Buying gold

Buying Gold Humans have been fascinated by gold for thousands of years, by the way it never tarnishes and by its unique color. Sadly, gold is useless in engineering terms, except for plating electrical contacts, to ensure they never tarnish and lose their conductivity. The metal is too soft, with too low a tensile strength to be used for much besides necklaces and rings. As an investment though, gold is a different story altogether. Why do people buy gold? It has zero intrinsic value. Gold prices fall and rise, according largely to the degree of fear that people have about the future. When war is imminent gold prices soar. When economic conditions are good, inflation low and employment rate high, gold prices fall. Under these conditions there are investments that are probably going to produce a better return than holding gold bars. People buy gold because they fear the inflation and catastrophic share price collapse that normally accompanies war and political uncertainty. They buy gold because they think gold will hold its value. Historically gold holds some value, whereas shares can lose all of their value overnight. However, anyone who buys gold at the high price associated with war will almost certainly lose money, when they sell at a lower price. Conclusion - buy gold when everyone is saying to invest in the stock market. Sell gold when things are looking grim and there are lots of buyers out there. If you do buy gold you need to appreciate that this investment has risk. The price of gold may fall. It may be years before you can sell your gold at a profit. Until recently many countries made it illegal for individuals to hold gold bars or bullion. Individuals could buy gold coins and other items however. The South African Krugerrand was minted to exploit this opportunity and to earn much needed foreign exchange for that country during the years of economic sanctions. Nowadays you can buy gold, silver and platinum coins in many denominations, including Canadian and US dollars, sterling crowns and sovereigns. Wanda Cortez is a prolific writer, who has a background in the financial and investment industry. Find more information on investment at Buying Gold or Buying Silver http://www.only-gold.info/ http://www.only-silver.info/ =========================================== Gold news money.cnn.com Gold still powering past $1,000 The precious metal continues to rally as investors eye a weak U.S. dollar and fret about inflation. By Ben Rooney, CNNMoney.com staff reporter Last Updated: September 16, 2009: 5:37 PM ET NEW YORK (CNNMoney.com) -- Gold prices settled Wednesday at their highest point as the dollar slumped and inflation concerns boosted demand for the metal as a hedge against rising prices. Gold for December delivery, the most active contract, settled at $1,020.20 an ounce, up $13.90 from Tuesday's close of $1,006.30 per ounce. December gold hit an intraday high of $1023.30 on Wednesday. That's about $10 below the highest intraday price, set on March 18, 2008, when it traded as high as $1,033.90 an ounce. Mark Hansen, director of trading at commodities research firm CPM Group, said the weak dollar is the "main driver" of Wednesday's gold rally. The dollar fell to a one-year low against a basket of currencies, as upbeat economic data boosted optimism about the global economic recovery and gave investors an appetite for more risky assets, such as stocks. At the same time, gold prices are being supported by concerns that government efforts to stimulate the economy could result in a bout of inflation a few years from now. "That has given investors more of an appetite for tangible assets," Hansen said. The inflation concerns come despite a government report that showed consumer prices remained relatively tame last month. The Labor Department's Consumer Price Index rose 0.4% in August from the month before due to higher energy prices. Over the past 12 months, CPI has declined 1.5%. "Because inflation is really not an issue now, investors are looking out a year or two and wondering what happens if there's not a timely withdrawal," of economic stimulus dollars, Hansen said. Investors view gold as a hedge against rising prices because tangible assets tend to hold value better than equity-based assets when inflation is an issue. Looking ahead, gold prices could head even higher, Hansen said. Market participants have become "more comfortable" with gold prices above $1,000 and that has "emboldened investors to think that market can go higher," he said. First Published: September 16, 2009: 3:40 PM ET