have outgoing each year to pay for storage with no money coming back.

You can invest in the various investment funds out there specializing in gold, but it is much better to have the physical gold rather than a piece of paper.

You should be aware of the different forms of gold and their value before you make a purchase. Some gold are only worth their scrap value whilst some gold coins are worth more than their weight in gold.

You are also going to have to pay tax on gold, and there is also the problem of liquidity in case you need some fast cash. If your money is in the form of gold, then you will have to sell this to get the case.

If you do not need the cash in a hurry, then this is not as bad, but can cause problems or even a loss if you have to sell cheaply just to get rid of it.

Generally speaking, gold goes up over time in the long term, but there is still a risk that you can lose money, depending on when you invest.

Before you commit yourself, do some research and find out as much as you can before you proceed to buy gold as an investment. You can make money investing, but it is not as easy as some people would have you think!

Israel Brown, who is a keen article writer and blogger, has written this article. Israel collects gold jewellery and always likes to share her thoughts and experiences. Unlike a lot of people, Israel invests his money in gold jewellery because he appreciates the pieces rather than looking to make a profit. He often goes to Gold Buyers Melbourne to sell gold jewellery or even buy a new piece.

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