Gold as an Investment - Gold 101

Much has been made of gold as a sound investment in recent years. In fact investors look to buy gold both in good and bad financial markets. Gold can be owned in several forms. The investment can be in bullion or coins. Other forms of gold ownership are certificates, accounts, derivatives, or shares.

There are several reasons gold is considered a good investment no matter the status of the market. One is due to the idea that gold is considered a safe bet during unsure economic times. This is often referred to as a store of value versus a stock certificate, which is perceived as a return on value, or something that anticipates a growth in price.  During a good market, otherwise known as a bull market, gold is also still purchased because it offers financial gain.

What type of gold you purchase depends on your investment goals. If you are interested in focusing on gold for its short-term price increases, then you should consider buying bullion coins. However, if you want to buy gold with a longer-term goal in mind, you might want to consider early 20th century gold coins, which have been designated as historical collector’s items. When you buy gold is really up to you. Since it is not the same as other investments, it can be purchased whenever you feel the need to diversify your portfolio.

The value of gold is generally determined by the London Gold Fixing. This is a phone meeting that happens twice a day with members of five bullion-trading firms. The price of gold is decided, as are most other investments and commodities, by supply and demand. However, people are more likely to hold onto gold than other investments and this can strongly affect the price of gold on the market.

While in the past gold’s value has been strongly linked with the dollar, recently the two seem to have decoupled. In the past a strong dollar made gold a less attractive investment. This change in the relationship between the dollar and gold may mean that even if the dollar becomes stronger, gold will still stay popular as an investment.

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Gold was first discovered thousands of years ago in its natural state, in streams, which lead to mining all over the world. Its brilliance, natural beauty, great malleability and resistance to tarnish made it enjoyable to work with. Gold gave rise to the concept of money itself. Today gold is used for jewelry fabrication, industrial application, and medical uses, by governments and central banks and by private investors.