In recent years, precious metal investments have come into the spotlight. Gold is the most stable and highly-sought savings and investment form, underlined by the following factors:
Through precious metal investments you can protect your assets against inflation and devaluation of currency. Buying gold, ensures a gold reserve which will maintain its value as well as a compensation for eventual losses in other investments caused by falls.
Gold’s spending power has remained almost unchanged for hundreds of years, only the value of money is changing. In the year 1911, an ounce of gold would buy you a men’s suit. Today, 100 years later, one ounce of gold will still buy a good suit. There are several other examples proving the value stability of gold. It should be noted, that in 1911 gold was $30 per ounce. While the dollar has continuously been negatively affected by its inflationary tendency, the purchasing power of gold (men’s suit) has remained unchanged. Gold has the power to stabilize the purchasing power of money!
Another example: In 1908, a Ford Lizzy could be bought for the same amount of gold than in 2008 a Ford Mondeo. As can be clearly seen, the US Dollar has lost significant value: it has lost 90% of its value in the last 100 years. However, the gold amount in ounces remained the same.
In economic terms gold has no yield; however investors can count on an increase in value due to its growing value expressed in paper money.
Precious metals are an ideal additional and stabilizing element of any investment portfolio. It is recommended to have at least 5-20 % of your portfolio in physical precious metals alongside other investment forms. Portfolio diversification always protects against value fluctuation of any element.
By purchased stocks of gold you can provide cover for planned or unexpected costs, as well as building a “gold stock” for your retirement years or even for your kids.
Gold’s value and liquidity is independent of politics and economics, currencies and diverse cultural traditions. Throughout history it has remained constant and independent from any manipulation.
Gold is a universal payment tool as it is the only ”international currency” that can be changed into paper money at any time and any place in the world. The most liquid bars are 24 Kt gold bullion bars with a purity of .9999 (four nines).
Global factors influencing gold price:
- The effort to balance inflation and the losses of other investments leads to an increase in demand for gold. As in case of any goods, increase in demand leads to an increase in the gold price.
- Gold price will be strengthened by further increase of inflation fear and the long lasting eurozone crisis.
- Measures taken by central banks to finance debt crises, primarily the monetary policies of the Federal Reserve (Fed) and European Central Bank (ECB) may affect the gold rate also in the long run.
- Rising industrial consumption will positively affect the value of gold. Primarily the increasing demand in the in jewelry industry that is mainly represented in India, the biggest physical gold consumer in the world.
- Gold’s function as a cover asset strengthens due to geo- and socio-political tensions. Miners’ strikes endanger the continuation of production, and furthermore, lead to pay rises. Continuously rising production costs of gold will also increase the gold price per ounce.
- Gold reserves of the world are finite, apr. 50,000-55,000 tons seems to be sufficient merely for more 15-20 years regarding the current relationship between production and consumption (yearly production: 2,500 tons, consumption: 3,600 tons). Furthermore, gold production is becoming more difficult and expensive due to the fact that gold can now only be found deeper and in decreasing concentration (0.4 grams per tonne).
|Main reasons to buy gold:|
|1. Gold is a stabile investment in critical period||Safety|
|2. Gold ensures protection against inflation and depreciation of money||Value stability|
|3. Gold can be converted into cash anywhere in the world||Independence|