Gold, silver, platinum, and palladium. These four metals are quite valuable, mined at few locations throughout the world. They are found in anything from expensive wristwatches to the forks on your dining room table, and are a reliable source of income for many. These precious beauties are more than just fancy decorations, however. No, their value comes from their value.
As overtly redundant and completely obvious as that statement sounds, gold and its siblings are inherently expensive. They have intrinsic value that goes beyond what you can make of them. Indeed, their rarity and tangibility have made them extremely hot commodities in the world of money-making since the dawn of commerce.
Today, paper money holds little real value. It is cheap and easy to reproduce, and printing more can be done with the click of a button. This means that a single dollar’s value today could be worth hundreds in a few years. But a dollar bill does not, in and of itself, retain that value.
To help explain this further, the value of $100 in the year 1900 would be able to buy what costs more than $3000 in today’s currency. But if you have a $100 bill from the 1900, it’s still only worth $100.
Now, let’s say you have $100 worth of gold from the 1900. Should the price of gold not have fluctuated since then, you would now have more than $3000 worth of gold. That is the benefit of tangibility and is the primary reason the term “gold investment” exists.
The same concept applies to other precious metals as well. Scarcity of such finite resources is where their value comes from, and that scarcity is practically guaranteed thanks to how hard it is to obtain them. And while this article will primarily be talking about gold, much of what is said here can be considered alongside silver, platinum, and palladium as well.
First and foremost, what is gold investing? Put simple, it is the buying and selling of gold – instead of stocks – in order to keep money secure or to gain marginal amounts of profit at a time. The price of gold does not fluctuate as drastically as the price of stocks can, so any gains will be incremental.
As with any investing, gold investing is based on the current market value of the metal in question. When demand for gold is high and supply is low, the price rises. The opposite applies as well: when demand is low and supply is high, the price drops. This means gold holds a consistent value that never inflates, as gold cannot be printed en masse, making its monetary worth real.
There are many ways to go about investing in gold. Buying bullions (not to be confused with “billions”) is the most reliable. Having a physical bar of gold that you can store at your leisure is a great way to keep the money behind that bullion in your hands. For those who wish to focus more on their portfolios, however, ETFs, or “Exchange-Traded Funds” can be a more appealing prospect.
As explained at https://en.wikipedia.org/wiki/Exchange-traded_fund, ETFs are traded on exchange much like stocks, with prices varying throughout the day. This means, when you invest with a “price of gold” ETF, you’re trading based on the constant fluctuation of gold’s price, rather than whatever it costs at the end of the day. ETFs are also impossible to lose or steal, unlike physical bullions, making them secure in their own way.
When making the choice between bullions and ETFs, one must consider the purpose of their purchase. Physical metal is a lot more secure when it comes to buying and selling, as well as storing for future use, but ETFs have the distinct benefit of being able to help diversify your investment portfolio.
Why Gold Investing?
Why would one use gold to invest, rather than the more lucrative stock market? Well, as explained earlier, there is a lot more security in gold. It is a tangible asset that cannot be inflated, and its value is no so volatile as a company share, which may plummet based on arbitrary factors such as corporate interest or lack thereof.
Gold’s tangibility is a very understated boon. It is hard to be scammed when you know the intrinsic value of what you have, and it is even harder to be fooled with a physical product you can check for defects. Foreknowledge of gold and how the market fluctuates will certainly help prevent you from falling for price gouging as well.
Another great benefit is that there are a lot of accessible resources available to you in order to help you make informed financial decisions. This Cornerstone Asset Metals review is just an example of the many, many websites that perform such services which can help you narrow down where you want to look when it comes to investing.
The regulations on gold may be a bit limiting depending on where you are, however, so be sure to look into your local tax code. The buying and selling of gold are highly regulated, especially since and thanks to the Gold Reserve Act. A majority of America’s gold is held within the banks, after all, at least partially explaining its rarity on commercial markets.
If the future is your concern, then gold is one of the most reliable ways to store your money. It may not develop interest, but it certainly doesn’t depreciate over time like cash would. If you simply want to make money quickly, then perhaps consider another alternative. Whether you want to keep money or make it, the process of gold investing is surely a good way to do either.
There is little in the world more reliable than gold. For as long as people have been using currency, gold has played a part in society’s economic development. And while today the “gold standard” might not perform such a defining role, it’s still the foundation by which much of America’s economy functions.