An Introduction to Gold



The recent economic crisis and subsequent collapse of some of the top banks
has meant that the value of saving money is no longer as lucrative as it once
was. The alternative to putting spare cash in a savings account is investing it;
this is typically seen as more of a risk than saving money, but the potential
returns are much greater.

There are a number of places you could invest your money:

  • Stock Market– a very unpredictable market that requires a
    significant amount of time and knowledge in order to make sizeable returns.
    Of late, the stock market has seen some of the worst falls on record;
  • Property– with house prices currently falling; the
    property market is a risky place to invest money. Some choose to invest
    their money in buy-to-let or barn conversions however this will require a
    large amount of initial investment;
  • Gold Sovereigns– with the price of gold rising at a much
    greater rate than inflation, many see this as a safe haven against these
    some-what rocky economic times.

This image shows the price of gold between 2011-2012  (Source of
figures: BullionByPost)

Price of gold chart

Why invest in Gold

The government’s response to the economic crisis was to print an
unprecedented amount of money; unsurprisingly this has the effect of lowering
the value of the pound and increasing the value of gold.

As mentioned the value of gold is increasing at a much greater rate than
inflation; in the past 5 years the price per ounce has increased by 204%. The
demand for gold now significantly outweighs the rate at which it is being mined
which indicates that this price is just going to continue to rise.

The long term rewards of investing in gold are also very attractive, like any
other valuable commodity it’s value does fluctuate and experience periods of
instability but historically its bounce-backs are spectacular.

How to invest in gold

Having taken all of this into account, you may now be wondering how you could
go about investing your money in gold. There are a number of ways you can go
about this, each method having its positives and negatives:

Shares in Gold- This works on the basis that you buy shares
in gold mining companies or gold trading companies. This is widely seen as the
best way to invest in gold as the value of your shares are influenced by the
companies’ profits and the and not the price of gold.

Gold Coins – Generally sovereigns will be more desirable
than Krugerrands and are therefore seen by experts to be worth paying more for.
Coins are very easily stored and portable- however storing gold in physical form
around the house does pose a certain security risk meaning you may have to
reassess your house insurance policy.

Gold Bars- Much like coins, the security and storage of bars
may be an issue. Fortunately there are organisations or ‘mints’ that allow
you to buy gold bars and offer a certificate and storage in a secure vault
included in the price.

Conclusion

While there is no concrete evidence that the price of gold will continue to
increase, almost all pointers indicate that this will happen. So is now a good
time to buy gold? The general consensus is yes, however some experts feel that
if the British economy is to turn around the gold prices will drop dramatically.

Author Bio: This article was written by Jason Scott on behalf of UK Credit.
UKC specialises in offering guarantor loans to those who have been declined
by mainstream lenders.