The characteristics of gold and how to invest in gold

The characteristics of gold and how to invest in gold

Gold lost about 20 percent of its value in 2018, raising doubts about the quality of investment in gold and the importance of escaping currency to tangible assets as a result of the erosion of the real value of currencies as they continue to be printed by central banks around the world. Is gold, in general, suitable for investment? Is gold still suitable for investment? What are the ways to invest in gold?

With a brief historical review, gold has grown by about 300 percent in the past 15 years, while shares (represented by the Dow Jones Index) have reached about 80 percent over the same period, although gold has lost 30 percent of its value this year, At the same time, the Dow Jones rose by about 23 percent. In other words, except for 2018, gold has grown by over 450 percent in 15 years, while Dow Jones has grown by 42 percent over the same period, plus annual dividends of 1 to 3 percent.

There is no doubt that one of the most important reasons for the rise in the price of gold in the past years is due to the great appetite to be acquired by investors and some central banks who believe that the dollar is in a state of deterioration will continue for many years, and that there is no room to save wealth only through tangible assets, . Despite the negative performance of gold this year, there are many who adhere to the idea of ​​investing in gold and does not deviate from it, whether it has risen or fallen.

Why attract investment in gold?

The idea of ​​investing in gold is based on two hypotheses. First, the purchasing power of paper currencies is constantly eroded; second, the supply of gold is limited. Therefore, the price of gold is always at the mercy of demand, which is expected to last for decades. As for the limited quantities of gold, it is known, since the total of the extracted from gold over the life of mankind estimated at less than six billion ounces, or about 170 thousand tons, and produces annually in the world about 2500 tons, and more than half of the production was during the 100 years past.

This means that the amount of gold in the world is increasing annually by about 1.5 percent, which makes gold fundamentally different from many other commodities that do not have the factor of accumulation, that is, those goods that are extracted and remain on the face of the earth, unlike many other goods as depleted as oil Which is extracted and consumed irreversibly. But since the amount of gold extracted on the surface of the earth is increasing - that is, the quantity is increasing - under the law of supply and demand is supposed to increase the supply lead to lower prices, it is assumed that the price of gold! The imbalance in this analysis is that demand is increasing more than supply, and this is true even in years where demand is relatively modest, due to the weak growth rate of annual gold, which, as we have seen, does not exceed 1.5 percent.

How can a person invest in gold? There are several ways, one of which is the purchase of products made of gold such as jewelry and ornaments, which can be used as a decoration for women and as an investment at the same time, but there are a number of reservations about this method. First, we have to know that the quality of gold is measured in carats, and the highest quality is pure gold, which is given a measure of 24 carats because the gold ratio exceeds 99 percent and up to 100 percent.

With this high percentage of gold, 24 carats can not be used in jewelry nor in many products because of the softer gold at this concentration, despite the high density of the metal. For the scientific benefit - even if it is in the field of chemistry that I do not know - the gold density is equal to 19.3 grams per cubic centimeter. In other words, the weight of a piece of gold in the form of a cube of 1 centimeter is 19.3 grams. You will not find any other material heavier than platinum, Which is often priced higher than gold.

Therefore, attempts to cheat in gold is very difficult because any other material added instead of gold will lead to the lower weight of the piece less than the right weight. But for practical and economical reasons, using 18 carats rather than 24 carats, which contains 75 percent gold - 75 percent by dividing 18 carats by 24 carats - and other materials to increase hardness and color control, often copper, silver or rhodium Or zinc and others. Even a 14-carat gold is a real gold, but the gold content is only 58.3 grams per cubic centimeter.

Although it is easy to buy gold jewelry, it is not the appropriate way to invest in gold for several reasons, including that the price of the gold item depends on the design and implementation and other stones added, so there is no direct and accurate relationship between the price of gold ounce in international markets and the price of products made of gold. For this reason, there are those who buy gold coins and molds that come in pure gold of 24 carats, which is the caliber used in gold trading, either through spot markets or futures, and then stored in safe places in banks' tanks or by specialized companies with insurance work on them .

However, the easiest way to buy gold is through specialized funds or even by buying ETFs, which are stocks that are sold and bought like the rest of the shares and are no different from them. For example, the GLD, which simulates the price of a gold ounce, Ten shares of it the price of one ounce of gold. Despite the popularity of this fund and its ease of circulation, there are those who do not consider it a real purchase of gold, and differ from the actual possession of gold molds or gold coins.

The reason is that these funds may sell more shares than they have gold, which is dependent on the idea that they have enough gold to meet the redemption requests that are made on a daily basis and that it is not expected that all investors will claim their money once, But it is not guaranteed. The other option to invest in gold is by buying shares of companies engaged in gold exploration. There are specialized funds that bring a number of these companies into one basket to reduce the risk of buying shares of one particular company.

