Investing in gold: what you absolutely need to know

Before diving headlong into investing in gold, you should at least understand what investing in gold is all about. The fact is, investing in gold is not like investing in other commodities. Gold occupies a special place among precious metals and is one of the most predominant indicators on the economy.

 Unlike other commodities, there is no real industrial application for gold and therefore no real consumer demand. Most people buy gold with the intention of accumulating it. People accumulate gold for various reasons, but more importantly, people accumulate gold to convert some of their wealth into a non-volatile form that protects against inflation and economic recessions. The world supply of gold is limited and its production is relatively stable. Therefore, the price of gold is almost only determined by its hoarding demand. Due to its widespread use as a currency for much of human history, gold has an internationally recognized value.

 If no one were to hoard gold for the protection of wealth, then there would be no demand for gold and gold would probably be very cheap, if not useless. Having understood the determinant of the price of gold, one should realize why the price of gold remains relatively stable. The gold supply is limited, but the world population is continuously growing, therefore gold should still be more expensive, right? Yes and no. The demand for gold does not normally fluctuate unless there is a fear of inflation or an economic downturn that devalues ​​other types of investment holdings. As such, gold is not a high-growth investment. In fact, in times of economic stability or boom, almost any other investment product will beat gold to increase your wealth.

  So if you are thinking of cashing in on a supposedly limited supply of gold, you won't get very good returns. But you shouldn't rule out gold entirely either. During times of recession, the gold price is sure to skyrocket as people flee volatile investments for the safe haven of gold. You must have a certain amount of gold to protect your own wealth and at the same time, the possibility to cash in a beautiful profit during a recession wave. Gold is likely to retain its special status as an alternative form of wealth for a long time. Its price will definitely increase over time. So when you invest in gold, the question to ask yourself is whether there is a better place to put your money.

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MARSH MAXWELL This is a leading account for sharing the information for o Joined: November 28th, 2019