Gold – Ways to generate a financial gain by betting against the crowd

Gold continues to be treated as being a financial instrument for many generations. Reason? It has no intrinsic value, only the value that worry attached to it: worry of inflation, worry of war and paper money devaluation. No one would like to see the repeat of the horrible experience of many German citizens with their investments in worthless Papiermark in 1920’s? Buy gold, but only at the suitable timing.

Since the dawn of history, human beings happen to be fascinated by gold for its exclusive coloration and comfortable metallic element. However, gold is pointless in engineering conditions, apart from plating electrical contacts, for goal of ensuring their conductivity. You will find gold plated contacts on very expensive hi-fi components and electronic equipment, such as personal computers and mobile gadgets. The metallic is too soft, with too decreased a tensile power to become made use of for considerably in addition to jewelry for instance necklaces and rings.

As an investment though, gold is a different story altogether. 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, as more people buy gold. They are buying gold for several reasons. The gold will be there regardless of what happens to the currency and because war tends to lead to high inflation, paper money becomes worth less and less. People outside the war zone buy gold because they see the price going up. They think it will keep going up and they will be able to sell at the top of the market and realize their profits.

People also buy gold when economic conditions are good. When inflation is low and employment rate high, gold prices fall. The prices fall because gold has no intrinsic value, only the value attached to it by people’s fear. In calmer times, it is possible to invest in shares and gain from the rising share prices that usually accompany economic growth.

Consequently, experienced investors often “swim against the tide” when they are investing in gold – purchase gold when the majority of investors speculate in the stock market. Sell gold when events are looking grim, fear is rampant and there are plenty of purchasers of gold on the market.

In the not too distant past, it was illegal to own gold bars or bullion in many countries. Men and women could buy gold coins and also other items nevertheless. The South African Krugerrand was minted to take advantage of this opportunity and to bring in significantly necessary international exchange as hard currency for that nation during the a long term financial embargo. Nowadays it is possible to buy gold, silver and platinum coins in quite a few denominations, like Canadian and US dollar, sterling crowns and sovereigns etc.

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