In conclusion, we know the characteristics of gold and how to invest in gold, where investment in gold is still a suitable way for those who have a fortune and wants to preserve it against the actions of central banks and the impact of inflation, and gold prices may go through financial bubbles as a result of fluctuating purchasing power of the dollar, Speculation on gold prices, such as stock speculation, is thus free of risk and loss of a large part of the capital.

What is an investment in gold?

Investment in gold is considered one of the best ways of investing, for a number of reasons, including that gold prices are rising, thus achieving opportunities to make a profit from investment in gold. In addition, gold has always been regarded as a safe and wise haven for periods of history.

Investing in gold is the best way to reach financial success and get rich. If we look at the economic news that is presented on a daily basis, we will note that it is not without mentioning the prices of gold on the local stock exchange and international exchanges. Recent statistics have mentioned that trade in gold is 80% Of world trade.

Anyone can invest some of their own money in gold by trading gold bullion through international banks, exchanges or even brokerage firms. This is what we will highlight in this article through the " billionaire tutor " and follow us.

Ways to invest in gold:

The methods of investment in gold are many and varied. These are the stock exchange, mutual funds, joint investment, gold futures or gold storage in several forms, whether in the form of gold bullion for the purpose of investment or in the form of gold jewelry.

How can I invest in gold? Whether for investment or savings, you will learn about the best ways to invest in gold.

The best ways to invest in gold:

First, investing in traditional gold is the most traditional and direct form of gold bullion. Its value varies according to its weight. It is suitable for most small investors, and although it is more difficult to save bullion while increasing its weight and quantity, it is one of the most valuable types.

Second: Investment in gold through stock exchanges or gold funds or gold contracts must be through a broker approved in the stock market, such as the stock market is completely normal and that way is suitable for large investments of gold and medium and fit for those who buy and sell gold with the price change.

However, the easiest way to buy gold is through specialized funds or even by buying ETFs, which are stocks that are sold and bought like the rest of the shares and are no different from them. For example, the GLD, which simulates the price of a gold ounce, Ten shares of it the price of one ounce of gold. Despite the popularity of this fund and its ease of circulation, there are those who do not consider it a real purchase of gold, and differ from the actual possession of gold molds or gold coins.

Third: One of the ways to invest in gold or from the forms of investment in gold is to buy gold and keep it for certain periods and then sold either with the change in price and achieve profits or with the need for more cash, and individuals can buy gold to invest in the form of alloys of a different weight of 5 Grams per kilo of gold or in the form of gold objects for the purpose of adornment and investment together.

Fourthly, investing in paper gold is one of the most effective and economical ways to buy gold in an intangible way as gold coins are calculated on the basis of silver or ligram, and there is often a fixed ratio between the gold gallery and the material gold it represents.

 

Note: Although it is easy to buy gold jewelry, it is not the appropriate way to invest in gold for several reasons, including that the price of the gold item depends on the design, execution and other stones added, so there is no direct and accurate relationship between the price of gold ounce in international markets and the price of products made from gold. For this reason, there are those who buy gold coins and molds that come in pure gold of 24 carats, which is the caliber used in gold trading, either through spot markets or futures, and then stored in safe places in banks' tanks or by specialized companies with insurance work on them .

 

Investing in gold has a strong anti-inflationary force, such as large inflation from 1973 to 1982, and gold prices hit record highs to nearly three times what they were 10 years ago.

To learn how to invest in gold usually takes some experience, buyers should go for gold for the first time with the aim of investing in gold buying gold coins and small alloys first with the aim of learning and gaining experience in selling and buying gold and how to calculate gold prices today, while experienced investors can invest in mutual funds Gold or gold investment funds associated with mining and prospecting for gold which is profitable with experience.

Learning how to sell gold in a volatile market is an important skill. When you are in financial straits, investing in gold is your preferred option, but knowing when to sell gold is by understanding your gold assets and gold prices today, and it is not prudent when you are in a financial crisis to sell gold at a time. The price of gold at the time of the loss of large and it is not wise to be high gold prices, which earns you a large margin of profit and does not sell gold that you own.

In conclusion, the investment in gold is still an appropriate means for those who have a great fortune and want to preserve it against the actions of central banks and the impact of inflation. Gold prices may go through financial bubbles as the purchasing power of the dollar fluctuates. It is possible to speculate on gold prices, So do not be risk free and lose a large part of the capital.

 

Warning: Investing in gold is not without risk as gold prices may go through financial bubbles due to a large number of reasons, the most important of which is the fluctuation of purchasing power of the dollar. It is possible to speculate on gold prices, just like stock speculation.

We have provided you with our dear followers of the site of the billionaire tutor , an overview of what is investing in gold and how to invest in gold and the best ways to invest in gold, we hope to have contributed to open new horizons in front of you, they publish the article as widely as there may be waiting for him to start The path of success, and the family of the site promises to provide more follow us.