The appeal of investing in gold is easy to understand. Its value is obvious, you can feel and touch it, and its worth has stood the test of time. In tough economic times it is often sought after as a safe haven, as well as a hedge against the risk of more traditional investments.
Precious metals, such as gold and silver, are investable in just a handful of ways, each with their own pros and cons:
You may be surprised by the volatility of gold prices. It can take you on a wild ride, so as an investor you need to strap in and hang on. Long considered as protection against inflation, gold responds to the rapid day trading of speculators.
The price of gold is set twice per day by the London Gold Market and is greatly impacted not only by supply and demand, but world events, as well. A nation’s currency can also affect the spot price of gold.
But determining the gold price today will depend on how you are investing in gold. For example, a collectable gold coin may have a large markup compared to the same weight of a bullion (non-collectable) gold coin. And each minted coin has its own daily price.
Commodity prices, such as silver, gold, agricultural products and minerals, are all impacted by the futures contracts of the commodity exchanges, so again prices can vary widely from day to day.
There is a lot to consider when making a move to buy gold: how, when and how much. And, as with any prudent investment, it starts with knowledge and a bit of research.