Gold is considered the best form of investment in comparison with all other precious metals. Investors buy gold in order to diversify risks. After the start of the Eurozone crisis, Chinese investors in 2011 began to look into gold as an avenue of investment as an alternative to investing in the Euro. The gold market, like any other market, features speculation and volatility. Historically, gold has been used as money. Gold has also been used as a measure of the standard for currency value in various regions and countries.
The price of gold, like any other product, is influenced by forces of demand and supply. However, saving and disposal play a greater role in affecting the price than consumption. The Central Bank and IMF play a major role in gold price. The price of gold is more or less determined by interest rates. An increase in the interest rates causes the price of gold to fall since gold earns no interest. A decrease in interest rates leads to the rise in the price of gold. Due to this, the price of gold is closely correlated to central banks’ interest rates that arise from their monetary policy decisions. The investment vehicles available to gold investment are listed below.
The most traditional method used in gold investment is buying of bullion gold bars. In countries like as Switzerland and Canada, trading in bullion bars takes place in major banks. There are also other dealers buy and sell the bullion bars. The bars come in various sizes.
Gold coins are also a common way of making an investment in gold. The price of Bullion coins is derived the fine weight. A small premium is added to the price that is derived from demand and supply. The size of the coins varies.
Gold certificates are also used for investment and help the investor to avoid risks and costs that arise from the transfer or movement and storage of bullion, e.g. theft, by being issued with another set of risks and costs that arise from the certificate itself, e.g. commissions.
The US Money Reserves is among the largest distributors of US Government-issued gold, silver and platinum coins. The coins are produced the US mint and are backed up fully by the US government. Since its inception, the company has shipped more than 1 million coins and offers a 30 day money-back guarantee on its certified coins.