Gold and silver have been kept as luxury items for centuries. These precious metals have been kept by civilizations since the beginning of time. Although, some people claim the value of metal instruments has lost its intrinsic value as compared to the past. But, however, the value of gold and silver has survived the political crisis and turmoil. Investment in gold and silver are still strong and seem to flourish as we move to the future.
Why Invest In Gold
People tend to keep precious metals as an item for security, especially in the case of any chaos or political unrest. Even in times of crisis; when real estates, bonds, and stock markets go down, people flock to precious metals for financial sustainability.
Strictly speaking about gold, it holds a high value of liquidity, with minimal liability, and risks. To add more, it is very scarce and holds high life. On the other hand, silver founds immense applications in industrial uses, which highly affects its price and outlook. Comparatively, silver can be traded more easily as compared to gold, making it more volatile and liquid.
Benefits of Gold and Silver Investment
Investments in gold can help prevent inflation. Powerful countries often use 10-15% of investments in gold at any time. Although investments in gold and silver have fallen since last years, the future of investments can never go down.
It is also important to know that gold has been considered as a tool for financial standardization. Many forms of financial representations are compared with gold to determine their actual value. The paper currency, digital currency and even some stock currencies are also compared with gold.
Inspite, crypto and other digital formats, investments in gold and silver can be made on the following basis:
- Jewelry 48.5%
- Investment 29.19%
- Central Banks: 14.84%
- Technology: 7.48%
US Dollar vs Gold
Gold has been considered as a barrier against inflation. This is mainly because gold is priced in US Dollars. When the prices of the US dollar go down, people tend to buy more gold as an opportunity for reliable gold investment. This creates a sharp increase in the price of gold demand, which can strengthen its price. Moreover, people tend to buy this commodity as a luxury item as well. This always keeps the value of gold in high as it can be easily sold and bought.
Gold Investment Forms
Investment in gold can be carried out in physical and non-physical formats.
Physical Formats: Investments in gold or silver can be done in various physical formats. This includes jewelry, bars, and coins made from gold. These precious metals can be found in jewelry stores and as well as from online markets. Normally, these investments are for long-term use and can be used for personal use and as well as getting bank loans.
Jewelry: About 49% of gold produced in the world is used to manufacture jewelry. Therefore, investment in jewelry is an important element of the gold business. This serves dual benefits of both aesthetic and investment purposes.
Gold Coins: These coins are issued by governments or private dealers not more than 1% to 5% of their underlying value. But a rapid increase in their value hiked the demand to 10% in 2020.
Bullcoin: Bullcoin can be considered as an investment of gold in a non-gold form. Coins made from Bullcoin can be used to represent an equivalent amount of gold status. Often, these coins are very difficult to liquidate in the short term, it can be used as cumbersome to store, transport, the numismatic value of the equivalent amount of gold.
Non Physical Formats: Investment in gold for nonphysical formats include various platforms. They are used as tool for investment by big investors. Major nonphysical formats of investments include the following.
Mutual Funds: This investment mode includes mutual funds that can be used to buy the ownership of these metals virtually. These investments are particularly ideal for those that want to buy precious metals without knowing the raw material and technicalities of the game. Mutual funds thus allow the customer to mutually invest in buying digital forms of gold and silver.
Certificates: Gold certificates are an excellent way of investing gold. People can get certificates for an equivalent amount of gold value. However, this form of investment is not normally used for gold or silver investments. It depends upon users buying preferences.
Mining Stocks: People often buy holding stocks in the mining company, as an indirect mode of investing in gold and silver. When the price of these precious metals goes high, the stock of these companies rises. The investment in these companies should be based on market fluctuations and predictive analysis.
Exchange-Traded Funds (ETFs): These funds allow investment in gold and silver in the same way as on equities on the stock exchange. The only difference is that ETFs only deal to trade in either gold or silver. This allows users to have a Demat account and a trading account. These investments help to invest in these metals with 99.9% purity.
Sovereign Gold Bonds (SGBs): Sovereign gold bonds enable the conversion of equivalent amount of gold into bond approximates. This enables help to develop a platform that can help them to bring the gold and silver share to the masses.
Future Speculations: People can also invest heavily in precious metals based on future speculations that provides them the opportunity to invest in platinum, gold, or silver. This sets a basis of contracts that enables the people to invest at low rates in present, and get high rates of return for future. These contracts are known as ‘Over the Counter’ trading, and particularly great interest for big investors.
Gold Derivatives: Gold derivatives help to develop a system that is available on Multi Commodity Exchange (MCX). These can be contracts based on gold derivatives that use the value of gold as an underlying effect.
Good Opportunity for the Feature
Investments in precious metals will never stop, regardless of any situation. Great returns of investment are available for precious metals that range from 25% to 80%, backed with solid financial and protection schemes.
Danis Woods in Businessman, investment banker and stock exchange traders. On the same time he loves writing financial blogs to shed lights on different aspects that new and existing businessman are not aware of.