Gold lost about 30 per cent of its value in 2013, prompting doubts about the quality of
investment in gold and how important it is to escape from the paper currencies to intangible assets, as a result of the erosion of the real value of currencies due to continue printing by central banks around the world. Is it gold, in general, suitable for investment? Is gold still makes sense to invest? And methods of investing in gold?
Simple historical review, we find that gold has grown by about 300 per cent in the past 15 years, while the stock has achieved (represented in the US Dow Jones) about 80 per cent during the same period, despite the loss of gold 30 per cent of its value this year, at the same time, the Dow Jones index rose by 23 per cent. That is, with the exception of 2013, gold has grown exceeded 450 percent in 15 years, while the Dow Jones grew by about 42 per cent during the same period, plus annual dividends up to 1 to 3 per cent.
Without a doubt, one of the main reasons for the high price of gold in recent years due to the overwhelming response to its acquisition by investors and some central banks, who believed that the US dollar in the case of severe deterioration will continue for many years, and that there is no room to save the wealth only by tangible assets, most notably gold . Despite the negative performance of gold this year, there are many who clings to the idea of investing in gold does not deviate from one iota, either increased or decreased its price.
Why is gold attractive?
Based idea of investing in gold on two assumptions, first that the purchasing power of paper currencies continues to erode, and the second that the amount of the supply of gold is limited, so the price of gold always comes at the mercy of the volume of demand, is expected to continue for decades. For the limited gold quantities are unknown, as the sum of what has been extracted from the gold over a human lifetime is estimated at less than six dollars per ounce, or about 170 thousand tons, and produced each year worldwide about 2,500 tons, and more than half of the production during the 100 in the past.
This means that the amount of gold in the world increased annually by 1.5 per cent, what makes gold fundamentally different from many other goods that do not have cumulative factor of, any of those goods which are extracted and remain on the face of the earth, unlike many other commodities such as oil-depleted which is extracted and consumed irreversibly. However, since the gold extracted amounts on the surface of the earth is on the rise Mstmr- that any quantity displayed in Azdiad- According to the law of supply and demand is supposed to increase the supply leads to lower prices, is assumed to decrease the price of gold! Flaw in this analysis is that the demand increase is greater than supply, and this is true even in the years where demand is relatively modest level, due to the weakness of the annual growth rate amounts of gold, which as we have seen does not exceed 1.5 per cent.
How can the average person to invest in gold? There are several ways, one of which is the purchase of products such as jewelry made of gold and ornaments, which can be used as an accessory for women and investment at the same time, however, there are a number of reservations about this method. First we need to know that quality is measured by carat gold, and the highest quality is pure gold, which was given the scale of the fact that 24-carat gold ratio not exceed 99 per cent and up to 100 per cent.
Such a high percentage of gold, can not be used in 24-carat jewelry, nor in many products because of softer gold at this concentration, despite the high density of the metal. Interest Alalmah- albeit in the field of chemistry that Ojhlha- equal to 19.3 grams of gold density per cubic centimeter, which means that the weight of gold pieces in the form of a stake 1 cubic centimeter is equal to 19.3 grams, and will not easily find any other material heavier than that, except material platinum, which are often priced higher than gold.
Therefore, attempts to cheat in gold is very difficult because any other substance is added instead of gold will lead to a reduction in the weight of segment less than the correct weight. But for reasons of practical and economical, uses 18-carat instead of 24 carats, which contains 75 per cent went - 75 per cent come by dividing the 18-carat to 24 carats - and add other materials to increase the rigidity and control of color, often copper material or silver or rhodium or zinc and others. Even measuring 14-carat gold is real, but the proportion of gold in which only 58.3 grams of a centimeter cube.
Despite the ease of buying gold jewelry, but it is not the appropriate way to invest in gold for several reasons, including that the price of gold piece depends on the design and implementation of other stones added, so a direct relationship and minutes between the price of an ounce of gold do not exist in the international market and the price of products made of gold. That's why there from buying currencies and gold templates come in pure gold of 24 carat, a caliber used in gold trading, whether through instant or futures markets, and then save them in safe places in banks tanks or by specialized companies with the work of securing them .
However, the easiest way to buy gold is done through specialized or investment funds even through the purchase of ETFs shares, which is about the shares are bought and sold like the rest of the stock is no different than in something, for example, shares GLD, which mimics the price of the price of an ounce of gold, equivalent to ten shares from the price of one ounce of gold. In spite of the popularity of this fund and ease of trading, there is not considered a real gold buying, and differs from the actual possession of the templates gold or gold coins.
The reason for this is that these funds may sell more than shares of its gold, which is the based on the idea that they have enough gold to meet redemption requests which are made on a daily basis, and it is expected that all investors demanding their money at once, and this is true and expected but it is not guaranteed. The other option is to invest in gold is by buying shares in the field of gold mining companies, and there are specialized funds combine a number of these companies in one basket to reduce the risk of buying shares of one particular company.
In conclusion, investing in gold is still an appropriate means to those who possess great wealth and wants to maintain them against the actions of central banks and the impact of inflation, it is possible that gold prices going through financial bubbles result swung the purchasing power of the dollar, it is possible to speculate on the price of gold, Kalmdharbh on the stock, which is it is not without risk and the loss of a large part of the capital.
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