Investment in Gold

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  • Topic: Gold coin, Gold, Gold as an investment
  • Pages : 5 (1878 words )
  • Download(s) : 105
  • Published : October 3, 2011
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The advantages and disadvantages of investment in gold:
Like investment in any other precious metal, investment in gold also has many advantages as compare with other kind of investing such as bond and stock. • It may not be the most obvious choice for a new investor, but it always is the safest choice. When choosing an investment, there are many factors to consider and every investor has to make sure that the investment he chooses is suitable for his budget and also for his financial goal. The stock market is considered for giving high return together with high risk. Sometimes, stock in hand can become worthless. But gold is money and can never become worthless. From thousands of years, since the beginning of the recorded history, gold has always been use to protect the wealth. Until now, after many civilizations have passed, gold still holds its true value. It can be said that gold is an investment tool that safe and durable to any external events that can make the economic become down. Gold can resist the damaging effects of inflation and maintain money worth for future use. Gold is the only asset whose value increases even when the value of the dollar goes down. That is the reason why most government in the world uses gold as a reserve to their fiat currency. • One of greatest advantages of gold is that Gold is not the subject of taxation. It means that any profits gaining from gold you do not have to share with other government agencies collecting taxes. • Another factor that makes gold become such an easy commodity to invest in is its storage. Since gold bars and coins can be bought from banks and gold dealers, investors now have an option on where to keep their investments. The most common gold storage is kept at home. This enables investors to save up on fees that are usually spent on maintaining deposit accounts and safety deposit boxes. And with the gold safely kept inside the home, it will be there when it is time to cash in.

However, every plus has a minus and gold investment is not an exception. • Gold preserves the capital but does not grow it. Since the purpose of investor is making money from their money, no one wants his money just sits in a vault. Although gold is an investment instrument that has ability to withstand the effects of inflation and economic downswing, it still lacks the growth potential that some investment vehicles may provides and the invested capital may not have higher amount than expected. • Gold bars and gold bullion are also hard to transport. Different from other paper based investments like stocks and bonds, since its weight it heavy, it is not easy to carry in a pulse or a bag. Again, this may raise expenses for the investor. Otherwise, it also hinders the investment from making transaction that require transport from one place to another. • Another problem for investment in gold is choosing the right format of gold. Sometimes it is rather simple to have one investment format to choose from. For instance, stock investors will not have a problem in keeping stock documents and papers since most of them are in electronic or in paper form. But gold has a variety of complicated options that can sometimes be confusing for the investor. Having many options does not simplify investing. It may be better if there is one format, like stocks, that people can choose from.

Method of investing in gold

Gold bar
Buying bullion gold bar is the most traditional way of investing in gold. In some countries such as Switzerland, Austria, Argentina, it is very easy to buy or sell the gold bar at major banks of these country. Besides, there are bullion dealers that provide the same service. Bars are available in various sizes. For example in Europe, a Good Delivery gold bar weighing 400 troy ounces (~12kg). Gold bars can be held either directly held by the investment or indirectly which is held in a vault of certain bank on their behalf.

Gold Coin
Buying gold coin...
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