Investment in gold and silver are slowly making their way into the mainstream, and investors are increasingly confident about taking their chances with these precious metals. The USA is seeing so much of deficit spending now, that investing in these metals is becoming a refuge for many. There is always a debate about which is a better investment option, gold or silver. Here are a few things to note while choosing what’s suitable for you.
Global Gold Demand Up; World Gold Council Establishes Conflict-Free Gold Standard, proposes gold collateral plan for Eurozone members
The global demand for gold in 2012 has remained more consistent as compared to 2011. The demand for the yellow metal in the third quarter of 2012 was significantly higher than the quarterly average of the past five years, according to the Gold Demand Trends Report released by the World Gold Council.
Worldwide demand for ETFs in Q3 2012 rose by a whopping 56% as compared to Q3 2011. To take things further, there was a substantially higher demand for gold as an investment option rather than jewellery. While investment demand spiked by 12% in 2012 as compared to 2011, jewellery demand went up by 7% in the same time frame.
The story, however, was different in China. Gold demand decreased by 8% in Q3 2012 as compared to Q3 2011. The cause of this was the largely negative outlook on the nation’s economy.
In other news, the World Gold Council recently published the Conflict-Free Gold Standard with comprehensive inputs by gold mining conglomerates, supply chain representatives, members of civil society, and governments. This was undertaken in an effort to address and combat the misuse of mined gold being used to fund civil unrest and conflict in politically unstable regions.
The Conflict-Free Gold Standard strives to ensure transparency and institute trust in gold supply chains. It also outlines principles that require mining companies to refrain from causing or escalating violent, armed conflict and other human rights atrocities. The Standard elaborates on the fact that gold mining can contribute to social and economic development worldwide if undertaken responsibly.
Everyone wants to buy gold at cheap rates regardless of current prices. Some bonds and stocks, and even mints, online sellers, and antique dealers come up as options. However, the collector’s gold offered by such sources is not always pure. So how can a serious investor buy gold at good prices?
1 – Factors that affect gold rates
Before deciding to buy gold at ‘bargain’ prices, one must be aware of the dynamics that influence rates. These include:
- Gold quantity and quality
- The form of gold on offer
- The source of the gold
- The dealer
2 – Buying physical gold
It is recommended that investors buy gold bullion or coins of a significantly higher weight/value, since purchasing high-demand coins such as Krugerrands ensures that their prices appreciate faster and yield better returns. Buying gold of a lesser weight/value may be easier on the pocket at first, but will yield lower returns in the long run. This is because storage, insurance, and shipping costs are passed on from the mint to the seller, which eventually reflects in the retail price. To summarize, this makes bullion or coins of a higher weight more desirable since they have fewer price mark-ups and are more inexpensive per gram.
3 – Purchasing gold online
If you would rather buy gold from the convenience of your home, take note: make purchases only from accredited dealers who are part of the World Gold Council (WGC). You can find out more about these dealers on the WGC website to avoid getting cheated or scammed by unscrupulous or fake online vendors.
4 – Going straight to the source
Travelling to a gold mine sounds like a ‘far off’ idea, and it is. However, the fact is that gold prices are cheapest when the metal is just mined, because there is no value chain involved. Entrepreneurs and businesspeople in particular can consider opening dealerships in a gold-producing nation to make the most of low costs due to closer proximity to mines.
5 – Buy gold after its price has fallen
The best time to buy gold is, of course, when its rate depreciates a bit. However, don’t wait for prices to hit absolute rock bottom, as there’s no telling if anyone can get assumptions down to the T.